Tax Flash No. 3/2012

Government Ordinance 2/2012 amending and completing the Fiscal Procedure Code was published in Official Gazette 71/2012

We hereby mention the main amendments and completions:

The procedure for the avoidance of double taxation for the transactions carried out between Romanian related persons was introduced. Thus, the adjustment of the income or expense of one of the related persons performed by the competent tax authority for administrating the fiscal debts due by that person is binding on the tax authority for administrating the fiscal debts due by the other related person.
For the purpose of establishing the scope and economic content of certain transactions, in accordance with the provisions of art. 11 para. (1) of the Fiscal Code, taxpayers should submit upon the competent tax authority’s request the file of the transactions concluded with persons located in countries for which no legal instrument for exchange of information is available. The content of such file will be provided within a separate Order.
Within the process of analysing the documentation related to the project of advanced tax ruling or advance pricing agreement, the competent tax authority can visit the taxpayer’s fiscal domicile (according to the procedure that will be provided within a separate Order). Also, certain provisions on the conditions for the presentation of the taxpayers’ point of view on the project of advanced tax ruling or advance pricing agreement were introduced, as well as on the assessment of the future transactions in case of the advance pricing agreement.
Income payers may request to the tax authorities the issuance of fiscal identification codes also for nonresident legal entities that obtain incomes taxed at source.
Directive 2011/16/EU on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC was transposed into the domestic legislation and will be generally applicable starting 1 January 2013.
Provisions regarding the procedure for changing the fiscal domicile, in case it differs from the domicile or registered head office, were introduced.
A procedure regarding the taxpayers’ access to the information concerning the status of the fiscal debts will be introduced.
The person holding shares in a company may also request a fiscal certificate for the respective company.
Clarifications regarding the submission deadline for the 2011 annual corporate income tax return were brought. Such return should be submitted by taxpayers no later than 25 March 2012 (except for non-profit organisations and taxpayers that obtain incomes mostly from the growth of cereals and technical plants, pomiculture and viticulture, for whom the submission deadline is 25 February 2012).

Order 74/2012 regulating certain aspects regarding the tax residency in Romania of individuals was published in Official Gazette 73/2012

The Order provides for the criteria/elements for determining the tax residency of persons, as well as other relevant aspects, detailed below:

If an individual is resident both in Romania and in a state with which Romania concluded a treaty for the avoidance of double taxation:
- the criteria for determining the tax residency are similar to those mentioned by the commentaries to art. 4 “Resident” from the Model Tax Convention for the avoidance of double taxation of the Organisation for Economic Co-operation and Development (the applicability of such commentaries is expressly mentioned by the Order);
In case of a non-resident individual who arrives in Romania:
- the non-resident individual should register with the competent tax authority the “Set of questions for determining the tax residency of the individual on the arrival in Romania” (as well as other relevant documents), within 30 days from the expiration of the period of 183 days of presence in Romania;
- further to the analysis carried out (based on the specific situation of the individual, the provisions of the treaty for the avoidance of double taxation and of the Fiscal Code, as well as on the documents mentioned above), the competent tax authority notifies the respective individual whether he/she has full tax liability in Romania or owes income tax only for the incomes derived from Romania. The notification should be issued within 30 days from the submission of the form mentioned above;
- the form mentioned above should also be filled in by the persons who arrived in Romania after 1 January 2009 and are still present in Romania after 1 January 2012. The non-resident individuals falling into this category should make proof of the payment of the income tax for the incomes obtained from any source, subject to income tax in Romania;
In case of a resident/non-resident individual who leaves Romania:
- the individuals, who will spend outside Romania more than 183 days during a year, are liable to register with the competent tax authority the “Set of questions for determining the tax residency of the individual when leaving Romania”. The form should be submitted within 30 days prior to leaving Romania in case the respective individuals did not bring information regarding the change of the domicile/permanent home;
- similarly to the case of non-resident persons arriving in Romania, the competent tax authority analyses the circumstances of the respective individual and notifies him/her whether he/she is still fully tax liable in Romania or his/her tax records should be updated. The notification should be issued within 15 days from the submission of the form mentioned above;
- also, specific provisions regarding the tax treatment applicable to individuals leaving Romania, depending on their tax residency and/or domicile were introduced.