(Official Gazette no. 1139 of 15 December 2023) 

This Emergency Ordinance brings several important changes to tax and related legislation. Most  of the new tax rules enter into force on 1 January 2024 / apply to income and expenses  incurred starting January 2024 / year 2024, with certain exceptions. The main changes include: 

Corporate income tax 

  • Minimum turnover tax – in the case of a tax group, the turnover of more than EUR 50.000.000 is  calculated by the responsible legal person by adding up the turnover of the members of the tax  group. 
  • Tax losses – starting 2024 / the amended tax year beginning in 2024, tax losses will be recovered  from taxable profits, up to and including 70%, in the following 5 consecutive years. Previously,  they were recovered from profits in full over 7 consecutive years.  
  • Borrowing costs resulting from operations which do not finance the acquisition/production of  fixed assets in progress or assets referred to in the provisions of the minimum turnover tax or  the additional tax for oil and gas and which are carried out with affiliated persons are deductible  up to a reduced annual ceiling of EUR 500,000. The provision does not apply to credit institutions  and non-banking financial institutions.  
  • Impariment adjustments – in case of adjustments for receivables recorded from 1 January 2024,  the deductible ceiling is reduced from 50% to 30%. Startting 15 December 2023, the deductibility  rules applicable to specific provisions and adjustments recorded by financial institutions are also  amended. 
  • Expenses relating to the operation, maintenance and repair of premises owned by an individual  and used for personal purposes will be deductible up to 50% corresponding to the areas made  available to the taxpayer under contracts concluded. 
  • Private scholarships – private scholarships are removed from the category of amounts that can  be deducted from corporate income tax (tax credit). These expenses can be deducted for the  determination of the taxable result, up to RON 1,500/each scholarship granted, and are also  included in the category of social expenses with limited deductibility. In the case of private  scholarships granted until 31 December 2023, respectively until the end of the amended tax year  ending in 2024, the amounts that have been deducted representing private scholarships unused  and returned by the beneficiaries to the taxpayers are to be added as a difference to the income  tax due in the period in which they were returned. 
  • Electronic Cash Register (AMEF) – the year 2023/the amended tax year ending in 2024 is the last  tax year in which amounts relating to AMEF remaining to be carried forward from previous years  are deducted from corporate income tax. Subsequently, these remaining carry-forward amounts will be treated as items similar to expenses starting with 2024/amended tax year beginning in  2024. In this case, the expenses representing the tax depreciation OF AMEFs are non-deductible  expenses in the calculation of the tax result. The profit reinvested in the acquisition of AMEF will  be eligible for tax exemption. 
  • Corporate income tax redirection – the submission of the corporate income tax redirection form  for the year 2023/amended tax year ending in 2024 is submitted by the deadline for filing the  annual corporate income tax return (previously, the deadline was of 6 months from the date of  filing the annual corporate income tax return).  
  • Nurseries, kindergartens, early education – expenses related to the operation of nurseries and  kindergartens, as well as settlements related to early education expenses for employees’ children  are included in the category of social expenses with limited deductibility. The amounts paid by  the taxpayer for the placement of employees’ children in early education units, according to the  legislation in force, are treated as social expenses up to the amount of RON 1,500/month for each  child.  

Microenterprise tax 

  • Number of microenterprises – from 2024, shareholders will be able to hold, directly or indirectly,  more than 25% of the value/number of equity securities or voting rights in a single micro enterprise (previously three). 
  • Additiona conditions – there is a new obligation to file the related annual financial statements on  time in order for a legal person be able to apply the micro-enterprise regime. For the year 2024,  if this obligation is not fulfilled by 31 March 2024 inclusive, then the company will apply the  corporate income tax regime.  
  • Income ceiling – when calculating the annual turnover ceiling of EUR 500,000, the income of  related enterprises, as defined under Law no. 346/2004 shall also be taken into account. 
  • HoReCa industry – companies operating in the HoReCa sector will no longer be able to opt to  apply the micro-enterprises regime unless they meet the conditions applicable to all companies  regarding classification as micro-enterprises. In their case, the condition of not having applied the microenterprise regime in the past will apply from the tax year 2024.  
  • Inactivity status – microenterprises that are under tempory inactivity registered in the Trade  Registry continue to apply the microenterprise tax regime for the entire period during which they  are inactive.  
  • Sponsorships / scholarships / AMEF – the possibility of deducting from the microenterprise tax the  sponsorship, scholarships granted to students enrolled in vocational – dual education and  electronic cash registers is eliminated. 

Personal income tax and social security contributions 

  • Income tax exemptions – for employers operating in the IT, construction, agricultural and food  sectors, if during the same month an individual earning salary income for a fraction of a month, in the basic function, with one or, as the case may be, with several employers in succession, for  the application of the exemption from income tax on salary income each employer shall  determine the part of the RON 10,000 monthly ceiling corresponding to this period and shall apply  the exemption within the fraction of the established ceiling. 
  • Income from indeependent activities – in the case of taxpayers for whom the annual net income  is determined in the real system, based on accounting data, the expenses for sponsorship and/or  patronage, granted according to the law, are eliminated from the category of expenses with deductibility and they are introduced in the category of non-deductible expenses.  
  • In the case of taxpayers for whom the annual net income is determined under the real system,  based on accounting data, the ceiling of deductible subscriptions for the right to use sports  facilities is reduced to EUR 100 per year from EUR 400 per year. 
  • The provision relating to the non-deductibility of expenses incurred on the purchase of electronic  fiscal cash registers commissioned in the year in question, according to the law, is removed. 
  • The possibility of redirecting amounts representing up to 3.5% of the tax for the support of NGOs  by persons who have sports activity contracts and by persons obtaining income from intellectual  property rights is removed. 
  • Tax losses – similar provisions are introduced as in the case of corporate income tax on tax losses  for certain types of income (e.g. income from self-employment, intellectual property rights, gain  from the transfer of securities), in terms of the limit on the recovery of losses from the taxable  income (70%) and the number of years of carry forward (5 instead of 7 years). 

