Amendments to the Tax Code and Fiscal Procedure Code 29th September 2011 Prepared by Teodora Cicu Iulia Lascau
Registering at the tax authorities theservices contracts with non-residents Individuals and permanent establishments in Romania of foreign legal entities are obliged to register at the tax authorities the commercial contracts for rendering of services concluded with non-residents (foreign legal entities and non-resident individuals); Before changes, only the resident legal entities were obliged for registration of service contracts; Entered into force on January 1, 2012
Transactions concluded with inactive taxpayers Expenses related to the transactions concluded with an inactive taxpayer and the VAT related to such transactions will be considered as disallowed (non- deductible) expenses for the corporate income tax purposes; This requires periodic review of the status for existing and potential partners before signing a contract or billing for services or goods. Verification can be done in the “Register of Inactive Taxpayers”, which is published on-line by the Ministry of Finance.
The declaration and reactivation of inactive taxpayers Corporate taxpayers or other entities without legal personality are declared inactive if they comply with one of the following conditions: a) On the course of a semester they do not fulfill any of their legal declarative obligations; b) Evade the tax inspection by declaring identity tax domicile data that do not allow identification from the fiscal body; c) Tax authorities found that the declared fiscal domicile is not the taxpayer’s place of operation, according to procedure established by Order of the National Agency for Fiscal Administration.
Recognition of new deductible expenses for the calculation of corporate income tax Expenses recorded in relation to valuation of fixed assets received in concession / management belonging to the public domain of the state or local administrative authorities; Expenditure on land registration or real estate advertising of the assets in state ownership received under management or concession; Entered into force on September 5, 2011.
The taxation of an association with legal personality established according to the legislation of another state Foreign legal entities and non-resident individuals within an association with legal personality, established according to the laws of another state owe profit tax in Romania, for the activities carried out in Romania; A Romanian legal entity participating in an association with legal personality established under the laws of another state is taxed in Romania according to the participation rate; Enters into force on January 1, 2012.
Withholding tax for revenues obtained by non-residents in Romania The declaration and payment of the withholding tax for revenues obtained in Romania by non-residents from: – properties or – sale/cession of equity can be made only through empowered persons Comes into force on September 5, 2011.
Option for payments in advance for the corporate income tax The taxpayers, other than the financial institutions, may choose (starting from January 1 2013) to make payments in advance for the corporate income tax due, based on the quarter of the tax owed in the previous period, adjusted with the inflation index. The option is available until January 31 of the year in which the advance payments apply and is mandatory for at least 2 years. Starting from January 1, 2012, the deadline for submitting the annual corporate income tax forms becomes March 25 of the year following the reporting period, instead of April 25.
Taxes on incomes obtained in Romania by non-residents (1) The individuals that fulfill the residency conditions for 3 consecutive years before December 31, 2011 are obliged to pay income tax (from any source in Romania or outside Romania) starting from January 1 2012; Non-resident individuals not domiciled in Romania, have the option to be taxed on the revenues obtained from any sources in Romania or outside of Romania, starting with January 1 of the year following the year in which they became residents of Romania, based on the Tax Code and the double tax treaties Comes into force from January 1 2012.
Taxes on incomes obtained in Romania by non-residents (2)• Exemption applies to those individuals providing that they are the resident of a country with which Romania has concluded double tax treaty agreement.• Individuals that are resident of other countries with which Romania has concluded a double tax treaty agreement must prove its residency through a tax residency certificate issued by the competent tax authority of that state or by another document issued by an authority other than the tax authority which is responsible for tax residency certificate.• This certificate / document is valid for the year / years for which issued.
Taxes on incomes obtained in Romania by non-residents (3)• Romanian resident individuals, who prove the change of residence within a state that Romania has not concluded double tax treaty agreement on avoidance of double taxation, are still obliged to pay taxes in Romania on their world wide income for the calendar year in which the change of residency took place as well as the next 3 calendar years following the residency change.
Changing the deadline for payment of the salary income tax and quarterly filling of the tax forms D112 Conditions for the application of the above provision: The companies must have had in the previous year an average number of up to 3 employees exclusively, and record a total annual income of under 100.000 euro; Micro-enterprises with an average number of employees of up to 3 exclusively; Authorized individuals and individual enterprises; Liberal professions and associations without legal personality between individuals who have staff based on individual labour contract. The above provisions will come into force starting from October 2011.
