Tax Flash no.7/2020 – The amendment of the Fiscal Code

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Emergency Ordinance no. 69/2020 for the amendment and completion of Law no. 227/2015 regarding the Fiscal Code as well as for the establishment of certain fiscal facilities was published in  the Official Gazette 393/2020

FISCAL CODE

Income tax and social security contributions

  • Starting with 2021, bonuses of up to 10% of the annual income tax, and up to 10% of the social insurance contribution can be granted. The level of bonuses, payment terms and granting conditions are established by order of the Minister of Public Finance.
  • Individuals can benefit from the following bonuses for submitting the Single statement on income tax and social security contributions and by paying these obligations by 30 June 2020, including:

a) for the payment of income tax, social insurance contribution and social health insurance contribution, representing annual tax obligations for 2019, a bonus of 5% of these amounts is granted, if all these tax payment obligations are extinguished by payment or compensation, in full until June 30, 2020 inclusive;

b) for the submission of the single statement regarding the income tax and social security contributions due by individuals by electronic means of remote transmission, a bonus of 5% of the income tax, social insurance contribution and social health insurance contribution is granted.

  • Taxpayers who have submitted the Single statement on income tax and social security contributions due by individuals for income derived in 2019, regardless of the method of submission, without receiving the bonuses can still benefit from them by submitting a rectifying statement by June 30 2020. The same provision applies for the payment of tax obligations due for 2019 until the date of entry into force of the Emergency Ordinance.
  • Amounts granted during the emergency period and paid until June 30, 2020 representing incentives/bonuses granted by the employer from the salary fund during the emergency period to prevent the spread of the COVID-19 epidemic, to individuals deriving income from salaries based on the individual employment contract, as a result of carrying out activities that involve direct contact with citizens and are subject to the risk of infection with SARS-CoV-2, are not included in the monthly basis for calculating the social security contribution, the health contribution, the work insurance contribution respectively. The beneficiaries are established through an employer’s decision, this document being considered a supporting document.
  • The 25 May 2020 deadline for the submission of the Single statement on income tax and social security contributions is extended until 30 June 2020.

VAT

  • The fiscal risk analysis is performed after the registration for VAT purposes.

Local taxes

  • Owners who own non-residential buildings put into use for carrying out economic activities to other individuals/ legal persons, during the period when the state of emergency was established may benefit from the reduction of the annual tax on buildings with a share between 15-25% as a result of decisions of local councils adopted by 14 August 2020, if they cumulatively meet the following conditions:

a) have waived at least 50% of the right to collect the equivalent value of the rent, royalty or other form of use of the building, established according to the contractual provisions, for the period for which the state of emergency was established;

b) at least 50% of the total areas owned and allocated to economic activities were not used, due to the fact that the holders of the right to use the respective buildings were obliged, by the law, to completely interrupt their economic activity.

In order to benefit from the exemption, the owners can submit to the local tax body in whose territorial area of competence the building is located, an application requesting the reduction, accompanied by a declaration on their own responsibility until September 15, 2020, inclusive.

The cancellation of certain fiscal obligations

  • The following 4 types of tax facilities are introduced for taxpayers (individuals or legal persons, regardless of the form of ownership, associations and other entities without legal personality, individuals who carry out economic activities independently or exercise liberal professions, administrative-territorial units or administrative-territorial subdivisions of the municipality of Bucharest or public institutions) that by March 31, 2020 register outstanding budgetary obligations, as defined by the Emergency Ordinance:

1) The cancellation of interest, penalties and all  late payment charges  related to the main budgetary obligations, outstanding on 31 March 2020 inclusive

  • Debtors may benefit from the cancellation of late payment charges related to outstanding main budgetary obligations on 31 March 2020 if they meet the following conditions:
  • extinguish by any means provided by the law all main outstanding budgetary obligations on 31 March 2020 inclusive by the date of submission of the application for cancellation of the late payment charges  inclusive;
  • extinguish by any means provided by law all main budgetary and ancillary obligations administered by the central fiscal body with payment deadlines between 1 April 2020 and the date of submission of the application for cancellation of  late payment charges inclusive by the date of submission of the application for cancellation of the late payment charges  inclusive;
  • submit all tax returns, according to the tax vector by the date of submission of the application  for cancellation of the  late payment charges inclusive;
  • submit the application for cancellation of the late payment charges by December 15 inclusive.

2) The cancellation of the late payment charges related to the budgetary obligations additionally declared by the debtors through rectifying statements

  • Debtors may benefit from the cancellation of late payment charges related to budgetary obligations with maturities prior to March 31, 2020, inclusive, additionally declared through rectifying statement if they meet the following conditions:
  • submit the rectifying statement from 1 April 2020 until the date of submission of the application for cancellation of the late payment charges inclusive;
  • extinguish by any means provided by law all the main budgetary obligations provided within the rectifying statement until the date of submission of the application for cancellation of the late payment charges  inclusive;
  • extinguish by any means provided by law all main budgetary and ancillary obligations administered by the central fiscal body with payment deadlines between 1 April 2020 and the date of submission of the application for cancellation of late payment charges inclusive by the date of submission of the application for cancellation of the late payment charges inclusive;
  • submit all tax returns, according to the tax vector by the date of submission of the application for cancellation of the late payment charges inclusive;
  • submit the application for cancellation of the late payment charges by December 15 inclusive.

3) The cancellation of the late payment charges related to the main budgetary obligations with maturities prior to 31 March 2020 and extinguished by this date

  • Interest, penalties and any late payment charges related to the main budgetary obligations with a maturity prior to 31 March 2020 inclusive, shall be canceled if they cumulatively meet the following conditions:
  • extinguish by any means provided by law all main budgetary and ancillary obligations administered by the central fiscal body with payment deadlines between 1 April 2020 and the date of submission of the application for cancellation of late payment charges s inclusive by the date of submission of the application for cancellation of the late payment charges inclusive;
  • submit all tax returns, according to the tax vector by the date of submission of the application for cancellation of the late payment charges inclusive;
  • submit the application for cancellation of the late payment charges by December 15 inclusive.

4) The cancellation of the late payment charges  related to the main budgetary obligations with maturities prior to March 31, 2020 individualized in taxation decisions

  • Taxpayers that on the date of entry into force of the ordinance, have an ongoing tax inspection or verification of their personal tax situation may benefit from the cancellation of late payment charges related to the obligations additionally established by the control body if they pay these obligations by the payment deadline set in the tax decision and if they submit the application for cancellation of the late payment charges within 90 days from the date of communication of the decision, regardless of whether this control has been completed by or after 15 December 2020.

Law no. 54/2020 approving Emergency Ordinance no. 33/2020 regarding certain fiscal measures and the amendment of certain normative acts was published in  the Official Gazette 396/2020

  • Corporate income taxpayers, regardless of the reporting and payment system, and micro-enterprises income taxpayers that pay the tax due by the due dates, July 25, 2020 inclusive, for the second quarter, and October 25, 2020 inclusive, for the third quarter, benefit from a 10% bonus calculated on the due tax.

The Romanian version of this newsletter is available here.

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