Changes to the taxation of employee benefits 

  • Telework – the amounts granted for teleworking (400 lei) are removed from the category of  non-taxable benefits and those that are not included in the monthly basis for calculating  social security contributions. 
  • Subscriptions for sport facilities paid by the employer for its own employees will be non taxable for the purposes of personal income tax up to EUR 100/ year/ person (previously the  ceiling was of EUR 400). The same ceiling reduction (from EUR 400 to EUR 100/ year) will also  apply to subscriptions paid by employees for the purposes of calculating the personal  deduction.  
  • New benefits within the 33% limit – the following elementes are included in the category of  non-taxable benefits and those which are not included in the monthly basis for calculating  social security contributions granted by the employer to its employees, up to the monthly  ceiling of 33% of the basic salary corresponding to the place of work: 
    • – amounts incurred for the placement of employees’ children in early education units, up  to a limit of RON 1,500 / month for each child. The amounts are granted for a single parent  by a single employer, the latter having the obligation to obtain an affidavit from the parent;  
    • – the favourable difference between the preferential interest rate established by  negotiation and the market interest rate for loans and deposits.

Rental income 

  • The option to determine the net rental income under the real system is eliminated and a flat  deductible quota of 20% is introduced. 
  • Payers of rental income (other than from sand and rental for tourism purposes), legal persons  or other entities that are obliged to maintain accouting records, are obliged to calculate,  withhold and pay income tax by applying a tax rate of 10% on gross rental income less the  20% tax deduction quota. Filing the tax return and payment of tax must be made by the 25th  of the month following the month in which the tax was withheld. 
  • Persons earning rental income from more than 5 rental contracts at the end of the tax year will not treat this income anymore as income from independent activities starting next year. 

The minimum gross salary for the calculation of social security contributions 

  • In order to determine the basis for calculating the social insurance contribution and the  health insurance contribution for certain categories of income, in the event that several  values of the gross minimum salary per country are used during the same year, the value of  the gross minimum salary in force on 25 May of the year in which the income is earned shall  be taken into account when checking whether the income falls within the annual ceilings, as  well as when determining the annual basis for calculating these contributions due. 

Value added tax 

  • Payment of VAT on imports – the provisions concerning the situations in which VAT is not  actually paid to the customs authorities in the case of imports (e.g. persons who submit  customs declarations using the centralised customs procedure, instead of persons who have  obtained the authorised economic operator certificate) are amended. 
  • 50% VAT deduction for certain buildings – the right to deduct VAT on the purchase, rental or  leasing of residential buildings/spaces located in residential areas or blocks of flats and VAT  on expenditure related to them, if they are not used exclusively for business purposes, is  limited to 50% (this provision will enter into force on the 1st of the month following the date  on which Romania is authorised to apply this special measure derogating from the EU VAT  Directive). 
  • 9% VAT rate – a reduced VAT rate of 9% will also apply from 1 January 2024 to milk powder  for newborn babies, infants and young children. 

e-Invoice – changes from 1 July 2024 

  • The issuer of the simplified invoice is not obliged to send it via RO e-Invoice system.
  • Failure of the issuer to timely send the invoice via the RO e-Invoice system will also be  sanctioned. The fine for not sending/not receiving the invoices via RO e-Invoice system will  be equal to 15% of the total invoice amount.  
  • Invoices issued on the B2B relationship should be sent within 5 calendar days in the RO e Invoice system (but not later than 5 calendar days since the issuance deadline according to  the Tax Code). 

e-Tranport – changes from 15 December 2023 

  • With the amendments brought to the Emergency Ordinance no. 41/2022, in addition to  monitoring road transport on national territory for goods with high fiscal risk, it is also  mandatory to monitor on national territory the international road transport of goods. 

Amendments to Law No. 70/2015 on strengthening financial discipline regarding cash receipts  and payments – amendments applicable from 15 December 2023 

  • Payments from advances – cash operations representing payments from advances taken may  be carried out by each person up to a daily threshold which was increased from RON 1,000 to  RON 5,000. 
  • Loans and other financing – receipts and payments between the persons covered by the law  (legal entities, authorised natural persons, freelancers, family businesses, self-employed  persons, natural persons carrying out activities independently, associations and other entities  with or without legal personality) and individuals representing receipts or repayments of  loans or other financing are carried out only by non-cash payment instruments (previously a  daily ceiling of RON 10,000 applied for such payments that could be made in cash). 
  • Daily limit for cash register – as an exception to the 50,000 lei ceiling, in the case of cash and  carry stores, supermarkets (defined) and hypermarkets (defined) that are organized and  operate under the legislation in force, the cash amounts in the cash register may not exceed,  at the end of each day, the ceiling of RON 500,000. 
  • Branches and other secondary offices of legal entities that have their own cashier and/or an  account opened with a credit institution shall apply the provisions of this chapter accordingly  for each cashier.

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For additional details regarding the above, you can contact any member of the Taxhouse team or you can send us an e-mail at office@taxhouse.ro.

Draft Order for the amendment of the Nomenclature of independent activities Law no. 431/2023 on ensuring a global minimum level of taxation of multinational enterprise groups and large-scale domestic groups