New deadlines regarding declarative obligations for a series of taxpayers Declaratia venitului net realizat pentru contribuabilii care obtin venituriDeclaration din activitati independente (D200) va avea ca termen de New deadline Obligation Old deadline depunere 25 mai inclusiv a anului urmator celui de realizare a venitului (fata de 15 mai anteriorStatement of net revenue of modificarii); May 15 of the year May 25 of the year D200 taxpayers obtained from following the reporting following the independent activities period reporting period Declaratia privind veniturile obtinute din strainatate (D201) va fi depusa de contribuabilii care obtin astfel de venituri pana la 25 mai inclusiv a Statement urmator celui de realizare15 of the year (fata deof themai anului of all revenues obtained May a venitului May 25 15 year D201 in foreign countries by residents anterior modificarii); following the reporting following the taxpayers period reporting period Declaratia depusa de platitorii de venituri cu regim de retinere la sursa Last day of Statement of taxes retainedfiscale) va avea ca year a impozitelor (D205 & Fisele under June 30 of the termen de depunere February of the D205 withholding regime for incomes following the reporting ultima zi a lunii februarie inclusiv a anului curent pentru anul expirat year following the obtained by residents year (fata de 30 iunie anterior modificarii). reporting year
Supplies of services determined by successive settlements or payments Supplies of services determined by successive settlements or payments (building-assembling, consulting, etc.) are deemed to be effected (VAT chargeable) when: work reports or work statements are issued or, depending on the contractual provisions, on their acceptance by the beneficiaries. So, the settlement period of such services is no longer limited to 1 year; Comes into force from September 5, 2011.
Detailing the waste categories forwhich the simplification measurements apply (reverse charge mechanism) Delivery of ferrous waste, scrap and recyclable materials, used recyclable materials consisting of paper, paperboard, cardboard, fabric, rubber and plastic, glass and glass shards; Delivery of after processing of materials by cleaning, polishing, selection, cutting, fragmenting, pressing or casting into ingots; Comes into force on 5 September 2011.
The deadline for submitting the VIES statement (D390) The deadline for submitting the VIES statement, starting with the declaration for August 2011, is 25 of the month following the reporting month, compared to 15 of the month following the reporting month as it was previously provisioned. Comes into force starting with the declaration of August 2011.
Penalties regarding summary statement VIES(D390) Penalties have been modified for summary statement VIES, namely: for not submitting the fine will be 1.000 RON to 5.000 RON and for incorrect or incomplete filing the fine will be from 500 RON to 1.500 RON. The 2% fine from the total amount of purchases/deliveries of goods undeclared has been eliminated.
Local taxes (1) The tax rate on buildings that have not been revaluated in the past 3 years varies between 10% to 20%, while for buildings that have not been revaluated in the past 5 years varies between 30% to 40%; Even the buildings which are not registered with the Office of Cadastre and Real Estate Publicity are obliged to make a tax declaration for local taxes; Obligation to pay tax on buildings whose construction was not completed within the time provided in the building permit and the authorisation was not renewed; Comes into force from 1 January 2012.
Local taxes(2) Declaring buildings for taxation and registration in the records of local authorities is a legal obligation of taxpayers who own these buildings, even if they were executed without a building permit; Setting a fix accomodation tax for hotels which can be imposed by Local councils, namely a rate of 1% of the total accomodation tariff / hotel day / tourist; Comes into force on January 1, 2012.
Local taxes(cont.2) Granting discounts on the tax on buildings or even exemptions for a period of maximum 7 years, starting with October 1 2011, for the following categories of buildings: Rehabilitated buildings under the legal provisions of the program on increasing the energy performance of housing blocks; Rehabilitated buildings based on the Law 153/2011 on measures to increase the quality of architectural - environmental buildings.
Granting reliefs for outstanding taxobligations that needs to be settled by August 31,2011 Granting reliefs for outstanding tax obligations that needs to be settled by August 31 2011 (comes into force on September 5 2011) namely: a) Cancelation of late payment penalties if the outstanding obligations and interest are settled through voluntary payment or compensation until December 31 2011; b) 50% reduction in penalties for late payment if the outstanding obligations and interest are settled through voluntary payment or compensation until June 30 2012.
Order of settlement for tax liabilities• Changes in the order of settlement for tax liabilities in terms of settling firstly the main obligations in order of their seniority and after accessories in order of their seniority, to avoid accumulation of new accessories for taxpayers, namely: a) Withholding taxes; b) Other tax obligations (principal); c) Tax accessories obligations in relations to taxes presented at a) and b).
Procedure of the tax documentation Introducing the verification procedure of the tax documentation in order to analyze correctly the taxpayer’s fiscal situation and possibly establish differences for due tax liabilities if the real situation differs from declared status. The documentary verification consist in performing an analysis of the taxpayer’s tax position: – upon on existing documents of the taxpayer’s file and – on any submitted information and documents provided by third parties or held by the tax authority, which are relevant to determining the fiscal situation.
Estimation of the fiscal base The tax authorities estimate the fiscal base if: a) tax returns were not filed or b) accounting records or tax returns or documents submitted to inspection were incorrect, incomplete or were not submitted at all Tax liabilities resulting from the estimation are subject to further verification.
Order of communication of administrative acts The priority for means of communication of administrative acts has been established: priority by mail; by submitting or presentation of the taxpayer / authorized agent at the tax body; by fax, e-mail or other remote electronic means and ultimately by advertising.