With the publication of O.G. 8/2021 on 08/30/2021, significant tax changes were introduced to the Romanian Tax Code Law 227/2015, the main ones being:
1. A foreign company in which the actual management is carried out from the Romanian territory is obliged to pay profit tax in Romania. The date from which this tax must be paid is the date of registration by the Romanian Tax Authority;
2. Dividend income received by a Romanian company paying income tax from another company in a member state is nontaxable income if the Romanian company holds more than 10 percent of the share capital of the company paying the dividends. An additional condition is that the company in the other member state is a taxpayer in the ordinary direct tax system. The change is that it is still considered non-taxable income and the situation where the company in the other member state pays another category of tax that replaces corporate tax;
3. As of January 1, 2022, the deductible charge with the provision of receivables from customers not collected when due is increased from 30% to 50%. The same conditions are maintained for the exercise of the deduction, respectively, more than 270 days have passed since the due date, the receivables are not between related parties, the receivables are not secured;
4. In case of cross-border transfer of assets, the Romanian taxpayer owes tax on profits. There are different tax procedures for determining corporate income tax. The taxpayer has the right to stagger the obligation to pay corporate income tax over a period of 5 years. What is new is that the granting of this relief is subject to the provision of a guarantee if there is a real and demonstrable risk of non-recovery of the credit. It is presumed, by effect of the law, that there is this real risk if the taxpayer in this situation records overdue balance sheet debts with a past due date of more than 90 days and the total value exceeds 20,000 lei;
5. Profit tax payers who make equal advance payments, either by law or by option, when they make equal advance payments in the following year and have benefited from the tax break for the purchase of cash registers or the increase/maintenance of equity, in making profit tax payments in this new year will not take into account the mentioned tax reductions;
6. It is reiterated that income of individuals from the disposal of movable property and certain types of real estate constitutes non-taxable income. Exceptions to this and subject to income tax are income from the disposal of real estate from personal property, income/gains from the disposal of securities, and income from gold/investment income. The amendment is a correction of the previous phrase “investment gold” using the phrase “financial gold.”
7. It is reiterated that an individual who realizes income from the disposal of the use of assets may opt to determine the tax in the real system (the flat rate of 40% will not be taken into account, but the actual income and expenses). If the taxpayer decides this fact, the real system is obliged to apply at least two consecutive tax years, and it is presumed to continue this taxation procedure if the taxpayer does not file a single return to change the taxation system until May 25 of the year following the year in which the two-year period ended;
8. As a general rule, persons who earn income from renting rooms in private dwellings for tourism purposes pay income tax through the income tranche procedure. If in a tax year a taxpayer earned income from renting out more than 5 rooms (regardless of the number of dwellings owned), starting from the following year such taxpayer owes and pays income tax calculated in the real system. The change is to clarify the taxpayer’s tax situation, meaning that starting from the next tax year of the following tax year the tax is determined in the real system, this individual will keep accounts and complete the tax register;
9. Dividend income received by individuals is taxed at 5% at source. The tax must be paid by the 25th of the following month. Please note that if dividends have been distributed but not paid by the end of the year, dividend tax must be paid by January 25 of the following year;
10. In determining income tax, the legislature also regulates in the content of the Tax Code the reduction of income tax with the purchase cost of tax electronic cash registers. This tax reduction is shown in the single return filed by the taxpayer;
11. If a company paying profit tax in Romania pays dividends to another company registered in the European Community, it benefits from the exemption from income tax payable by nonresidents if the company in the other member state holds more than 10 percent of the capital company in Romania, and the company receiving the dividend is a taxpayer on profits. The amendment to this ordinance is that it benefits from the dividend tax exemption and the situation in which the company receiving the dividend pays a tax in lieu of profit tax. The dividend tax exemption is extended under the same conditions for dividend payment to companies in Iceland, Kingdom of Norway, Principality of Liechtenstein;
12. From a VAT perspective, it regulates the situation in which companies not registered for VAT can use the one-stop shop mechanism for distance deliveries to non-taxable beneficiaries in other member states. Previously, this possibility was reserved for VAT-registered persons only;
13. The situations in which the Special VAT Number must be required for purchases/deliveries and purchases of services/intra-community supplies of services – Article 317 of the Tax Code – are to be amended. In addition to the situations already regulated, the possibility of using the special VAT code is extended for businesses not used for VAT purposes that opt for the simplified system of distance sales of goods;
14. Several VAT exemptions are regulated, such as the supply of goods and services to the European Commission or bodies established by the European Union to combat the COVID pandemic. Imports made by the European Commission or a body established by the European Union when the imports are made into Romania to combat the COVID pandemic are exempt from VAT.
