Official Gazette no. 977 of 27 October 2023
The present Law introduces a series of important amendments and completions to the tax legislation as well as to other relevant laws, which mainly concern the following aspects:
Amendments applicable starting with income related to November 2023
- Tax facilities applicable to IT sector (income tax) – the income tax exemption related to income obtained from salaries and income assimilated to salaries is limited to a monthly gross income of up to and including RON 10,000, the part of the monthly gross income that exceeds RON 10,000 not benefiting from tax exemption. The income tax exemption is applicable until 31 December 2028;
- Tax facilities applicable to construction / agriculture / food industry sectors (income tax) – the references regarding the level of the minimum gross salary applicable in these sectors are removed from the Fiscal Code. The level of the minimum gross salary will be approved by law;
- Tax facilities applicable to construction / agriculture / food industry sectors (social security contributions) – the exemption from the payment of the social health insurance contribution as well as the work insurance contribution are eliminated;
- Tax facilities applicable to construction / agriculture / food industry / IT sectors (social security contributions) – the social security contribution rate related to income obtained from salaries and income assimilated to salaries of no more than RON 10,000 gross monthly value is reduced by the percentage points corresponding to the contribution rate to privately administered pension funds – currently 3.75%. However, employees from these sectors can opt to pay the entire social security contribution rate.
Amendments applicable starting with 11 November 2023 (amendments to Law no. 70/2015)
- The daily ceilings of cash payments and collections will be updated both in case of transactions carried out between legal entities and in case of transactions between legal entities and individuals, as well as in case of transactions between individuals. The level of sanctions applicable in case of non-compliance with the provisions of Law no. 70/2015 has been updated.
- Also starting with 11 November 2023, the amounts in the cash register of legal entities cannot exceed, at the end of each day, the ceiling of 50,000 RON. Cash amounts exceeding the ceiling of RON 50,000 are deposited in the bank accounts of these persons within two working days. By way of exception, amounts related to the payment of salaries and other personnel rights and other operations involving individuals may exceed the ceiling imposed for a period of three working days from the date provided for their payment.
Amendments applicable starting with 1 January 2024 / income related to January 2024 Amendments regarding the corporate taxation
- Minimum tax on turnover – the minimum turnover tax is introduced for taxpayers which registered in the previous year a turnover over EUR 50 million. If, starting from the fiscal result of the reference quarter/ year, the corporate income tax is lower than the minimum turnover tax, then the taxpayer is obliged to pay the minimum turnover tax;
- The minimum turnover tax is determined as follows: 1% x (Total revenues – Exempt revenues – Fixed assets in progress – Accounting depreciation of certain assets), each indicator being specifically defined;
- Additional tax for credit institutions – by way of exception from the minimum turnover tax, credit institutions – Romanian legal entities and Romanian branches of legal entities – will owe, in addition to the corporate income tax, a turnover tax, as follows:
- 2% on the turnover (specifically defined) for the period January 1, 2024 – December 31, 2025;
- 1% on the turnover (specifically defined) starting January 1, 2026.
- Additional tax for taxpayers that conduct activities in the oil and natural gas sectors – by way of exception from the minimum turnover tax, for the period January 1, 2024 – December 31, 2025, legal entities that conduct activities in the oil and natural gas sectors and that registered a turnover over EUR 50 million in the previous year, will owe, in addition to the corporate income tax, a specific turnover tax. The list of legal entities that will owe this additional tax is to be approved by Order of the Minister of Finance;
- The additional tax is determined as follows: 0.5% x (Total revenues – Exempt revenues – Fixed assets in progress – Accounting depreciation of certain assets), each indicator being specifically defined;
- New taxation rules for microenterprises income – microenterprises with a turnover not exceeding EUR 60,000 and that do not carry out certain activities (IT, HoReCa, medical services) will be subject to a 1% tax rate (the other conditions regarding classification as a microenterprise remain applicable);
- Microenterprises that exceed the ceiling of EUR 60,000 or carry out the activities mentioned above will apply the 3% tax rate.
