Law no. 370/2022 regarding the approval of Government Ordinance no. 16/2022, and other normative acts

Recently, Law no. 370/ 2022 approving with amendments the Government Ordinance no. 16/2022 for completing and amending the Tax Code was published in the Official Gazette.

Among the main provisions are the following:

Corporate Tax

• The research-development activities eligible for granting the additional deduction when determining the fiscal result must be from the categories of applied research and/or experimental development activities, relevant to the activity carried out by the taxpayers. Thus, the term "technological development" was replaced by the term "experimental development".

Tax on dividends

• It is clarified that for dividends distributed based on the interim financial statements prepared during 2022, the dividend tax rate is 5%, without recalculation of the tax on the respective dividends, even after their regularization based on the annual financial statements related to the financial year 2022. Thus, the dividend tax rate of 8% applies to dividends distributed after 1 January 2023.

Tax on the income of micro-enterprises

• A company can apply the tax system on the income of micro-enterprises, if it has gained revenues, other than those from consultancy and management, with the exception of revenues from tax consultancy, corresponding to NACE code: 6920 - "Accounting and financial audit activities; consulting in the fiscal field", accounting for more than 80% of total revenues. Thus, a company can apply for microenterprise income tax regardless of the proportion of income from tax consulting in total income;
• The exit rules from the taxation system regarding the incomes of micro-enterprises are also modified accordingly, mentioning the exception of the revenues from tax consultancy, corresponding to NACE code 6920, which do not have a limit in terms of the proportion in the total income achieved;
• The condition regarding the new turnover threshold of EUR 500,000 applies starting with the revenues related to the year 2023. Therefore, even if, on 31 December 2022, a company paying tax on the income of micro-enterprises obtains a turnover between 500,000 and EUR 1,000,000, it will not switch to corporate tax starting 1 January 2023, but can opt for the application of the micro-enterprise income tax in 2023;

- New provisions are introduced in the field of HoReCa:

• in the event that legal entities carrying out activities corresponding to NACE HoReCa codes (namely 5510, 5520, 5530, 5590, 5610, 5621, 5629, 5630) also obtain income during the year from other activities apart from those corresponding to these NACE codes, they are obliged to apply the profit tax declaration and payment system for income from other activities if one of the following conditions is met:
  • achieve revenues from consulting and/or management in a proportion of over 20% including total revenues;
  • carry out the activities from art. 47 para. (3) lit. f) - i) – activities in the field of banking, in the fields of insurance and reinsurance, of the capital market, activities in the field of gambling, activities of exploration, development, exploitation of oil and natural gas deposits;
  • income from other activities exceeded the equivalent in RON of EUR 500,000.

These legal entities owe corporate tax for the income from other activities starting from the quarter in which any of these conditions were met, for the entire period in which the taxpayer exists.

Income tax and social contributions

• Amendments are introduced regarding the tax incentives in the field of construction, in the sense that in the calculation of the total turnover indicator, the income from the activity carried out outside Romania is no longer taken into account.

Local taxes and fees

A new category of buildings is introduced for which local councils can decide to grant exemption or reduction of the building tax/tax due:

• h^1) new or rehabilitated buildings, intended for housing, for which the owners carry out at their own expense works to increase energy performance, for the installation of electricity production systems from photovoltaic sources or for certified ecological water collection and treatment systems used products resulting from own consumption;

The changes introduced by Ordinance 16/2022 regarding taxes and local fees enter into force starting from 1  January 2025 (the provision according to which it would have entered into force starting from 1 January 2023 is repealed)

Order no. 2541/2022

The model, content and methods of submission and management of form 212 (Unique Declaration 2023) is established.

Among the changes are the following:

• the alignment of the statement’s content with the provisions brought to the Tax Code as of 1 January 2023 (such as the new thresholds for pension contribution and health fund contribution due for income from independent activities, income from other sources, investment income etc.);
• the removal of the section related to the determination and declaration of tax obligations due by taxpayers, for the allowances provided by GEO no. 30/2020 and introduction of a distinct section for the determination and declaration of tax obligations owed by taxpayers, for the allowances provided by GEO no. 2/2022.

Order no. 21.813/6.421/2.246/4.433/23.12.2022

Among the changes are the following:

• Employees from public institutions, as defined under art. 2, par. (1) point 30 of Law no. 500/ 2002, can benefit from the exemption from paying income tax on salary income for the period when they perform software development activities;
• A new job position of engineer of software development products is introduced in the list of positions for which the salary tax exemption can be applied;
• Non-EU nationals who have a diploma equivalated and recognized by the Minister of Education will also benefit from the salary tax exemption from 01.01.2023, under the conditions mentioned by the Order;
• Clarifications are brought regarding the content of the documents to exclude the periods of interruption from studies for the application of the tax exemption.

Law no. 376/2022

• The tip collected by economic operators carrying out activities corresponding to NACE codes: 5610 — «Restaurants», 5630 — «Bars and other activities serving drinks» is highlighted on the tax receipt, regardless of the method of collection, and it is entered in the database of the electronic fiscal marking machines in the form of an article, with the name "tip";
• The income from tips is deemed income from other sources for which the 10% tax withholding and payment obligation stays with the income payer. Those amounts cannot be reclassified as salary income and are not subject to social charges;
• From the VAT perspective, the tip is not assimilated to an operation within the scope of VAT;
• In the situation where economic operators issue invoices to customers, at their request, economic operators have the obligation to highlight the tip on the invoice as well;
• The amounts representing tip, highlighted as such on the invoice, are considered protocol expense, deductible within the Fiscal Code limitation, for the clients which are economic operators;
• Non-compliance with the legal provisions regarding the inclusion of the tip on the tax receipt can be sanctioned with a fine between 2,000 RON - 4,000 RON.

For more details, please consult the Official Gazette no. 1228, 1246, 1252, 1255 of 20 December, 23 December, 27 December 2022 respectively.

The EY team is available for further details on the above.