News / Publications

• Legal updates
• Latest News
• In The Press
• Press center

OFFICIAL GAZETTE 891/30.12 – Emergency Ordinance no. 117/2010 issued on 23/12/2010 amending and supplementing Law no. 571/2003 regarding the Fiscal Code and the regulation of some of the fiscal measures

• Changes to the Fiscal Code

The Income Tax

The period for which there are maintained the provisions regarding limiting the deductibility of expenses on fuel and VAT on fuel and car purchases, was extended to December 31^st, 2011.

The Income from Independent Activities

• In the case pf the SEP (self employed persons) performing two or more activities that generate commercial revenue for which they have the possibility to choose to pay the income as income tax bracket, the net income will be determined by adding the standard income for each activity. Prior to these changes, the SEP paid the income tax at the highest rate of income.
• In case of an association without legal personality between two or more SEPs paying the income bracket tax, the standard income tax will be decided for each associate member.
• Income from royalties, civil conventions, from the sale of goods under consignment, from activities performed under agent contract, commission or commercial mandate and income from technical and accounting expertise, judicial and extrajudicial expertise income for which the taxpayers have chosen to pay the 16% final tax, is no longer framed at “other income” but will be declared according to the nature of that income.
• Submission of statement for income from independent activities, calculating the taxes and the payment until May 25^th  the next year was dropped and there were adopted the old provisions. Thus, the taxpayers earning income from independent activities will submit the statement of income until May 15^th  the next near, and the fiscal authorities will calculate the income tax on the basis of this statement and will issue the tax decision. The taxpayer will pay the difference within 60 days from the date the tax decision was communicated.
• The taxpayers achieving income from independent activities and/or income from agricultural activities which end their activity or temporary suspend their activity during the fiscal year, are required to submit a statement accompanied by supporting documents, to the competent fiscal authority, within 15 days from the date of this event, according to the legislation, in order to recalculate the advance payment;  the procedure to apply these provisions will be established by order of the NAFA president.

 Taxation of income whose source was not identified

According to the changes, any income found by the tax authorities, under the Tax Procedure Code, whose source was not identified will be calculated applying 16% to the adjusted taxable quote, based on the procedures and indirect methods of reconstitution of income and expenses. The tax authorities will determine the amount of the tax and accessories by tax decision.

Micro-enterprise income tax

There has been reintroduced the possibility of choosing to pay the tax on the micro-enterprises’ income.

Non-residents tax

There has been dropped the  provision according to which dividends paid to a legal person resident in an EU or EFTA Member State were taxed with a 10% quota, the same treatment as for the Romanian legal persons being applied for these dividends.

VAT

• There  has been  introduced the possibility to cancel the registration for VAT if the turnover of the previous year is below 35,000 Euros, calculated at the exchange rate of the date of Romania’s accession to EU (119,000 lei).

 The turnover taken as reference for applying the exemption threshold is calculated according to the sales records and consists of:

–          The total value of deliveries of goods and taxable services

–          Operations resulting from economic activities for which the place of delivery/service is considered abroad, if the fee is deductible in case these operations were carried out in Romania

–          Deductible exempt operation and non-deductible exempt operations stipulated in the article 141 paragraph (2) a), b), e) and f) of the Fiscal Code (meaning the financial services, insurance and insurance mediation, real estate sale and rent), unless they are incidental to the main activity.