Amendments regarding the taxation of natural persons
- Net income from independent activities (including on the basis of sports activity contracts) – income tax is calculated by applying the 10% rate on gross income, from which the social health insurance contribution owed is deducted (previously only the social insurance contribution could be deducted);
- Wage benefits representing the value of tourist and/or treatment services, including transport (subject to 33%) become taxable and are included in the calculation basis of mandatory social contributions, if employees benefit from holiday vouchers;
- The nominal value of meal vouchers and holiday vouchers is also included in the social health insurance contribution calculation basis;
- The social health insurance contribution due for income from independent activities is calculated on the net annual realized/gross income or the annual income norm, respectively the adjusted annual income norm. The calculation base cannot be lower than the threshold of 6 minimum gross salaries (if no other income subject to the social health insurance contribution has been obtained at least at this level), but also not higher than the threshold of 60 minimum gross salaries.
Amendments regarding VAT
- The definition of “housing that can be lived in as such at the time of delivery” has been modified, new criteria being introduced;
- The applicable VAT rate increases from 5% (current rate) to 9% for the following deliveries of goods/ provision of services:
- the delivery of housing as part of social policy, under the conditions specifically regulated by the Fiscal Code;
- delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency heating systems etc. for housing or central and local public administration buildings, including components for the repair and/or expansion of these systems;
- delivery of high-quality food, i.e. mountain, eco or traditional products, authorized by the Ministry of Agriculture and Rural Development;
- services consisting in allowing access to fairs, amusement parks and recreational parks whose activities are included in NACE codes 9321 and 9329;
- services consisting in allowing access to sports events.
- The applicable VAT rate increases from 5% (current rate) to 19% for the following deliveries of goods/ provision of services:
- the right to use sports facilities whose activities are included in NACE codes 9311 and 9313; the transport of people with trains or historic vehicles with steam traction on narrow lines for touristic or recreational purposes;
- the transport of people using cable transport installations – cable cars, chair lifts, ski lifts – for tourist or leisure purposes;
- the transport of people with animal-drawn vehicles, used for tourist or leisure purposes; the transport of people with boats used for tourist or leisure purposes
- the delivery of thermal energy in the cold season, intended for certain categories of consumers specifically mentioned.
- For delivery of food with added sugar (definition provided in the Excise title of the Fiscal Code), whose total sugar content is at least 10g/100g product, the standard VAT rate of 19% is applied, with the exception of cookies and biscuits, whose delivery is subject to the reduced rate of 9%;
- The VAT exemption with deduction right is restricted for construction services, rehabilitation and delivery of equipment, the exemption being maintained only when these operations are conducted to non-profit entities registered in ANAF’s Public Registry and intended for hospital units owned and operated by the non-profit entity or those in the state public network.
- Transitional measures are introduced regarding the applicability of the reduced rate of 5% to the delivery of housing as part of the social policy between January 1 – December 31, 2024 if contracts that regulate advance payment were concluded between January 1 and December 31, 2023.
Introduction of the special tax on high value immovable and movable assets
- The following persons are obliged to pay the special tax on high value immovable and movable assets:
- individuals who own (including joint ownership) residential buildings located in Romania whose taxable value calculated according to the rules for determining the tax on buildings, individually or cumulatively, as the case may be, exceeds 2,500,000 lei;
- individuals and legal entities that own cars registered in Romania and whose individual purchase value exceeds 375,000 lei. The tax is due for a period of 5 years starting from the fiscal year in which the handover-acceptance of the car takes place or for the fraction of years remaining until the completion of the 5-year period from this date for those in which the handover-acceptance of the car took place previously.
