The government recently approved a Decree (currently being published) that introduces important tax changes.

Microenterprise

The most significant change concerns the reintroduction of the option to be able to apply, as an exception to the general provisions, the ordinary regime for determining income tax (profit regime) even in the case of a turnover of less than 1,000,000 euros/year.

In fact, as has already been the subject of previous newsletters, all enterprises with a turnover of less than 1,000,000 euros as of Dec. 31, 2017 are mandatorily subject from Jan. 1, 2018 to the application of the microenterprise regime (with flat tax determination and taxable basis the turnover recorded for each quarter, regardless of deductible costs).

The novelty therefore makes it possible, when certain conditions are met, to return to the application of the regime of determining the ordinary tax of 16 percent calculated on the taxable profit and thus taking into account the deductible costs recorded in the quarters. As a result, the novelty favors companies in the start-up phase, that is, with significant operating costs and low margins.

The conditions for opting for the ordinary regime are as follows:

1- share capital of at least 45,000 lei;

2- Employment of at least 2 employees with normal hours (even by adding up several positions with partial contracts).

Upon fulfillment of the above two conditions, the taxpayer may apply to switch to the ordinary regime for one time only; if condition No. 2 is not fulfilled, within 60 days the taxpayer may take all necessary measures to restore the minimum number of employees on pain, after the deadline has passed, of the loss of the ordinary regime and return to the microenterprise regime.

We remain available for any clarification.