Recall that as of January 1, 2023:
✔ The conditions for the application of the microenterprise tax regime as a result of the decree are radically changed; in fact, from 2023 companies in order to be microenterprises will have to:
✔ record total annual revenues not exceeding the maximum ceiling of 500,000 euros (at the exchange rate existing on 31.12 of the previous year);
✔ Hire at least one employee, full time;
✔ the percentage of revenue from consulting and administration shall not exceed 20% of total revenue;
✔ The number of microenterprises that can be owned in proportion of more than 25 percent by the same associate/shareholder is limited to a maximum of 3.
The single rate applicable to microenterprises will be 1 percent; the 3 percent rate currently applicable to microenterprises without employees will be eliminated.
– Companies in the HoReCa sector will be able to apply the microenterprise tax regime, without being conditioned on meeting the conditions regarding the level of annual revenues, number of employees, as well as the rest of the conditions specific to this tax regime.
The taxation regime applicable to micro-enterprises will become optional as of January 1, 2023, legal entities will be able to opt for the application of this taxation regime, subject to certain conditions (recall that currently the natural regime for companies under Romanian law is the micro-enterprise).
The hiring of the employee
For the purpose of complying with the condition of hiring at least one employee, an employee is defined as a person employed under a full-time individual employment contract in accordance with the Labor Code. [Article 51 paragraph (4) Fiscal Code]
The condition is also considered fulfilled in the case of microenterprises that:
(a) have persons employed under individual part-time employment contracts if the fractions of the norm therein, when added together, are the equivalent of a whole norm;
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The suspension of the labor contract
Also for the purpose of satisfying the condition of having at least one employee, in case of suspension of employment (e.g., Sickness, maternity), according to the law, the condition regarding having an employee is considered satisfied if:
- **** reserved for subscribers
The microenterprise tax regime becomes optional from 2023 [Article 48 paragraph (1) Tax Code].
Romanian legal entities may elect to apply the microenterprise income tax, starting from the NEXT tax year:
– if they meet, as of Dec. 31 of the previous year, the conditions of microenterprise, previously submitted (so to access in 2023 the scheme the conditions must be met as of Dec. 31, 2022), and
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Notification of the option to apply the microenterprise income taxation scheme is made by March 31 (inclusive) of the year for which microenterprise income tax is paid by submitting the application to join the scheme.
The establishment of the company and joining the micro-enterprise scheme
A newly established Romanian legal entity may opt for the payment of income tax on microenterprises from the first tax year, if on the date of incorporation ono the conditions relating to the holding of share capital and shareholdings of shareholders in the commercial register are met, while the condition relating to the hiring of at least one employee, within 30 days of the date of incorporation of the respective legal entity. [Article 52 paragraph (3) Fiscal Code]
The option to apply the microenterprise tax regime is communicated to the Romanian Revenue Agency (ANAF) at the time of registration in the Trade Register (constitutive phase), by submitting the tax registration application. [Article 55 paragraph (1) Fiscal Code] . It is probably appropriate at that time to notify.
Exit the system – after the end of the year
Microenterprises can opt to pay the ordinary tax (16% on taxable profit) starting from the following tax year (they cannot opt to pay the profit tax during the tax year) by notifying the application by January 15 of the year for which they opt to pay the tax on taxable profit [Article 88 para. (1) of the Code of Tax Procedure, Article 48 para. (21) Tax Code]
Microenterprises that, in the year 2023, become taxpayers on taxable income due to not having met the conditions listed above, shall notify the tax authority of their exit from the system of taxation on microenterprise income by March 31 inclusive of the fiscal year 2023 by filing the declaration of mentions – Form 700. [Article 55 paragraph (4) Tax Code]
The exit from the microenterprise tax regime during the year: [Article 52 of the Tax Code].
● If during a tax year a microenterprise earns revenues in excess of 500,000 euros or the share of consulting and/or administration revenues in total revenues is at least 20 percent, it will exit the scheme and be subject to the liquidation of tax on taxable profits as of the quarter in which any of these limits have been exceeded, without the possibility of opting for the next period for the application of tax on microenterprises’ income. (These tax limits are verified on the basis of accumulated income since the beginning of the tax year. The exchange rate for determining the countervalue in euros is that valid at the end of the previous fiscal year).
● If, during a tax year, a microenterprise no longer meets the condition of having at least one employee, it must pay ordinary tax on taxable profits from the quarter in which the condition is no longer met. (Exception – for a microenterprise with only one employee whose employment relationship terminates, the condition is considered satisfied if, within 30 days of the termination of employment, a new employee is hired under an individual employment contract for an indefinite period or for a fixed period of at least 12 months).
● Micro-enterprises that start in the course of a quarter to engage in banking, insurance/reinsurance, including brokerage in these sectors, gambling activities, exploration, development, and exploitation of oil and natural gas deposits (provided for in Article 47 paragraph (3) (f)-(i)) are subject to profit tax from the respective quarter.
● In the event that, during the fiscal year, any of the partners/shareholders of a microenterprise takes ownership of more than 25 percent of the value/number of equity securities or voting rights in more than three microenterprises, the partners/shareholders shall establish the microenterprises/microenterprises that are not subject to microenterprise income tax and that apply profit tax as of the quarter in which the respective situation is recorded, so that the condition regarding the maximum number of three microenterprises in which any one of the partners/shareholders holds more than 25% of the value/number of equity securities or voting rights to be discharged.
Upon exit from the microenterprise income tax system during the year, the calculation and payment of profit tax (16%) by former microenterprises shall be made taking into account the income and expenses realized as of the quarter in which the exit from the microenterprise income tax takes place. [Article 52 paragraph (6) Tax Code]
Exit from the income taxation system of microenterprises during the year shall be reported to the Tax Authority (ANAF) within 15 days from the date of change, by filing the declaration of change of tax regime -. [Article 55 paragraph (1) Tax Code, Article 88 paragraph (1) Code of Tax Procedure]
