Recently, the Government Ordinance no. 8/2021 for the amendment and completion of the Fiscal Code, we present below the most important amendments:
Corporate Tax
Clarifications were made regarding the fiscal period of foreign companies with the place of exercising the effective management in Romania. In this respect, it is mentioned that in their case, for the first year, the taxable period starts from the date of registration with the central tax authority.
From the perspective of the tax regime of dividends received from the Member States of the European Union, the ordinance supplemented the conditions that must be met for dividend income to be considered non-taxable. In this respect, it is specified that the beneficiary of the dividends must be a payer of income tax under Title II, without the possibility of an option or exemption or payer of another tax to replace the profit tax, according to national law.
Similarly, with regard to the dividend payer, it is now mentioned that he must pay, without the possibility of an option or exemption, one of the taxes provided in Annex no. 2 of Title II of the Fiscal Code or another tax to replace the respective taxes. Previously, the condition mentioned that the payer must pay one of the taxes provided in annex no. 2 previously mentioned or a tax similar to the profit tax regulated by Title II of the Fiscal Code.
The ordinance increases the percentage of tax deduction for adjustments for impairment of receivables, from 30% to 50%. The percentage will be applicable as of 1 January 2022, and no changes have been made to the other conditions to be met for deducting adjustments for impairment of receivables.
Also, the Ordinance brings changes on the provisions regarding the payment of the tax on distributed but unpaid dividends. Therefore, the tax on distributed but unpaid dividends is paid until January 25 of the year following the year in which their distribution is approved. Previously, it was specified that the payment is made until 25 January of the year following the year in which the annual financial statements were approved.
The ordinance also introduces new additions regarding art. 45 of the Fiscal Code. In this sense, the taxpayers who apply the anticipated system of declaration and payment of the profit tax, who will benefit from the Government Emergency Ordinance no. 153/2020, they will make the advance payment for the first quarter of each fiscal year / modified fiscal year at the level of the amount resulting from the application of the tax rate on the accounting profit of the period for which the advance payment is made, until the 25th of the following month I quarter.
Non-resident income tax
Regarding the non-resident income tax, the ordinance introduces the following changes:
- The tax residence certificate submitted to the tax authorities by electronic means of remote transmission is accepted in copy in accordance with the original, stating that the original / certified copy is with the income payer / legal person whose securities are alienated / at permanent headquarters in Romania.
- The annual withholding tax return is also submitted by the income taxpayer with withholding tax, when the tax due by the non-resident is borne by the income payer.
Income tax and social contributions
Taxpayers who obtain income from the transfer of the use of personal property, other than income from leasing of agricultural property and income from tourist rental of rooms located in personal property, will have the right to opt for determining the net income in real system, based on data from accounting. The option is mandatory for a period of 2 consecutive fiscal years.
For taxpayers who in one fiscal year have earned income from the rental of more than 5 rooms for tourist purposes, the obligation to determine the net annual income in the real system, based on accounting data, will be established for the next fiscal year, and not from the following fiscal year.
The term for paying the tax on distributed dividends, but not paid to shareholders / associates / investors until the end of the year in which their distribution was approved, is until 25 January of the year following the distribution.
The income tax due for the income from gambling characteristic of casinos, poker clubs, slot machines and lotteries exceeding RON 66,750, will be determined by applying the scale provided in art. 110 para. 2 of the Fiscal Code on each gross income received by a participant, and the amount of RON 667.5 will be deducted from the result obtained. This is a technical clarification.
The tax residence certificate can be submitted through the Virtual Private Space and will be accepted in copy in accordance with the original, with the mention that the original is with the income payer in case of income with withholding tax, to the Romanian legal entity whose titles value are alienated in case of capital gain, at the permanent establishment in Romania in case of incomes that are attributable to the permanent establishment, respectively at the legal entity in Romania where the non-resident natural person was seconded.
The ordinance introduces the option of the Romanian tax resident employer or the non-Romanian tax resident employer, which falls under the applicable European legislation in the field of social security, as well as the agreements on social security systems to which Romania is a party, to opt for the calculation , withholding and payment of social contributions in the case of individuals who obtain cash and / or in-kind benefits from third parties who are not Romanian tax residents. This change ensures a correlation with the income tax provisions and applies to the income related to October 2021.
Value Added Tax
The ordinance transposes into the local legislation the provisions of the Council Directive (EU) 2021/1159 of 13 July 2021 amending Directive 2006/112 / EC regarding temporary exemptions for imports and certain supplies of goods or services in response to the pandemic of COVID-19.
In this sense, the import of goods made in Romania by the European Commission or agencies established under EU law will be exempt from VAT. The VAT exemption does not apply to goods / services purchased / imported which are used, either immediately or at a later date, for the purpose of subsequent supplies for consideration by the European Commission or by such agency or body. These provisions will enter into force starting with 1 November 2021.
Other changes are made to the special regime for intra-Community distance sales of goods, for deliveries of domestic goods made by electronic interfaces that facilitate these deliveries and for services provided by taxable persons established in the European Union but not in the Member State of consumption (“Special Regime”).
Therefore, in the context of the letter of delay in Case 2020/4142 communicated by the European Commission, there have been included the following provisions:
- taxable persons having the seat of the economic activity outside Romania, but being established in Romania through a fixed establishment, which are not registered for VAT purposes and which opt for the application of the Special Regime, have the obligation to request the registration for VAT purposes in this respect;
- taxable persons that apply the special exemption regime for small enterprises may register for VAT purposes according to the special procedure applicable to the Special Regime, without being required to register according to the normal procedure which would have entailed to charge VAT on all transactions.
For more details regarding the provisions brought by Ordinance 8/2021, please consult the Official Gazette no. 832 of 31 August 2021.
The EY team is available for further details and clarifications regarding the above.
Prepared by:
- Corina Mîndoiu ― Associate Partner, People Advisory Services Romania & CESA PAS Leader
- Cristina Muntean ― Manager, Direct Tax
- Andra Tăbăcaru ― Manager, Indirect Tax
For additional information, please contact:
- Alex Milcev ― Tax & Law Leader Romania
- Georgiana Iancu, Partner ― Leader of the Indirect Tax Department