NNDKP Tax Flash No. 4/2023 – Government Emergency Ordinance no. 116/2023 on certain measures for the implementation of certain digitalization projects
Government Emergency Ordinance no. 116/2023 on certain measures for the implementation of certain digitalization projects and Government Emergency Ordinance no. 115/2023 on certain budgetary measures to ensure Romania’s long-term financial sustainability were published in the Official Gazette no. 1138 and 1139 of 15 December 2023
GEO 116/2023 on certain measures for the management and accounting of the current revenues of the public budget through the implementation and development of certain digitalization projects
Starting 2024, aiming to improve the operational capacity of the tax administration in preventing and combating tax non-compliance, certain information systems of national strategic interest (SIISN) will be implemented, including:
- ROe-Factura;
- RO e-Transport;
- RO e-Sigiliu;
- RO e-SAF-T;
- RO e-Case;
- RO e-VAT.
SIISN are necessary to prevent, reduce and combat tax evasion and tax fraud in order to (i) identify specific risk profiles of individual and legal taxpayers and (ii) identify inconsistencies and/or discrepancies between the data and information provided by SIISN and those in the accounting and tax declaration/evidence system.
RO e-VAT:
It aims to pre-fill VAT returns based on the information provided by the RO e-Factura and RO e-Case systems and make it available to taxpayers via the Private Virtual Space.
Taxpayers who receive a pre-filled VAT return are required to:
a) check, amend and complete the information on the VAT return;
b) submit the VAT return to the tax authority.
The deadlines for the use/implementation of the SIISN modules are:
a) RO e-Factura: 1 March 2024;
b) RO e-Case: 1 April 2024;
c) RO e-Sigiliu: 1 January 2025;
d) RO e-Transport: 1 September 2024;
e) RO e-VAT: 1 August 2024;
f) other modules: 1 March 2025.
GEO 115/2023 on certain fiscal and budgetary measures in the field of public expenditure, for fiscal consolidation, combating tax evasion, for amending and supplementing some normative acts, as well as for extending some deadlines
TAX CODE
Deductibility of expenses
The deductibility is limited to 50% the operating, maintenance and repair costs relating to an establishment located in a dwelling owned by an individual and also used for personal purposes;
The deductibility is limited to 50% of the operating, maintenance and repair costs relating to a registered office acquired by the taxpayer in residential buildings or individual residential buildings, which is not used exclusively for business purposes;
Private scholarships are removed from the category of sponsorships for which tax credits can be obtained. Expenditure on private scholarships limited to RON 1,500/scholarship will be added to social expenses and the result will be deducted up to 5% of the value of salary costs;
The corporate income tax redirection for sponsorship can be performed up to the deadline for filing the annual corporate income tax return (as opposed to the current 6-month deadline).
Crèches and kindergartens are included in the category of establishments managed by taxpayers for which operating expenses are deductible to a limited extent;
In the category of social expenses, the amounts paid by the taxpayer for the placement of children of employees in early education units up to 1,500 lei/month per child, under certain conditions, are included.
Provisions and depreciation
Deductibility for impairment adjustments on receivables is limited to 30% (instead of 50% at present) for receivables booked from 1 January 2024. Impairment adjustments for receivables are defined as amounts due from internal and external customers for products, semi-finished goods, materials, goods sold, work performed, and services rendered.
Some clarifications are made with regard to impairment adjustments and specific provisions made by non-bank financial institutions.
For a registered office which is not used exclusively for business purposes, located in residential buildings or in individual residential buildings, in residential complexes defined according to legal provisions, registered in the taxpayer’s assets, depreciation is deductible at the rate of 50%.
Tax losses
Annual tax losses, from 2024 onwards, are recovered from the taxable profits made, up to 70%, in the following 5 consecutive years.
Tax losses relating to years prior to 2024 will be recovered up to a maximum of 70% of the profits obtained over the remaining period to be recovered in the 7 consecutive years following the year in which the losses were incurred.
Deductibility of excess cost
A limitation to EUR 500,000 of the deductibility of the excess borrowing costs resulting from transactions/operations that do not finance the acquisition/production of fixed assets under construction/assets that are carried out with affiliated persons is introduced. It does not apply to credit institutions, non-banking financial institutions and investment companies.
Income tax on micro-enterprises
Amendments are made to the definition of micro-enterprise as follows:
- The 25% shareholder/partner ownership must be direct or indirect and applies to a single legal entity;
- A requirement that the annual financial statements must be filed within the statutory deadline is introduced;
Clarifications are made with regard to the income ceiling of EUR 500,000 in the sense that it is determined by taking into account the income of the legal person cumulated with the income of the related companies, defined according to Law 346/2004.
Amounts representing sponsorships/grants and amounts representing the purchase of electronic fiscal cash registers are no longer deducted from the income tax of micro-enterprises.
