Decree Law No. 115/2023 published on December 15, 2023 significantly changes the Tax Code, and these changes to the Tax Code take effect on January 1, 2024.
In this second part, we analyze the tax changes made to the profits tax:
1. Taxpayers in the same tax period are allowed to reduce the profits tax through the reinvested profits procedure and with the value of cash registers purchased in that tax period.
2. The legislation returns with the possibility for the employer paying the profits tax to pay the amount of 1,500 lei/child for the early education of employees’ children. This is not a profit tax reduction, but an employer expense in the category of deductible social expenses limited to 5 percent of total payroll.
3. If repairs, maintenance or expenses related to a taxpayer’s registered office are made and it is located in a home owned by an individual, the expense is deductible limited to the 50% rate. In the event that a registered office located in the taxpayer’s estate is used for personal purposes by partners or members, the expense of that office is fully nondeductible. This 50% limitation also applies to depreciation.
4. Expenses related to private scholarships granted are no longer deducted from profits tax.
5. The cost of tax cash registers is no longer deductible from profit tax.
6. Expenses for goods and services provided to UNICEF are added to sponsorship expenses and reduce profit tax to the lesser extent of 0.75% of sales, not to exceed 20% of profit tax. Both expenses are initially non-deductible in the profit tax calculation.
7. In the year 2024, expenses with bad debts are deductible at the rate of 30%. The normative text makes a clarification in the sense that it is specified that such claims are against internal or external customers, for supplies of goods and services. The other correlative conditions must also be met, the claims are unsecured, are not from related parties, and are more than 270 days past due. This provision applies to claims arising after January 1, 2024.
8. Tax losses recorded in the annual tax return from tax year 2024 will be recovered in the next 5 consecutive years and only within the limit of 70%. This percentage is also preserved in the case of loss carryover in the event of merger, dissolution, demerger procedures, etc.
9. A taxpayer has the right to deduct expenses with the excess cost of debt in the amount of 1,000,000 for a tax year in the calculation of corporate tax. In the situation where the excess cost of indebtedness is generated by transactions with affiliated entities, the maximum amount deductible in a tax year is a maximum of 500,000 euros.
10. The possibility of redirection of the amount representing sponsorship or patronage expenses up to the maximum limit provided by law shall be safeguarded if the taxpayer submits the redirection form.
