Changes of Romanian Fiscal code: tax updates, quotas, thresholds, and more

CORPORATE INCOME TAX:

– The list of assets for which the tax exemption of reinvested profit is applied is extended, in the sense of adding assets for refurbishment. These assets will be defined by order of the Ministry of Finance

– There is no change in the corporation tax quota – 16%

 

DIVIDEND TAX:

– Dividend tax is increased for residents and non-residents from 5% to 8%

– When applying the conditional exemptions from the dividend tax paid between companies, the income tax of micro-enterprises is considered to be a tax that replaces the profit tax.

 

SPECIAL TAX (HORECA) – is repealed

 

INCOME TAX FOR MICRO-ENTERPRISES

– The annual revenue ceiling is reduced from 1 million euros to 500,000 euros

– The share of revenues from consulting and management services is limited to 20% of the total – there is no definition of consulting and management services. However, considering the substantiation note of the project, we appreciate that the target is precisely the professional incomes that require a high qualification and having high profit margins, therefore it is expected that a possible definition of them will have a very wide spectrum.

– the number of micro-enterprises in which the same person can hold more than 25% of the total participation titles or voting rights is limited to 3

– Companies in the following business are excluded from the scope of application of the income tax on micro-enterprises: banking, insurance, capital markets, gambling, exploitation of oil and natural gas deposits – The income tax of micro-enterprises becomes optional

– Companies without employees cannot apply the income tax on micro-enterprises.

– The income tax rate of micro-enterprises is 1% of income.

 

INCOME TAX

1. Income from salaries:

– The income tax exemption from salaries for persons with an employment contract for a maximum period of 12 months with legal entities in the HORECA field carrying out seasonal activities is eliminated.

– The fiscal facilities for the employees constructions, agriculture and food industry are granted for salaries up to 10,000 lei per month (from 30,000 lei per month previously). The facilities are granted only for the incomes from salaries for the activity carried out in Romania.

– The list of tax-exempt indemnities is updated with indemnities for the care of the patient with oncological diseases.

– The following monthly accumulated income does not represent taxable income within the meaning of income tax, up to a monthly ceiling of no more than 33% of the basic salary corresponding to the job held: allowances received under the mobility clause, contributions to private pension schemes and private health insurance, and other benefits in kind.

– The ceiling for granting personal deductions is set at the level of the minimum salary + 2,000 lei.

 

2. Income from independent activities:

– For some activities the income tax basis may be the standard income determined by the authorities. Such option is available up to a revenue threshold of 25,000 euros per year (from 100,000 euros per year).

– The calculation basis for the social contributions for persons who realize taxable incomes other than   those from salaries is determined as follows:

– 12 minimum wages if the accumulated income is between 12 and 24 minimum wages

– 24 minimum wages if the accumulated income is the at least at this level.

 

 

3. Rental income:

– The flat rate of deduction for the calculation of the income tax from rents is eliminated (previously 40%). The taxable income thus becomes equivalent to the realized income. There remains the option of determining the taxable income in the real system (based on the data from the single entry accounting).

 

4. Income from gambling:

– It will be taxed through progressive quotas as follows: 3% up to 10,000 lei, 20% for the range 10,000 -66,750 lei and 40% for what exceeds 66,750 lei.

 

5. Income from the transfer of real estate from personal patrimony:

– The deduction of the amount of 450,000 from the tax calculation base is eliminated

– The tax rate will be 3% for properties held up to 3 years inclusive and 1% for goods held for more than 3 years.

 

SOCIAL CONTRIBUTIONS

– The deduction regime is correlated with the new rules regarding the non-taxable or exempt incomes provided for the income tax from salaries

– For part-time employment contracts with minimum wage, the calculation basis for social contributions is completed at the level of the minimum wage for full time contract (with some exceptions: students younger that 26 years old, some disabled people, some categories of pensioners and people with several part-time employment contracts) starting with August 1, 2022.

– The calculation basis for the social contributions for persons who realize taxable incomes other than those from salaries is determined as follows:

– 12 minimum wages if the accumulated income is between 12 and 24 minimum wages

– 24 minimum wages if the accumulated income is the at least at this level.

 

INCOME TAX FOR NON-RESIDENTS

– Dividend tax increases from 5% to 8%

 

VAT:

– The VAT rate is increased from 5% to 9% for hotel and restaurant/catering services, as well as for certain categories of inputs in agriculture

– Some food products (non-alcoholic beverages with high sugar content) are eliminated from the category of those for which the reduced quota of 5% is applied

– The threshold for the reduced VAT rate of 5% for the sale of homes will be 600,000 lei. The reduced rate will apply for a single home purchased by the same person individually or jointly with other people. For the houses contracted before 31.12.2022, the rules in force until this date can be applied

 

BUILDING TAX

– Common tax rules are established for individuals and legal entities, the only remaining difference depending on the destination

– The tax rate for residential buildings owned by individuals is changed to at least 0.1% of the taxable value

– The tax rate for non-residential buildings owned by individuals is changed to at least 0.5% of the taxable value (from 0.2% – 1.3%). For buildings intended for agricultural activities the tax rate is at least 0.4%

– The taxable value of the buildings is the one determined by the Market Studies administered by the National Union of Notaries Public in Romania or, if they are not available, based on the value from the records of the fiscal offices on 31.12.2022

– For mixed-use buildings, the tax rate corresponding to the majority destination will be applied.

 

OTHER CHANGES:

– Merchants with an annual turnover of more than 10,000 Euros per year are obliged to accept payment by card, through a POS terminal (the previous threshold was 50,000 Euros)

 

NOTE: the amendments enter into force on January 1, 2023, with the following exceptions:

– The provisions regarding the facilities for employees in the field of construction, agriculture and food industry enter into force within 3 days from the date of publication of the ordinance

– The provisions regarding the tax for gambling income enter into force on August 1, 2022.