Tax Flash No. 15/2013

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Law 168/2013 regarding the approval of Ordinance 8/2013 amending and completing the Fiscal Code and establishing certain financial-fiscal measures was published in Official Gazette 310/2013

We hereby mention the main amendments and completions:

Fiscal Code

Corporate Income Tax

The Law bring the following main amendments with regard to the foreign legal entities with several permanent establishments in Romania:

  • starting 1 July 2013, foreign legal entities with multiple permanent establishments in Romania are required to designate a permanent establishment liable to comply with the relevant fiscal obligations. Hence, incomes and expenses of such permanent establishments are cumulated at the level of the designated permanent establishment. In this respect, the Law introduces specific provisions regarding the computation, declaration and payment of the relevant profits tax liability, as well as regarding the recovery of fiscal loss;
  • the computation, payment and declaration of the profits tax due for the period 1 January – 30 June 2013 should be performed at the level of each permanent establishment until 25 July 2013;
  • in case of non-resident legal entities with a sole permanent establishment in Romania, such permanent establishment represents the designated permanent establishment for complying with the relevant tax liabilities.

New provisiond were introduced for the taxpayers that apply the IFRS accounting regulations with respect to the fiscal value of assets utilised within activities of exploration and production of oil and gas and other minerals.

In case of certain special-destination vehicles (e.g. used for rendering services against consideration used by sales and purchase agents, etc. ), the 1,500 RON/month limitation of the fiscal depreciation expenses is not applicable.

The provisions regarding the limitation of the deductibility of the daily allowance expenses within the limit of 2.5 the level for public institutions were abolished.

Income Tax

Salary-assimilated incomes subject to taxation will also include the following:

  • allowances and any other similar amounts received by the employees of representative offices of foreign legal entities in Romania , during their delegation and secondment to another city, within the country and abroad over the limit of 2.5 times the level provided by the law for public institutions’ personnel;
  • allowances and any other similar amounts received by employees that have non-resident employers, during their delegation and secondment to Romania, over the limit of 2.5 times the level provided by the law of the employer’s country, from which the personnel of public institutions in Romania would benefit if they would travel to that country. The amounts granted within this limit shall not be subject to taxation.

Also, in case of allowances and other similar amounts received during delegation and secondment, the tax should be withheld upon each payment and it should be paid to the State Budget on a monthly or quarterly basis, as the case may be.

New provisions are introduced with respect to the taxation of incomes from agriculture activities.

Microenterprises Income Tax

A new condition was introduced in order to apply the system for taxation of micro-enterprises, namely the Romanian legal entity should not be under the procedure of dissolution with liquidation.

Also, as regards the conditions for the application of the system for taxation of micro-enterprises certain exception were introduced. Hence, a newly established company that upon the registration with the Trade Registry, has a subscribed share capital of at least EURO 25,000 (RON equivalent), can opt to pay corporate income tax. The option to pay corporate income tax is definitive provided that the company maintains this share capital level throughout its existence.

Withholding Tax

Clarifications are brought regarding the nature of incomes from services rendered outside Romania. Incomes from management services, consultancy, marketing, technical assistance, research and design in any field, advertising and publicity, as well as services rendered by lawyers, engineers, architects, public notaries, accountants and auditors are included in the category of incomes derived from Romania (with the exception of international transport services and ancillary services).

The 50% tax rate for certain types of incomes (dividends, interest, royalties, commissions, services) paid in a state which has not concluded a legal instrument for the exchange of information with Romania, is applicable only in case of transactions qualified as artificial.

VAT

The deadline within which the reverse-charge mechanism applies for supplies of cereals and technical plants has been prolonged until 31 May 2014.

Excises

Clarifications are brought regarding the total destruction or irretrievable loss of excise goods and the conditions for not beeing subject to excise duties.

The guarantees set up by the excise payers can not exceed a maximum amount provided in the methodological norms.

The value of the excise duty for beer established through Ordinance 8/2013 is applicable until 31 December 2015.

Social Contributions

The following income categories are subject to social security contributions:

  • allowances and any other amounts of the same nature received by employees during their delegation and secondment to another city, within the country and abroad over the limit of 2.5 times the level provided by the law for public institutions;
  • allowances and any other amounts of the same nature received by employees that have non-resident employers, during their delegation and secondment to Romania, over the limit of 2.5 times the level provided by the law of the employer’s country, from which the personnel of public institutions in Romania would benefit if they would travel to that country.

Fiscal Procedure Code

The Law brings a series of amendments and completions to the Fiscal Procedure Code regarding non-resident entities with one or more permanent establishments in Romania, as follows:

  • the designated permanent establishment is liable to declare the salary tax due by the other permanent establishments;
  • the tax authority where the designated permanent establishment is located shall administer the respective taxpayer;
  • permanent establishments defined by the Fiscal Code are secondary offices.

The amendments and completions to the Fiscal Procedure Code are applicable starting 1 July 2013.

Other  Provisions

Non-resident taxpayers with one or more Romanian permanent establishments registered for tax purposes in Romania as of 30 June 2013 should submit within the period 1-31 July 2013, a tax registration statement, together with a list of permanent establishments.

The tax registration code of the permanent establishments that do not qualify as salaries and assimilated income payers is annulled.

The tax liabilities of the permanent establishments recorded up to 30 June 2013 and not paid shall be taken over by the non-resident taxpayers through the designated permanent establishment as the new debtor.

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