- The special tax is determined as follows:
- in case of properties representing residential buildings, by applying a rate of 0.3% on the difference between the individual taxable value or the sum of the individual taxable values, as the case may be, communicated by the local fiscal body through the tax assessment decision and the threshold of 2,500,000 lei;
- in case of properties representing cars, by applying a rate of 0.3% on the difference between the purchase value and the threshold of 375,000 lei.
Provisions applicable to tax assessment decisions issued after 1 July 2024
- Any income obtained by natural persons ascertained by the tax authorities under the verification procedures, for which the source has not been identified, will be subject to an income tax of 70% applied to the adjusted taxable base.
Amendments regarding the RO e-Invoice system
Provisions applicable starting with 1 January 2024
- The obligation to submit the electronic invoice in the RO e-Invoice system between January 1 – June 30, 2024:
- The electronic invoice is issued for delivery of goods and provision of services that have the place of delivery/supply in Romania, in the B2B, B2G relationship and with other public institutions;
- The electronic invoice is issued regardless of whether the recipients are or are not registered in the RO e-Invoice system;
- Who has the obligation to submit the electronic invoice:
- • Economic operators – taxable persons established in Romania, regardless of whether or not they are registered for VAT purposes;
- • Economic operators – taxable persons not established but registered for VAT purposes in Romania for delivery of goods and provision of services that have the place of delivery/supply in Romania, starting with January 1, 2024, without a deadline.
- Exports (but not ancillary services to exports, such as transport) and intra-community deliveries are exempted from the obligation to submit the electronic invoice in the RO e-Invoice system;
- Suppliers will continue to send the invoice also in the classic format, with the exception of the case when both commercial partners are registered in the RO e-Invoice system. The deadline for submitting invoices in the RO e-Invoice system is of 5 working days from the date of issuing the invoice issued within the legal term;
- Sanctions applicable to the issuer of the invoice for non-compliance with the submission deadline:
- • Lei 5,000 – 10,000 for large taxpayers;
- • Lei 2,500 – 5,000 for medium taxpayers;
- • Lei 1,000 – 2,500 for other legal entities, as well as for individuals.
- The sanctions do not apply between January 1 – March 31, 2024.
Starting with 1 July 2024
- Starting with 1 July 2024, for operations carried out between economic operators established in Romania, invoices on paper or in the previous electronic format will no longer be accepted from a fiscal point of view. The only invoices accepted for the purpose of exercising the right to deduct VAT will be those issued electronically, in XML format, and provided to beneficiaries through the RO e-Invoice system (Art. 319 (11) CF).
B2G relationship
- Electronic invoicing in the field of public procurement is applied in case of existence of a B2G economic transaction:
- By economic operators established in Romania;
- By economic operators not established but registered for VAT purposes in Romania who opt for the national e-invoice system.
- Recipients of invoices register the invoices and make payments from their own budget only if the invoice is correctly issued through the RO e-Invoice system. The original copy of the electronic invoice is considered the XML type file accompanied by the electronic seal of the Ministry of Finance;
- Failure to comply with the previous provision is considered a contravention and is sanctioned with a fine from 500 to 1,000 lei. The recovery of the amounts implies assessment of late penalties and interest;
- The same provisions apply also to invoices issued to public institutions, other than B2G.
B2B relationship
- In the B2B commercial relationship between taxable persons established in Romania, the issuer has the obligation to submit the electronic invoice through the national RO e-Invoice system;
- Non-resident economic operators, registered for VAT purposes in Romania, can opt for the use of the national RO e-Invoice system;
- In case of exercising this option, they are obliged to register in the RO e-Invoice Register, the registration being effective starting from the 1st of the month following the exercise of the option;
- The use of the electronic invoice is considered accepted on the date of its communication in the RO e-Invoice system;
- To generate invoices, economic operators can use the application made available by the Ministry of Finance;
- If, in the B2B relationship between economic operators established in Romania, an invoice is issued without being included in the RO e-Invoice system and the recipient of the invoice receives and registers the invoice, the latter is sanctioned with a fine equal to the amount of VAT entered in the respective invoice.
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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