The micro-enterprise continues to pay income tax on the income of micro-enterprises for the entire period of temporary inactivity and after the resumption of activity (if it meets the conditions of share capital, ownership, submission of financial statements and, within 30 days, that relating to having an employee).
Income tax
Salary and assimilated to salary income
Clarification is provided on the exemption from salary tax on the income from computer software development, construction, agriculture, and the food industry if such income is received from several employers in the same month.
Limit the deduction to €100 (instead of €400) for the cost of gym membership paid by employees.
Clarification is provided on the non-taxable ceiling of 3 basic salaries granted as a secondment/detachment allowance to employees/administrators, on national territory and abroad.
Income from independent activities
The €400 ceiling for gym membership fees is reduced to €100.
Expenses incurred that are proven to be related to corruption will not be deductible.
Transfer of use of goods
A flat rate of 20% is introduced
The obligation to determine net income under the actual system is abolished if more than 5 leases are concluded at the end of the tax year.
Rules are laid down for the assessment and withholding of tax on income from the transfer of goods paid by legal persons or other entities required to keep accounts.
Taxpayers can no longer have 3.5% of their income tax redirected to support non-profit organizations, except for income from salaries and assimilated to salary, for which the provision remains valid.
The tax loss rules for corporate income tax will also apply to certain types of income (e.g. self-employment, intellectual property).
Clarification is provided on the minimum gross national wage used to determine the ceilings for social contributions.
Clarification is provided on the option to contribute or opt out of contributing to the private pension fund for employees in the IT, construction, agriculture and food industry sectors.
VAT
The right to deduct tax on the purchase, rental or leasing of buildings/dwelling spaces, whatever their purpose, situated in residential areas or buildings of apartments and tax on expenditure relating to such buildings/dwelling spaces, where they are not used exclusively for business purposes, is limited to 50%. It will enter into force from the 1st of the month following the date from which Romania is authorized to apply a special measure derogating from the provisions of the VAT Directive.
Deferment of payment of VAT for imports will apply where a customs declaration is lodged using the centralized customs clearance procedure or the procedure for entry in the declarant’s records. Therefore, the facility can no longer be applied only on the basis of the AEO certificate.
The obligation to submit the “Information declaration on supplies of goods and service” is suspended until 31 December 2026.
Excise
It is provided the update of the excise duty for petrol and diesel with the increase in consumer prices over the last 12 months, calculated in September 2023, compared to the period October 2014 to September 2015, as follows:
- from 1 January 2024, by 50% of the increase in consumer prices;
- from 1 July 2024, by 50% of the increase in consumer prices.
The obligation to pay excise duty before delivery of the goods from tax warehouses or from the place where they were received by the registered consignee also extends to products such as apple cider, sparkling wines, etc. In these cases, delivery of the products is made on the basis of the purchaser’s order. On the basis of the order, the supplier issues a document which must contain certain elements.
The certificate of certified consignee and certified consignor will be valid from the date of issue (as opposed to the 1st of the following month as previously).
For products in the category of non-alcoholic beverages containing added sugar for which non-harmonized excise duty is applicable and which are in stock on 1 January 2024, the chargeable event and chargeability shall occur on the date of sale of the products on the domestic market.
The marking of energy products or assimilated products in terms of the level of excise duty and diesel is done by the ACCUTRACE™ PLUS marker scientifically called Butoxybenzene. Until 18 January 2024 both the current Solvent Yellow 124 marker and the new ACCUTRACE™ PLUS marker can be used.
The obligation to mention separately the excise duty on invoices is introduced for taxpayers who are obliged to issue invoices and who produce and sell in Romania products subject to non-harmonized excise duty.
The changes will take effect from 1 January 2024/with the income related to 2024, with certain exceptions (e.g., the specific provision amendment, the private scholarship provisions in the case of income tax, which apply from 15 December 2023, the exclusive marking with ACCUTRACE™ PLUS which applies from 18 January 2o24).
Amendments to Law 296/2023 on certain fiscal-budgetary measures to ensure Romania’s long-term financial sustainability
In the case of the minimum turnover tax, taxpayers who reduce the value of assets under construction/assets according to indicators I and A, are obliged to keep these assets in their assets for at least half of their economic useful life, but not more than 5 years. If this condition is not met, the minimum turnover tax is recalculated on the amounts in question and, where appropriate, ancillary tax claims are levied as from the quarter/year in which they are deducted.
The following assets are not covered by these provisions:
a) are transferred as part of reorganization operations carried out in accordance with the law;
b) are disposed of in liquidation/bankruptcy proceedings in accordance with the law;
c) are destroyed, lost, stolen or defective and replaced, provided that these situations are duly demonstrated or confirmed by the taxpayer. In the case of stolen assets, the taxpayer shall prove the theft on the basis of supporting documents issued by the judicial authorities;
d) are removed from the estate as a result of the fulfilment of statutory obligations.
