Tax Flash No. 5/2018

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Government Decision no. 354/2018 amending and completing the methodological norms for the application of Law no. 227/2015 regarding the Fiscal Code, approved by Decision no. 1/2016 was published in the Official Gazette 442/2018

CORPORATE INCOME TAX

  • If the amounts representing the reduction or cancellation of specific provisions/impairment adjustments or, as the case may be, the expected loss amounts and the sale price of the assignment are not reflected, from an accounting perspective, as income and the value of the receivables disposed as expenses, they will be treated as elements similar to income and expenses.
  • Examples are brought regarding the way to determine the deductible level of exceeding borrowing costs and clarifications are brought as follows:
    • the rate communicated by the National Bank of Romania for the last day of each quarter for which the profit tax is calculated, respectively for the last day of the year, shall be used to determine the deductible ceiling representing the RON equivalent of EUR 200,000;
    • for taxpayers with a fiscal year different from the calendar year, the deductibility of interest expense and other interest-equivalent costs will follow the rules applicable for each year (in order to determine the deductible level for interest recorded until 31 December 2017 they will follow the rules in force in 2017);
    • for assets produced or acquired after January 1, 2018, the tax value does not include interest cost and other interest-equivalent costs.

MICROENTERPRISES INCOME TAX 

  • Companies that applied the specific tax (regulated through Law 170/2016) and derive revenue up to the EUR 1,000,000 ceiling are subject to microenterprise income tax.
  • When determining the number of employees, individual labor contracts/individual labor agreements concluded according to special laws, as well as those that are suspended should also be taken into account.

INCOME TAX

  • The granting of the income tax exemption to individuals performing computer programming activities does not require the consent of any institution.
  • It is specified that the income tax exemption for persons performing research and development activities applies only to the persons included in the research-development and innovation project.
  • In view of applying the income tax exemption for seasonal workers, the seasonal nature of an activity requires a period that is repeated from year to year, in which certain activities are required to be carried out over a relatively fixed duration depending on season, and the exemption also applies in the situation of carrying out the activity on the basis of a part-time work contract.
  • The norm details the conditions in which individuals can opt to distribute the 2% from income tax to support non-profit entities and the cult units and respectively to grant private scholarships as well as the conditions under which individual taxpayers may choose to distribute the 3.5% from income tax to non-profit entities and cult units that are providers of social services accredited under the law.
  • Non-resident individuals who derive income from the transfer of securities (other than via an intermediary) and legal persons who derive profits from the sale/transfer of securities of companies in Romania must submit the certificate of tax residence to the company whose securities are sold, and must also enclose a legalized copy of the tax return.

SOCIAL SECURITY CONTRIBUTIONS

  • Examples are brought on how revenue is to be framed in the case of self-employed individuals and intellectual property rights, in the ceiling of 12 gross national salaries, for establishing the obligation to pay the social security contribution and health contribution for 2018.
  • The basis for calculating the insurance contribution for work includes the allowances of the board of directors, the higher council, the executive committee, the discipline commission, and other similar committees.

VAT

  • Clarifications regarding the VAT treatment of research and development operations are brought, as follows:
    • taxable persons carrying out research and development activities for the benefit of their economic activity are entitled to deduct the VAT incurred upon the acquisitions made for this specific purpose, under the normal conditions;
    • the research and development activities whose results are transferred to another person fall within the VAT scope only if they are performed by taxable persons acting as such, for consideration.
  • It is clarified that organizations collectively managing copyright and related rights qualify as taxable persons for the copyright management fee retained from the collected amounts. Compensatory fees collected for the private copy are not subject to VAT.

EXCISES

  • The procedure for the refund of the excise duty on heated tobacco products, manufactured in warehouses in Romania and for which the excise duty was paid, which are subsequently delivered intra-Community or exported is provided.
  • The forms to be used for the intra-Community movement of products subject to non-harmonized excise duty already released for consumption are introduced.
  • The right to benefit from excise duty exemption for the legal entities under the Ministry of National Defense is clarified, when purchases are made for or in the name of NATO forces.

LOCAL TAXES

  • The documents necessary for granting the tax exemption for buildings classified as historical monuments, architectural or archaeological monuments are detailed.

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