Monitorul Oficial al Romaniei No 136 / 14 March 2013 has published Government Resolution No 84 / 2013 which amends and supplements the Methodological Norms for the application of Law No 571 / 2003, regarding the Tax Code.

The major amendments refer to value added tax, profit tax, income tax and tax on the income obtained from Romania by non-residents, as well as to excise tax and social security contributions.

The following aspects are approached inter alia:

Title II – Profit Tax

• The income and expenses resulting from the appraisal of bonds shall also be taken into account when the taxable profit is determined.
• New provisions have been introduced in relation to the taxation records.
• The Resolution gives examples so as to clarify the tax rules applicable to the determination of taxable profit by the taxpayers that apply accounting regulations in compliance with the International Financial Reporting Standards.
• The expenses incurred for the depreciation of bonds shall become deductible when the taxable profit is determined.
• When taxable profit is calculated, business entertainment expenses shall also include the expenses related to the VAT collected for the offered gifts the value of which is equal to or higher than RON 100.
• The manner in which tax loss may be recovered by taxpayers that apply the microenterprises income tax system starting 1 February 2003 is clarified.
• The Resolution clarifies matters related to the establishment of assigning or assigned taxpayers that are involved in operations such as merger, division, separation / transfer of assets and apply the annual profit tax system by making payments in advance, i.e. quarterly.

Title III – Income Tax

• Falling under the category of salary or salary-related income shall also be:

–       the remuneration paid to the appointed or elected coordinating lawyer who carries on his/her activity within a professional civil society organisation or a professional limited liability company; and

–       that part of the daily allowance received by employees during business travels or secondments, which exceeds 2.5 times the legal level set for the personnel of public institutions.

• New provisions refer to the taxation in Romania of the income obtained from salaries paid by or on behalf of an employer residing in Romania or having its registered place of business in Romania for dependent activities performed in a foreign state.
• The Resolution clarifies the manner in which tax returns should be prepared in respect to the calculation and withholding of tax for every income beneficiary, i.e. employee posted to another entity.
• New provisions are introduced with reference to the obligation of salary income payers to fill in tax returns insofar as tax calculation and withholding for every income beneficiary is concerned.
• The Resolution clarifies how the tax base should be determined in the case of lease paid in kind.
• New provisions refer to the taxation of income obtained from agricultural activities, covering:

–       groups of plant and animal products in relation to which income is determined on the basis of income standards;

–       categories of taxpayers that have no obligation to declare and pay tax on income obtained from land, forest and fish farming;

–       determination of the annual income deriving from agricultural activities on the basis of income standards;

–       calculation and payment of the tax on the income obtained from agricultural activities.

• New examples are given in respect to the income obtained from other sources.
• The Resolution also clarifies matters related to the amounts representing tax payments made in advance, for the income deriving from agricultural activities included.
• New categories of income are introduced (i.e. income from forest and fish farming), for which taxpayers shall submit declarations regarding their realised income.
• The Resolution enumerates the obligations of the member representing an association that obtains income from agricultural activities on which tax is levied on the basis of income standards.
• The method is established for the determination of the income achieved by a subsidiary formed of the association of a professional limited liability company with one or more natural entities.
• The Resolution clarifies the manner in which the tax return should be prepared in respect to the income obtained from abroad and what supporting documents should be provided for the adjustment in Romania of the tax on salary income owed by taxpayers.

Title IV¹ – Microenterprises Income Tax

• New provisions are introduced with regard to the application of microenterprises income tax system by newly established legal entities.
• Amendments are made in respect to the Romanian legal entities that have no obligation to apply the microenterprises income tax system.
• The Resolution establishes the regime applicable to the Romanian legal entities that have requested, until 31 January 2013, to no longer apply the microenterprises income tax system.
• The procedure has been set for the notification of tax authorities by microenterprises achieving income worth more than EUR 65,000.

