Government Emergency Ordinance no. 84, published on 6 December 2016 in the Romanian Official Gazette, implements the following new fiscal law provisions which entered into force on 1 January 2017:
1. Corporate income tax
- Specific provisions for companies that have a financial year different from the calendar year and seek to either return to the calendar year or to change the modified fiscal year;
- Indefinite extension of the tax incentive for reinvested profit and broadening of the scope to also cover rights to use software;
- Clarifications regarding the allocation criteria for expenses related to non-taxable income; and
- Deductibility of expenses incurred for the theoretical and/or practical training of students in vocational and technical education including the depreciation of fixed assets or investments used for such purpose.
2. Micro-enterprise tax regime
- Reduction of the minimum share capital threshold for newly-incorporated companies to opt for the application of the corporate income tax regime from EUR 25,000 to RON 45,000 (equivalent to EUR 10,000); and
- Micro-enterprises with a share capital of at least RON 45,000 (but below the current threshold of EUR 25,000) can switch to the corporate income tax regime starting with 1 January 2017 or with the quarter when the condition is fulfilled.
3. Personal income tax
- Amendment of the definition of a stock option plan, eliminating the requirement that the securities be traded on a regulated market or alternative trading system; and
- Payers of salary/deemed salary income; income derived from intellectual property rights; pensions; and certain other legal entities required to submit the Income Tax and Social Contribution Form (“Form 112”), no longer have to submit the Informative Statement on Withholding Tax and Gains/Losses (“Form 205”) for each income beneficiary.
4. Social contributions
- For salaries and salary differences established by law which are granted for past periods, rectifying returns regarding social contributions must be submitted for each month affected.
- Taxpayers declared inactive or who have had their VAT registration number cancelled have the right to deduct input VAT related to the acquisition of goods/services during the period they were inactive/VAT number cancelled, after they re-register for VAT purposes;
- Similar provisions were introduced for the beneficiaries of acquisition of goods/services from inactive suppliers/suppliers with cancelled VAT registration numbers;
- With a few exceptions, VAT adjustments for capital goods will no longer be performed one-off for the remaining adjustment period (five or twenty years, depending on the goods), but instead on an annual basis, within the adjustment period, only for 1/5 or 1/20 of the initial input VAT;
- Introduction of a new special scheme for farmers, in line with VAT Directive 2006/112/CE; and
- Elimination of the obligation for taxpayers carrying out intra-community transactions to register in the Registry of Intra-community Operators and suspension of the obligation to submit certain reporting notifications (Forms 392A, 392B, 393) until 31 December 2019.
6. Fiscal Procedure Code
- Clarifications regarding the reactivation of inactive taxpayers as well as the timing of tax payments, budgetary obligations and other amounts collected by public bodies;
- Inclusion of additional payment methods (i.e., internet banking, mobile banking, payment terminals and ATMs) as accepted means of tax payment and the related documents as accepted proof of payment;
- Ability to challenge decisions enforcing precautionary measures directly before courts of law, within 30 days from the notice, without the previous requirement to follow the preliminary administrative procedure; and
- Amendments needed to transpose Directive 2015/2376/UE regarding the automatic mandatory exchange of information in the tax field.
Note that the Fiscal Procedure Code amendments entered into force on 6 December 2016, except for the last one which entered into force starting with 1 January 2017.
Additionally, the following provisions, already included in the Fiscal Code, entered into force on 1 January 2017:
- The standard VAT rate was reduced from 20% to 19%;
- The monthly health insurance contribution is capped at five times the national monthly average gross salary. This is applicable for income obtained starting 1 January 2017;
- Income from investments or income from other sources obtained starting 1 January 2017 is subject to the health insurance contribution even if the individuals obtain other types of income (e.g. salaries, pensions, freelancing activities);
- Excise duty levied on certain fuel products was decreased;
- The tax on special constructions was abolished;
- The specific tax for companies that carry out activities in the field of tourism, hotels, restaurants, bars and public food service is applicable.