In the Romanian Official Gazette no. 44 published on January 17, 2019 several amendments and completions to some normative acts were published, which were divided into two compartments: the Fiscal Code and the Fiscal Procedural Code respectively.
Amendments to the Fiscal Code
Starting with January 1, 2019, as social expenses (article 25 paragraph (3) letter b) point 3) with reduced deductibility, amounting to a threshold of up to 5% of the total payroll expenses, will also be included cultural vouchers, which can be used by employees to go to films, shows and exhibitions or purchase books or school books. At the same time, article 9 from Law no. 165/2018 regarding the granting of value tickets was abolished, which permitted the full deduction of the amounts related to value tickets (meal vouchers, gift vouchers, nurseries, cultural and holiday vouchers) in the calculation of corporate tax.
Changes have also been implemented on the rules limiting deductibility of interest and other costs equivalent to interest from an economic point of view (article 402), through which the difference between the excess of borrowing costs, as defined by article 401 point 2, and the deductibility threshold as provided by paragraph (4) is deducted in a limited method in the fiscal period in which it was incurred, up to 30% of the calculation basis computed according to the algorithm provided by paragraph (2).
The deductibility threshold of the excess of borrowing costs, denoted in RON, which allows the taxpayer the right to deduct, in a specific fiscal period, was increased from EUR 200,000 to EUR 1,000,000, and is calculated using the exchange rate published by the National Bank of Romania valid for the last day of the quarter / fiscal year, as the case may be.
The Informative Statement on sponsorship beneficiaries for micro-enterprises which perform sponsorship activities, as per situations provided in article 48 paragraph (31) and article 52, will be filed by the 25th of the month following the first quarter for which corporate tax is owed.
As an income from other sources, will also be included the revenue from the transfer of virtual currency, calculated as the positive difference between the selling price and the purchase price, adding the costs directly linked to the transaction, which in turn are exempt from the obligation to calculate and declare the related income tax, provided that the taxpayer has a profit / transaction which is less than RON 200, whilst also the total earnings in one fiscal year do not exceed RON 600.
Starting with January 17, 2019, besides the credit institutions – Romanian legal entities and branches of credit institutions in Romania – foreign legal entities, established during the previous year or which for the previous fiscal year has recorded tax losses, and did not owe corporate tax, but performs quarterly prepayments to the corporate tax account, will also include taxpayers who in the previous year were subject to corporate tax on micro-enterprises income.
It is known that, according to the article 348 paragraph (1), the authorized warehousekeeper, the registered consignee, the registered consignor and the authorized importer have the obligation to submit to the appropriate authority a guarantee, at the level established as per the methodological norms provisions, to ensure the payment of excise duties that may become chargeable; however the amendment of this paragraph implies a breakdown of the guarantee definition, which can be set up as:
- depositing cash at a State Treasury unit;
- letter of guarantee / insurance policy issued under the terms of the law by a credit institution / insurance company registered in the EU and the European Economic Area, authorized to carry out its activity on Romanian territory, in the favor of the territorial tax authority where the economic operator is registered as a taxpayer.
Starting with April 1, 2019, referring to the non-deductible sponsorship and/or patronage expenses, as well as the expenses related to the private scholarships awarded according to the legislative norms, through which taxpayers who carry out these type of activities designated to non-profit organizations, including places of worship, as well as those who grant private scholarships, deduct the applicable amounts from the corporate tax due at the minimal value between the computed value of 0.5% from the turnover or 20% of the corporate tax due, only if sponsorship beneficiary at the date of the contract is enrolled in the Register of entities / places of worship for which tax deductions are granted, according to paragraph (41).
Furthermore, a new paragraph (41) is added in article 25, stated above, which clarifies the legal framework for the Register of entities / places of worship for which tax deductions are granted, along with the registration procedure and the cumulative conditions required, such as (i) carrying out the activity in line with the area of activity in which it was established, (ii) the fulfillment of all tax reporting requirements, and other.
In relation to the computation of income tax on wages and near-cash employee income, taxpayers may have the right to use a cap amount representing up to 3.5% of the tax imposed as per article 78 paragraph (5), in support of nonprofit entities which are established and activate under the legislative requirements and places of worship, as well as for activities which have as a main aim the granting of private scholarships, in accordance with the regulations of the new article (1231), which will determine the conditions for granting the taxpayer’s right to dispose of the capped tax amount. These regulations also apply to the earnings received abroad which have same nature as those obtained in Romania.
Amendments to the Fiscal Procedural Code
Starting with January 17, 2019, the tax authorities will no longer have the obligation to publish on their website neither the list of private individuals that are debtors and have outstanding tax liabilities, nor their amounts, as this will be performed only for legal persons.
A new article is added in this Code (2301), which clarifies in a detailed manner the mediation procedure:
- Clarification of the extension of the tax liability as specified in the letter of formal notice, if the debtor has any objections to it;
- Analysis of the economic and financial situation of debtor which would be performed by the fiscal authority together with the debtor, in order to identify the optimal solutions for settlement of tax liabilities, including the analysis of potential tax breaks which are provided by law.