Legal & Tax Updates

Tax Flash No. 10/2013

Decision 84/2013 amending and completing the Methodological Norms for the application of the Fiscal Code was published in Official Gazette 136/2013

We hereby refer to the main amendments and completions:

CORPORATE INCOME TAX

• When determining taxable profits, revenues and expenses resulting from the valuation of bonds performed according to the applicable accounting rules are taken into account. The fiscal value of the bonds will include such valuations.
• Expenses resulting from the depreciation of bonds recorded as per the accounting regulations are included in the category of expenses incurred in view of obtaining taxable revenues.
• For the purposes of the application of the provisions regarding the recovery of tax losses further to the spin off operations, the part of patrimony transferred as a whole is defined and clarifications are brought for determining the independent nature of an economic activity/ branch of activity.
• There are new provisions regarding the taxpayers under reorganization procedures, applying the annual corporate income tax system with advanced quarterly tax payments.
• Clarifications have been brought regarding the fiscal regime applicable to the amounts derived from the inflation rate update of depreciable fixed assets and land by taxpayers applying the IFRS accounting rules.
• Provisions have been introduced regarding the recovery of fiscal losses by taxpayers applying the microentreprises income tax system as of February 1st, 2013.
• When computing the taxable profit, the expenses recorded regarding the value added tax collected by taxpayer for granted gifts valued to 100 lei or higher, are taken into account as protocol expenses.
• Additions have been brought regarding the information presented in the fiscal register.

INCOME TAX

• The amounts received by employees during their delegation and secondment to another city, within the country and abroad, exceeding 2.5 times the level provided by the law for public institutions, are considered salary income for the rights related to the period starting February 1st, 2013.
• Provisions were introduced regarding the taxation of salary income in relation to dependent activities carried out abroad and paid by or on behalf of a Romanian employer or an employer having a permanent establishment in Romania.
• The obligation to fill in the returns regarding the computation and withholding of tax for each income beneficiary exists as well in relation to salary income paid to employees for the activity carried out abroad, regardless of whether the tax on such income was withheld.
• The union membership fee paid directly by the employee, member of the union, is deductible, within the limits set by law, from the income derived during the month when the fee was paid, based on the justifying documents issued by the union organisation.
• The income obtained by individuals from the exploitation, up to 20 m3 per year, of the wood mass from own forest, under the conditions set forth by law, is not subject to taxation being deemed movable asset, part of the personal patrimony.
• There are new clarifications/provisions regarding:
  • taxation of salary income, salary differences, related interest granted and the inflation rate update, where such are set based on final and irrevocable court decisions;
  • taxable base in case of in-kind lease payments;
  • investment income in respect of inherited social parts and securities acquired through reorganization transactions;
  • associations without legal personality.
• Income derived as a result of the assignment of receivables, other than that falling under the income categories specifically mentioned by the Fiscal Code, is considered income from other sources.
• Provisions regarding the fiscal treatment of income from agricultural activities, forestry and fisheries as well as certain non-taxable income from this category of income have been introduced.
• Taxpayers who derive income from forestry and fisheries, taxable on their real profits starting February 1st, 2013, are required to submit the statement regarding the estimated revenue / income norm for 2013 within 15 days from the publication date of these Methodological Norms.

MICROENTREPRISES INCOME TAX

• The threshold of EUR 65.000 will be determined based on the income derived by taxpayers as of the date when they applied the microenterprises income tax system, respectively January 1st, 2013 or February 1st, 2013.
• Provisions regarding the application/non-application of the microenterprises tax income system are introduced for:
  • Romanian legal persons which were temporarily inactive and those newly incorporated in January 2013;
  • Romanian legal persons which recorded income ranging from EUR 65.000 to EUR 100.000 as of December 31st, 2012 and met the legal provisions for the microenterprise income tax system until February 1st, 2013.

WITHHOLDING TAX

• Title V “Taxation of incomes derived from Romania by non-residents” lists the services supplied outside Romania which are considered as generating income derived from Romania (e.g. management services, consultancy in any field, marketing, technical assistance, research, design, advertising and publicity), subject to tax in Romania.
• In relation to income subject to 50% tax rate (e.g. dividends, interests, royalties, commissions) if paid in a state that did not conclude a legal instrument for the exchange of information with Romania, it is clarified that the tax residency of the income beneficiaries in a state that concluded a treaty for the avoidance of double taxation with Romania is not relevant.
• Provisions for applying the 50% tax rate in case of income from interests, deposits, certificates of deposit and other savings instruments, paid in a state that did not conclude a legal instrument for the exchange of information with Romania, are introduced.
• The tax residency certificate issued electronically or online by the competent foreign authority does stand for original tax residency certificate.
• In the informative statement regarding the tax withheld and remmited in relation to the income subject to withholding tax, for non resident income beneficiaries, the non-resident’s tax identification code shall be filled-in, if such a code has been issued to the non-resident or if not, the non-resident’s identification details, shall be evidenced.

