Humanitarian and assistance measures in the context of the military conflict on the territory of Ukraine

Alexandru Cristea
Alexandru Cristea

Summary:
1. Emergency Ordinance No. 20/2022 for amending and supplementing certain normative acts, as well as for regulating humanitarian and assistance measures

Emergency Ordinance No. 20/2022 for amending and supplementing certain normative acts, as well as for regulating humanitarian and assistance measures (“GEO 20/2022”) was published in the Official Gazette No. 231/2022.

1. Tax initiatives for donations/humanitarian expenses

1.1 Cash donations

Individuals and companies that, until 31 December 2022, donate money for humanitarian support and assistance to citizens from the armed conflict zone in Ukraine will benefit from certain tax facilities. More specifically, the corporate income taxpayers/microenterprise taxpayers performing cash donations through the account opened with the General Inspectorate for Emergency Situations will be able to deduct the respective amounts for the purpose of taxable base computation. Similarly, individuals who determine the annual net income in real system may also deduct such expenses.

1.2. Expenses with goods and services rendered

For the expenses with goods and services rendered to persons affected by the armed conflict in Ukraine, on the basis of the request of the Department for Emergency Situations, the following fiscal facilities shall apply.

For corporate income taxpayers, the following possibilities are granted:

– Limited deduction when computing the fiscal result; taxpayers incurring such expenses may add them up to the social expenses and deduct them within the limit of the 5% quota applied to the value of the personnel expenses.

– No deduction is granted when computing the fiscal result; taxpayers incurring such expenses may add them up to the sponsorship expenses, consider them non-deductible when computing the fiscal result and deduct their total value from the profit tax due, within the limits provided in art. 25 para. (4) point i) from the Fiscal Code (minimum between 0.75% of turnover and 20% of corporate income tax).

For microenterprise taxpayers, these expenses are added up to the sponsorship ones and their total value is deducted from the microenterprise tax due, within the limits provided in art. 56 para. (11) of the same Fiscal Code.

Also, in case of individuals who determine the annual net income in real system, the expenses with goods and/or services provided free of charge as humanitarian aid, intended for persons affected by the armed conflict in Ukraine, represent deductible expenses, provided they are included in the same deductibility limits as those provided for the sponsorship and social expenses, provided in art. 68 para. (5) points a) and c) of the Fiscal Code, as applicable.

From a VAT perspective, the goods/services provided free of charge as humanitarian aid by taxable persons are considered goods/services provided free of charge as part of the sponsorship actions, as provided by art. 270 para. (8) point c) and art. 271 para. (5) point a) of the Fiscal Code.

1.3. Expenses with aid granted to UNICEF and other international organisations

As of 11 March 2022, expenses with goods, financial means and services provided to the United Nations Children’s Fund – UNICEF and other international organisations operating under the special agreements to which Romania is part of are non-deductible expenses.

Taxpayers will add these expenses to the sponsorship and/or patronage/private scholarships expenses and will deduct the resulting amount from the profit tax due, at the level of the minimum value between 0.75% of the turnover and 20% of the profit tax due.

2, Other administrative facilities

Ukrainian citizens who have entered Romania legally and who do not apply for asylum in Romania may be employed without a notice of employment. These citizens are granted the extension of the right to stay in Romania for work activities, without the obligation to obtain a long-stay visa for employment.

The Ukrainian citizens who do not have documents proving the professional qualification or work experience necessary for employment can be hired in Romania for a period of 12 months with the possibility of extension with periods of 6 months, up to maximum one year, based on an affidavit stating that they meet the conditions of professional qualification and experience necessary to be employed on the respective job and do not have a criminal record that is incompatible with the activity they are currently carrying out or they will carry out in Romania. However, this exception does not apply to Ukrainian citizens coming from the armed conflict zone in Ukraine who wish to access or carry out in Romania, independently or as an employee, regulated professions such as that of doctor, dentist, pharmacist, architect, lawyer, taxi driver, expert accountant, and others.

Alexandru Cristea, Tax Partner ŢUCA ZBÂRCEA & ASOCIAȚII TAX

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