Title V – Tax on Income Obtained by Non-residents from
Romania and Tax on Foreign Companies’ Representative Offices in Romania

• The Resolution provides for new categories of income deemed to be achieved from Romania for services rendered outside Romania.
• The Resolution clarifies how the 50% rate should be applied to the income paid in a State with which Romania has not concluded any legal document by virtue of which information may be exchanged.
• New provisions refer to the method for the taxation of income in the form of interest on sight deposits / current accounts, time deposits, deposit certificates and other saving instruments with banks as well as with other authorised credit institutions located in Romania.
• New provisions are introduced with regard to the tax residence certificate which is issued in an electronic format or on line.

Title VI – Value Added Tax

• The provisions referring to the procedure for the implementation of the VAT group are amended.
• The treatment of low value goods freely granted during business entertainment events is clarified.
• The treatment of services provided in relation to immovable assets is also clarified.
• New provisions are introduced with regard to the entities issuing invoices or receiving down payments before such entities are deregistered from the records comprising the entities registered for VAT purposes, in respect to which the chargeable event has occurred after being deregistered.
• The Resolution contains new provisions regarding the situations in which the events specified by Art.130 occur after the taxable entity has been deregistered from the VAT records.
• A new example is given for the case in which VAT exemption is not applied to services the main purpose of which does not refer to medical care.
• The Resolution includes a new example of application of VAT exemption in the case of educational-related services.
• The Judgement of the European Court of Justice on C-257 / 11 Gran Via Moineşti has been transposed to the Methodological Norms for the Application of the Tax Code.  The ECJ Judgement refers to the right of tax deduction when a taxable entity wishes to demolish an immovable asset purchased with a view to performing other construction works on the appurtenant land, which represent taxable operations.
• New provisions refer to tax deduction in the case of entities that have applied VAT upon collection of payments or have acquired goods / services from entities that have applied such VAT system but are deregistered from the VAT records.
• The Resolution contains new provisions regarding VAT deduction on the basis of cash register receipts.
• The provisions referring to the additional information requested for VAT refund are amended.
•  The Resolution contains clarifications on the adjustment of the tax deducted in the cases in which tangible movable assets that are the subject of finance lease are not returned by lessee.
• Tax adjustment following the occurrence of changes to the elements used for the calculation of deducted tax is further clarified.
• The Resolution clarifies how the VAT applied upon collection of payments, contained in invoices for which the time limit has expired, should be recorded in the Sales Ledger.
• The cases in which the reverse charge mechanism shall not apply are further clarified.

Title VII – Excise Tax and Other Special Taxes

• The procedure for the acquisition of excisable goods in the European Community is amended.
• New provisions refer to the excise tax paid for coffee sorts withdrawn from the market in order to be destroyed, and to the procedure which should be followed in this case.
• The Resolution contains clarifications on the products to which the provisions regarding end-use authorisation shall not apply.
• New provisions are introduced with regard to the economic operators acquiring products which are not deemed heating fuel.
• The conditions which should be met by economic agents to obtain the end-use authorisation are amended.
• The entities releasing fermented beverages (other than beer and wine) for consumption shall have new obligations to fulfil.
• Appendices 35, 47, 48.1 – 48.5, 49, 52.1, 52.2, 53.1, 53.2 and 55¹ to the Methodological Norms for the application of Title VII of the Tax Code are amended.

Title IX² – Social Security Contributions

• The Resolution contains new provisions regarding the monthly calculation base of the social health insurance contribution.
• New provisions are introduced with regard to the monthly calculation base of the social security contribution.

Other Provisions

• Taxpayers obtaining income from forest and fish farming, which is subject to effective taxation as of 1 February 2013, shall submit tax returns related to the estimate income / income standard in 2013 within 15 days of the date of publication (i.e. 14 March 2013) of Government Resolution No 84 / 2013 in Monitorul Oficial.

The Resolution comes into force on the date of its publication in Monitorul Oficial (i.e. 14 March 2013).

TAX ALERT by Mazars Consulting / MAZARS ROMANIA

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