VAT

• The taxable person who no longer meets the conditions for being a member of a VAT group may opt to exit such group before the expiry of the 2-year period.
• The installation/assembly services related to machinery or equipment which cannot be detached without being altered represent services linked with immovable goods.
• The taxable persons that turn to the special exemption regime shall cancel the output VAT in the invoices issued if, following their anulement as VAT payers:
  • the operations for which advance invoices were issued for the partial value take place;
  • reductions of the taxable base occur.
• The beneficiaries will have to adjust the VAT deduction right accordingly while the supplier may seek the refund of such VAT via filing a special VAT return.
• The market value of operations effected between affiliated persons shall be established through the transfer pricing file.
• A VAT exemption is applicable upon the re-importation in Romania of goods previously dispatched from Romania or from another Member State for works within the outward processing regime.
• Taxable persons whose VAT deduction right was postponed until effective collection of payment and who are deregistered as VAT payers may subsequently deduct unpaid VAT, upon payment date, through:
  • special VAT return provided the goods were not in stock upon the anulement of the VAT code, by the taxable persons who request the application of the special exemption regime;
  • the first VAT return/a subsequent VAT return filed after re-registration for VAT purposes, by the taxable persons deregistered by default.
• Taxable persons acquiring land and buildings that are demolished maintain their VAT deduction right provided they can prove they intend to continue using the land for taxable operations. The demolition of the buildings shall not generate a VAT adjustment obligation. Such provisions are aligned with the ECJ decision in case C-257/11 Gran Via Moinesti.
• VAT shall be deducted from fiscal receipts qualifying as simplified invoices up to 100 EUR (including VAT) if the supplier specified the VAT code of the beneficiary on the fiscal receipts using the cash register machine.
• No VAT adjustment shall be made for movable tangible goods and capital goods which are not recovered if leasing companies prove they initiated recovery measures for these goods, regardless of whether such are ever recovered.
• The anulement of the VAT registration of Romanian taxable persons ceasing their economic activity is valid from the date the activity is ceased.
• The invoices for which the VAT deduction is postponed until payment shall no longer be reflected in the purchases ledgers if the prescription term is met and such invoices were not paid, being written-off from the records.
• The beneficiaries liable to pay VAT through a fiscal administrative act issued pursuant to the tax audit as result of not applying the reverse-charge mechanism for operations subject to the simplification measures shall not reflect in the VAT return the correction invoices issued by the suppliers in view of refunding the VAT to the beneficiary.

EXCISES

• Clarifications are brought regarding the destruction of coffee withdrawn from the market:
  • excises shall be reimbursed at the request of the economic operator that paid excise duties;
  • withdrawals from the market shall be notified to the customs authorities;
  • the destruction shall be carried out under customs supervision and shall be recorded in a protocol.
• Clarifications are brought in relation to beer mixed with certain non-alcoholic beverages and various fermented beverages, other than beer and wine, respectively the procedures to be applied in the case of intra-community acquisition, withdrawal from the market, intra-community supply and export are detailed.
• The provisions for obtaining the end-user authorization do not apply to additives which are not destined to be used, put on sale or effectively used as fuel. The acquisition of such products shall be notified to the customs authorities and a copy of the notification shall be sent to the supplier.
• For the purposes of applying the exceptions to the excise regime based on the end-user authorisation, such authorisation will be issued only if the applicant does not register outstanding fiscal obligations. In case such fiscal obligations exist, the end-user authorization can be revoked.
• Summary statements regarding the acquisitions and deliveries of excisable products shall be submitted online by operators holding end-user authorisations and by registered consignees. Also, distributors of aviation fuel will submit online the journals regarding the acquisitions /supplies.

SOCIAL CONTRIBUTIONS

• The consolidation of the taxable base for the healthcare contribution to the minimum threshold required by law, for certain individuals obtaining taxable income from independent activities, is performed by the tax authorities.
• The assessment regarding reaching of the maximum threshold provided by law for social security contribution is made by income payers for certain taxable incomes, subject to withholding tax, in accordance with article 52 of the Fiscal Code.