The provision applies similarly to the additional tax for legal persons operating in the oil and gas sectors.
It details the conditions for determining the social health contribution for individuals who have a cumulative annual net income of less than 6 gross minimum wages per country.
Foods with added sugar for which 19% VAT is charged and powdered milk for newborn babies are excluded.
The notion of ‘added sugar’ is amended in the sense that for the purpose of determining the added sugar content, products assimilated to sugar (e.g. cane sugar, brown sugar, crystalline sucrose, invert sugar, dextrose, molasses, honey sugars, nectars, syrups) are taken into account when they are added as ingredients.
The RO e-Factura System
During the period from 1 January 2024 to 30 June 2024, the following transactions are exempted from the application of the e-Factura system:
1) exempted intra-Community supplies of goods and exports;
2) supplies of goods/services to taxable persons who are neither established nor registered for VAT purposes in Romania;
3) supplies of goods/services for which simplified invoices are issued;
4) the provision of services for which invoicing is not subject to the invoicing rules applicable in Romania.
It is provided that, as from 1 July 2024, the deadline for sending the invoice via the RO e-Factura System in the case of taxable persons established in Romania is 5 calendar days from the date of issue of the invoice, but no later than 5 calendar days from the deadline for issuing the invoice provided for in Article 319 para. (16) of the Fiscal Code.
Failure to comply with the deadline for submitting the invoice via the e-Factura System shall be sanctioned by a fine as follows:
- from RON 5,000 to RON 10,000 for large taxpayers;
- from RON 2,500 to RON 5,000 for medium taxpayers;
- from RON 1,000 to RON 2,500 for other legal entities and for individuals;
The penalty for receiving and registering the invoice outside the RO e-Factura System by the recipient – taxable person established in Romania – is amended in the sense that this will be sanctioned with a fine equal to 15% of the total value of the invoice. The same fine also applies to a supplier who fails to submit an invoice via the RO e-Factura System.
If the ROe-Factura System is not operational for at least 24 hours, the obligation to send invoices via the system is suspended until the system is back up and running. In this case, invoices can be sent in accordance with the Tax Code. The periods of non-functioning of the national electronic invoice system RO e-Factura will be published on the websites of the National Tax Administration Agency and the Ministry of Finance.
RO e-Transport
From 15 December 2023, it is introduced the obligation to report through the RO e-Transport system all international transports of goods (relating to imports, exports, supplies and intra-Community acquisitions of goods), regardless of whether they are classified as high tax risk goods or not.
For domestic transports of goods, the obligation to report only consignments of goods with a high tax risk is maintained.
The obligation to declare data on the international carriage of goods in the RO e-Transport system is incumbent on the following users:
a) the consignee entered on the customs import declaration or the consignor entered on the customs export declaration, as the case may be, in the case of goods covered by import or export operations;
b) the beneficiary in Romania, in the case of intra-Community acquisitions of goods;
c) the supplier in Romania, in the case of intra-Community supplies of goods;
d) the warehouse keeper, in the case of goods which are the subject of intra-Community transactions in transit.
It introduces the obligation for the transport operator to ensure the transfer of the current vehicle positioning data, which are the subject of the declaration, throughout the transport journey of the goods being monitored by the RO e-Transport System. To this end, the transport operator is obliged to equip vehicles with telecommunication terminal devices using satellite positioning and data transmission technologies, on which are installed the computer modules provided by the National Centre for Financial Information.
An obligation is introduced for the driver of the vehicle to switch on the positioning device before the start of the transport and to switch it off only after delivery of the goods at the declared place of delivery.
Failure to declare international transports through the RO e-Transport System constitutes a contravention and is sanctioned by a fine from RON 20,000 to RON 100,000 in the case of legal entities.
Penalties for non-compliance with the new obligations apply from 1 July 2024.
Law 70/2015 on strengthening financial discipline on cash receipts and payments operations
The terms ‘supermagazin’ and ‘hipermagazin’ are defined.
It is increased the ceiling for advance payments for settlement from RON 1,000 to RON 5,000.
In cash & carry stores, supermarkets and hypermarkets, cash amounts at the end of each day may not exceed RON 500,000.
The provisions entered into force on 15 December 2023.
GEO 28/1999 on the obligation for economic operators to use electronic fiscal cash registers
Starting 1 October 2024, a fine of RON 8,000 to RON 10,000 will be imposed for failure by users of electronic fiscal cash registers to comply with the deadlines set by law to use electronic fiscal cash registers.
Accounting Law No 82/1991
A requirement is introduced for non-profit legal persons who, in the reporting year, have received grants, sponsorship, amounts redirected from corporate income tax, microenterprise income tax or personal income tax and other similar forms of financing, regardless of their cumulative amount, to draw up a statement accompanying the annual financial statements and disclose the amounts thus received or used.
The amount of penalties for certain offences under the Accounting Law are increased.
The Romanian version of this newsletter is available here.
