Tax Flash No. 24/2012

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Decision 1071/2012 amending and completing the Methodological Norms for the application of the Fiscal Code was published in Official Gazette 753/2012

We hereby mention the main amendments and completions:

Corporate Income Tax

  • The Decision brings clarifications regarding the recovery of the fiscal losses by the entities involved in reorganisation operations. The main clarifications refer to the order of recovering the fiscal losses, the method of recovering the fiscal losses incurred during the fiscal year in which the reorganisation operations occurred, as well as to the operations that should be performed by the transferor/recipient with the view to recover the fiscal losses transferred or maintained, upon the case.
  • The contractual interests, penalties or damages cancelled through conventions concluded between the contracting parties are considered taxable incomes, respectively deductible expenses, during the fiscal year in which the cancellation is performed, under certain conditions.
  • The technical provisions established by the legal persons administrators of private and/or voluntary pension funds as per the relevant legislation are mentioned as deductible for profits tax computation purposes, within the meaning of article 22 para (1) letter d) from the Fiscal Code.

VAT

The main changes regarding the application of the VAT cash deferment system:

  • The taxable persons not registered for VAT purposes as of incorporation date will not consider the transactions performed within the VAT exemption threshold (lei 220,000) for determining the turnover.
  • The taxable persons registering for VAT purposes between 1 October – 31 December 2012 will apply the VAT cash deferment system starting with the first day of the second reporting period of the year 2013, if the turnover obtained by the end of the year 2012 is below the threshold of lei 2,250,ooo. The application of the VAT cash deferment system will be notified to the competent tax authorities by 25 January 2013 inclusive.
  • The taxable persons whose VAT registration was cancelled by default by the tax authorities ( for example, fiscal inactivity) and re-register for VAT purposes, will apply the VAT cash deferment system depending on the turnover obtained in the year of re-registration or in the previous year, as the case may be. The turnover will be determined based only on transactions performed by the person holding a VAT registration code.
  • The adjustment of the taxable base in case of the cancellation, price reductions, refusals, bankruptcy of the beneficiary as regards the transactions subject to VAT cash deferment system shall be performed in connection with the tax paid until the time when these events occur.
  • The payment methods for the supplies of goods and / or services subject to the VAT cash deferment system (for example, clearing operations, assignment of receivables, usage of other payment instruments, payment in kind) necessary for determining the VAT chargeability are enumerated.
  • The VAT cash deferment system is also applicable to payments in cash performed by individuals. For the invoices issued to legal persons, individuals registered for VAT purposes, partnerships without legal personality, which are partially paid in cash, the VAT cash deferment system will apply for the part of the invoice which is not paid in cash.
  • When the value of the invoices issued within the VAT cash deferment system is partially cashed, and the invoices refer to transactions for which different VAT regimes / rates are applicable, the supplier will choose the transactions to which the payment is made in order to determine the output tax.
  • The VAT deduction right is postponed until the payment of the goods / services acquired from the persons applying the VAT cash deferment system also in the case when the supplier does not inscribe on the invoice the mention “VAT on cashing”.
  • Non-resident persons established in Romania through a fixed establishment or not established in Romania but registered for VAT purposes will deduct the VAT incurred on acquisitions from eligible persons for VAT cash deferment system upon the payment of those purchases.
  • Adjustments of the VAT deduction right related to the transactions subject to VAT cash deferment system shall be performed for the amount of the tax effectively deducted.
  • Taxable persons applying the VAT cash deferment system have the obligation to carry forward the invoices issued and the details regarding their payment in each sales ledger. This provision would similarly apply at the level of the beneficiaries.
  • The output and input tax deemed as non-chargeable for the transactions subject to the VAT cash deferment system would be booked through the account “4428 Non-chargeable VAT”. Examples for the VAT cash deferment system are included within the norms.

Changes regarding the adjustment of the VAT deduction:

  • The adjustment of the VAT related to the acquisitions of vehicles, where a change of the vehicles’ destination occurred after their acquisition, is provided.
  • The missing stocks, others than those lost / destroyed due to natural disasters, force majeure events, perishable goods, quality damaged goods, fall under the cases for which an adjustment of the VAT initially deducted is mandatory.
  • The norms regarding the adjustments of the deduction for the goods lost / destroyed due to natural disasters and force majeure events and of missing stocks including thefts are similarly provided for capital goods.

Changes regarding the invoicing

  • Non-resident taxable persons, having fixed establishments in Romania, have the obligation of inscribing on the invoice the address of the fixed establishment from Romania as well as the address of the business premises outside Romania.
  • Clarifications regarding electronic invoices, as well as the methods for accepting those invoices by the beneficiary are introduced. The invoices created on paper which are scanned and sent through electronic means are considered electronic invoices. The invoices created electronically but sent on paper are not considered electronic invoices.
  • Additional information regarding the procedure for ensuring the origin authenticity, the integrity of the content and the readability of the invoices are brought, irrespective whether the invoices are on paper or electronic. Specifically, for ensuring the authenticity of the electronic invoices the digital signature provided by Law 455/2001 was replaced with the advanced electronic signature according to Directive 1999/93/EC.
  • The taxable persons which are not able to identify the beneficiary may opt to issue simplified invoices or a centralised document containing the information provided by the norms.
  • Invoices may be issued upon option, including for non-taxable operations.
  • The obligation of notifying the tax authorities for the issuance of the invoices by the client on behalf of the supplier was cancelled. Also, the acceptance procedure of the invoices issued by the client on behalf of the supplier may be implicit.
  • Invoices may be stored on paper or electronically, regardless of the form in which they were received, through the conversion procedure.

Other changes:

  • Granting of goods as protocol is considered delivery of goods with consideration if the value of each present exceeds the threshold of RON 100. The obligation to charge VAT for services supplied without consideration as protocol would not occur if they are rendered for business purposes. Transitory provisions regarding the goods / services given within protocol activities in the year 2012 are introduced.
  • Taxable persons who are not established in Romania will request for reimbursement only the invoices paid in the fiscal period related to the respective VAT reimbursement request.
  • Taxable persons, who are not established in Romania but are registered for VAT purposes through fiscal representative, will maintain the VAT registration code allocated to the fiscal representative and will carry forward the VAT payable / refundable amount reported in the last VAT return submitted by the fiscal representative, in case they opt for the direct registration in Romania. These provisions are applicable in the opposite case as well.

The aforementioned provisions enter into force as of 1 January 2013.

Excise Duties

  • The authorised warehouse-keepers whose authorisations have been revoked due to non-compliance with the amendments brought to the authorisation/functioning conditions of the fiscal warehouse may be re-authorised before the expiry of the 6 months term.
  • The Decision brings amendments regarding the conditions in which the warranty submitted by the authorized warehouse-keeper to the relevant authorities may be reduced (e.g., the 75% warranty reduction may be granted if the authorized warehouse-keeper has not incurred any outstanding fiscal obligations within the last 3 consecutive years – previously it was mentioned a term of 5 years).

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Unless otherwise provided, the above mentioned provisions enter into force starting the date the Decision was published.

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