Tax Flash No. 14/2012

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Decision 670/2012 amending and completing the Methodological Norms for the application of the Fiscal Code was published in Official Gazette 481/2012

We hereby mention the main amendments and completions:

CORPORATE INCOME TAX

  • Expenses with the write-off of receivables, according to the reorganisation plan approved and confirmed through a court decision, as provided under Law 85/2006 regarding the insolvency procedure, are expenses incurred with a view of deriving taxable revenues.
  • Clarifications are brought on the application of the 50% deductibility threshold for the expenses related to vehicles.
  • Clarifications are brought on the criteria and documents necessary to sustain the full deductibility of the expenses related to vehicles.

INCOME TAX

  • New examples of aids granted to individuals, considered non-taxable incomes, were included.
  • Similar clarifications to those provided under the “Corporate income tax” section regarding the application of the 50% deductibility threshold for expenses related to vehicles were introduced as regards the activities carried out by freelancers.
  • Clarifications regarding the tax treatment applicable to the incomes obtained further to the sale of movable goods as waste from the business assets by the taxpayers whose object of activity is the collection and recovery of waste were brought.

WITHHOLDING TAX

  • Starting 1 January 2013, non-residents that derive incomes from Romania and have custody accounts opened with custodians (as defined under the Romanian law) shall submit the original tax residency certificate to their custodians. An authenticated copy of the tax residency certificate and the authorised Romanian translation shall be sent by the custodian to each person that performed payments towards the non-resident income beneficiary in order to apply the provisions of the double tax treaties or of the European Union legislation.

VAT

  • Clarifications are brought on the expenses directly attributable to a vehicle owned or used by the taxable person, subject to the 50% limitation on the VAT deduction right if not exclusively used for business purposes.
  • Clarifications regarding the cases where the vehicles fall within the category of the vehicles used exclusively for business purposes are brought.
  • Provisions regarding the vehicles used by the purchasing agents are introduced.
  • The VAT registration by default is considered valid on the communication date of the decision issued by the competent tax authorities in this respect.

EXCISE DUTIES

  • The authorized consignors are required to transmit to the territorial customs authority which issued their authorization the list regarding the supplies of excisable products, according to the template included in the Decision, by the 15th of the month following the reporting month.
  • Other completions/amendments brought in the excise duty area refer to:
    • the amount of minimum share capital that must be set up by the persons who intend to authorise as warehouse keepers for production of certain excisable products;
    • the amount of minimum guarantee that must be set up by the warehouse keepers authorised for production of certain excisable products;
    • the distortion of ethylic alcohol (e.g. regarding the purity degree of used substances, distortion formulas).

LOCAL TAXES

  • The tenant that performs during a fiscal year works for reconstruction, consolidation, modernization, modification or extension of a building, whose individual value is lower than 25%, but exceeds in total 25% of the building’s value, is liable to communicate the total value to the landlord within 30 days from the date such level is reached.
  • The value of the construction works declared in the application for the issuance of the construction permit, based on which the related tax is computed, does not include VAT.

SOCIAL CONTRIBUTIONS

  • Form 112 “Declaration regarding the payment liabilities in respect of social contributions, income tax and nominal record of insured persons” should be submitted by the individuals who carry out their activity in Romania and derive salary incomes from employers resident in third countries, that did not conclude with Romania any agreements or conventions in the social security area.
  • Clarifications are brought on the computation base for the contribution to the Guarantee fund for the payment of salary debts.

The provisions of the Decision enter into force starting 13 July 2012, except for the amendments on withholding tax, effective as of 1 January 2013.

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