• There have been amended the provisions on the place of providing a service for the main and auxiliary services related to cultural, artistic, sporting, scientific, educational, entertainment or similar activities such as fairs and exhibitions, including the services provided by the organizers. Thus, if the services are provided to non-taxable persons, the place of supply is considered to be the place where such activities are carried out effectively. If the beneficiary is a taxable person, the place of providing the services related to the access to cultural, artistic, sporting, scientific, educational, entertainment or other similar events such as fairs and exhibitions, as well as auxiliary services related to such access, the place of supply  is considered to be the place where such activities are carried out effectively.
• As an exception to the rule B2B, the place of supply is considered to be outside the Community if the use and effective operation of services is outside the Community, for transport services of goods outside the Community, when these services are provided to a taxable person settled in Romania. Goods transport services performed outside the Community are the transport services whose departure point and arrival point are outside the Community, and these are considered effectively used and operated outside the Community.
• There have been clarified some aspects regarding the adjustment of the tax base as a result of the activities referred to in the art. 138 of the Fiscal Code (that is, the return of goods, total or partial cancellation of supplies or services and the discounts granted after delivery/invoicing).For these, the tax is due on the date of the occurrence of any of the events mentioned in the art. 138. However, the tax treatment, the applicable rates and the exchange rates are the same as those for the operations leading to these events. Previously, the exchange rate was that of the adjustment date.
• The positive or negative differences of VAT calculated by the tax inspection authorities by decision communicated to the date of statement submission will be added to the aggregate tax payment of VAT, respectively to the cumulative, negative amount of tax.
• Statements 392A and 392B will be submitted by all the taxpayers, and the non-taxable persons whose turnover is lower than 35,000 Euros, calculated at the rate valid on the date of Romania’s accession to EU. Previously, this obligation was calculated for taxpayers if their turnover was lower than 10,000 Euros and for the non-taxable entities if their turnover was between 10,000 Euros and 35,000 Euros. 
• Starting from January 1, 2011, there will be applied measures in order to simplify the transfer of the certificate of emissions of greenhouse gases, as defined in Art. 3 of Directive 2003/87/EC of the European Parliament and the Council of October 13^th  2003 establishing a scheme for trading the rates of greenhouse gas emission within the Community and amending the Council Directive 96/61/EC transferable in accordance with art.12 of the Directive, and the transfer of other units that can be used by operators in accordance with the same Directive.

Excise

The main amendments focus on modifying the calculation of excise on cigarettes as well as preserving the excise duty on coffee in 2011.

Social contribution

Starting from January 1, the social contribution for income on salaries, income similar to salaries, income from independent activities and the income from royalties and civil conventions are regulated by the Fiscal Code.

The compulsory social contributions regulated by the Fiscal Code are:

• The individual social security contribution and the contribution owed by the employer to the social insurance budget;
• The individual contribution for health insurance and the contribution owed by employer to the National Fund of Health Insurance;
• The contribution for leaves and the health insurance allowance owed by employers to the National Fund of Health Insurance;
• The individual contribution to the unemployment fund and the employer contribution due to the unemployment insurance budget;
• The contribution of insurance for work accidents and occupational diseases owed by employer to the state social insurance budget;
• The contribution to the Guarantee Fund for payment of wage debts, owed by individuals or legal entities having the status of employer, under Law no. 200/2005 regarding the creation and use of the Guarantee Fund for payment of wage debts, amended and supplemented.

Monthly calculation basis of mandatory social security contributions is represented by the gross earnings of dependent activities, in the country or abroad, in compliance with the international legal instruments to which Romania is party, which include income from wages as defined in the art. 55 paragraph (1) in the Fiscal Code and the income similar to wages as defined in the art. 55 paragraph (2), including among others:

• amounts representing wages or differences in the salaries set of court ruling final and irrevocable, updated with the inflation index;
• monthly allowances paid by the employers under the law, on non-competition period, calculated under the individual employment contract;
• indemnity paid to administrators and the amount of net profit due to the companies administrators according to the memorandum or determined by the general meeting of the shareholders;
• monthly indemnity of the sole member, without being limited to the value recorded in the statement of social insurance;
• accommodation and detachment remuneration received, in country and abroad, for business, paid by non-profit legal entities and by other non-taxable entities (including taxable micro-enterprises),  2.5 times above the accommodation paid to the employees of the public institutions;
• any other income or benefits similar to salaries, for taxation.

Note: the base for individual social insurance contribution (CAS, individual rate) is limited to 5 times the average gross earning for each way that generates the income.

