The Law regarding the tax on specific activities (such as: activities performed in the area of hotels, restaurants or bars) also known as the “HoReCa” Law, after being sent back for re-examination and subject of several amendments, was adopted in the final form by the Chamber of Deputies on September 20, 2016, being applicable as of January 1, 2017.
The HoReCa law, by exception from the Title II of the Fiscal Code regarding corporate income tax, establish a new type of a tax on specific activities. The derogation is applicable for Romanian legal entities performing their activities under specific CAEN1 codes, generally referring to those having its primary or secondary activity in the area of hotels, restaurants, or bars.
The taxpayers that fall under the payment obligation of the tax on specific activities are legal entities that fulfil the following two conditions as at the 31st of December of the previous year:
– The primary or secondary activity of the legal entity according to the specific CAEN codes is stipulated in the act of incorporation;
– Is not under liquidation, according to the law.
However, the following additional obligations must be fulfilled at the level of the corporate income tax payers:
– Keeping the evidence of the fiscal depreciation;
– Declare, withheld and pay the dividend tax;
– Keeping the fiscal evidence registry.
The computation of the tax on specific activities in performed based on a formula established in the appendix of the law, varying based on the following: the type of activity, the useful surface used for performing the activity, the rank of the place, the number of accommodation number for hotels, etc.
Please note that the annual standardized level of the tax on specific activities used in the calculation may be amended by the Ministry of Economics, Commerce and Relations with the Business Environment.
At the level of European Union, in general, application of progressive rates of tax was seen by European Commission as a potential state aid as it gives to small companies a selective advantage over their competitors. The European Commission analyzed the specific situation from Hungary and Poland as it is mentioned the press release available here.
It remains to see whether the application of HoReCa Law may get the attention of European Commission in light of the previous case laws.
Partner DELOITTE ROMÂNIA
Director DELOITTE ROMÂNIA