New amendments to the Fiscal Code will take effect from August 1, 2016. These tax incentives target research and agriculture (O 32/2016).
1. Researchers will be exempted from income tax as IT employees
Specifically, there will be placed in the category of persons exempted from income tax of 16% the employees in the domains of applicative development and / or technology development
Conditions for applying the tax incentives will be detailed by a order of the ministers of economy, finance, labor and agriculture.
Currently the employees who create computer programs are exempted from income tax. In this case the criteria for granting the tax incentive are provided in an order. By 2015, graduate specialization was also a criterion.
2. Tax-exempt for the transfer of real estate from the personal property according to law 77/2016 (darea in plata).
The exemption, which is already in force since July, immediately after the publication of O 32/2016, has been introduced for the persons who give up the real estate property to credit institutions and is given only for the first operation. Therefore, in these cases, tax of 2% or 3% of the transaction value, depending on the period of holding, will no longer be calculated and withheld by public notaries.
3. The reduced VAT rate of 9% instead of 20% will apply, from 1 August, for delivery of fertilizers and pesticides used in agriculture, seeds and other agricultural products for sowing or planting and the provision of specific services used in agriculture.
!! The application of the tax incentive which aims to support farmers will be provided by a order of finance and agriculture ministers.
The two orders – both for income tax exemption for researchers and for applying reduced VAT rate in the agricultural sector – will be published until August 1, the date of entry into force of the tax incentives.
Other important provisions for research and development issued in July
The rules governing deductions for expenditure on research and development were also be amended by order 1056/2016. The rules are implementing Article 20 of the Tax Code to allow an additional deduction of 50% of eligible expenditure for research and development activities.
Conditions for granting additional deduction are:
The activities are included in a project that contains at least the following elements: target, development period, the research and development, funding sources, the category outcome (eg studies, schemes, technology, computer products and more also), the innovative character;
There are included in the categories of applied research activities and / or technological development.
Eligible expenses are those with:
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