Among others, the following types of income are not included in the monthly calculation base of individual contributions, even if they are included in the tax base for income tax:

• food vouchers, holiday vouchers, gift vouchers, nursery vouchers, according to law;
• the benefits received for a dependent activity, but not limited to:

–          the use of any goods, including a vehicle of any type of business assets, for personal purpose, except for the round-trip travel from home to work;

–          accommodation, food, clothing, household staff, and other goods or services, free or at a lower price than the market price;

–          telephone subscriptions and the costs of telephone conversations, including phone cards for personal purposes;

–          permits for travel on any means of transport used for personal purposes;

–          insurance premiums paid by the sponsors for their employees or other beneficiary of income from wages, at the time of payment, other than the mandatory ones.

The calculation base of social contributions owed by the employers, entities similar to the employer and any other entity paying wage income, or similar to the wage income

• The contribution for pension – the monthly calculation base is the sum of the gross earnings of persons mentioned above but cannot be greater than the product of the number of insured employees for which their employers owe differed contribution, depending on the working conditions, of the month for which it is calculated the contribution due to the state social insurance budget, and the corresponding value of 5 times the average gross earning.
  During the period in which the insured person benefits from sick leave and health insurance allowance, except for work accidents or occupational diseases, the base for calculating the monthly insurance contribution due to the state social insurance budget is the amount representing 35% of the average gross earnings, according to the number of working days starting from the sick leave period.
•  The social health insurance contribution and the contribution for holidays and allowances for health insurance – the monthly calculation base is the sum of the gross earnings of persons mentioned above. For leaves and health insurance allowance contributions, the monthly calculation base can not be greater than the product of the number of insured persons from the month for which the contribution is calculated and the corresponding value of 12 minimum guaranteed wages.
• The contribution to the unemployment fund – the monthly base is the sum of the gross earnings paid to individuals previously mentioned, on which there is, by law, the obligation to pay individual contribution to the unemployment insurance budget.
•  The guarantee fund for payment of wage debts – the monthly calculation base is the sum of the gross earnings of employees according to an individual labor contract, according to the law, including the employees benefiting both from pension and salary, except for certain wage benefits.
•  The contribution of insurance for work accidents and occupational diseases – the monthly calculation base is the sum of monthly gross earnings of persons mentioned above, respectively the gross minimum guaranteed wage, according to the number of working days on sick leave, except for the cases of work accident or occupational disease.

From these general provisions, the Fiscal Code provides a series of specific exceptions.  

Thus, for the indemnity paid to administrators the sum owed is paid only for the health insurance, both the individual and the employer’s share, and the contribution for leaves and indemnities.

The mandatory social contribution rates are as follows:

• for the social insurance contribution:

–          31.3% for normal working conditions, of which 10.5% for individual contribution and 20.8% for the contribution due by the employer;

–          36.3% for difficult working conditions, of which 10.5% for individual contribution and 25.8% for the contribution due by the employer;

–          41.3% for special working conditions, of which 10.5% for individual contribution and 30.8% for the contribution due by the employer.

•  for social health insurance contribution:

–          5.5% for individual contribution;

–          5.2% for the contribution due by the employer.

•  0.85% for leaves and health insurance allowance
• contribution to the unemployment insurance budget:

–          0.5% for individual contribution;

–          0.5% for the contribution due by the employer;

•  0.15%-0.85% for the contribution of insurance for work accidents and occupational diseases, differed depending on the risk category, according to the law, due by the employer;
• 0.25% for the contribution to the guarantee fund for payment of wage debts, owed by the employer.

The individual social security contributions are withheld and transferred to the budgets and funds they belong to until, inclusively, the 25^th day of the following month, together with the contribution due by the employer or the entities treated as employers, according to the law.

Attention!!! Physical and legal persons acting as employers or treated as employers are required to submit the Inventory Statement of the contribution of leaves and allowances on the balance on December 31, 2010, and unpaid, until 31^st  January 2011, including the accessories related to them, on fiscal years, to the health insurance offices until  February 15^th  2011. This statement will include the balance of the amounts to be recovered from the budget of the National Fund of Health Insurance for which restitution claims have been filled in due time, and that were not recovered until January 31^st , 2011.

The model and the content of the statement will to be approved by order of the Minister of Health and the President of the National Health Insurance Agency.

Amendments of the O.U.G. no. 77/2009 on the organization and operatio