Major Changes to Romania’s Tax System: A Breakdown of New Laws and Regulations

Amendments in corporation tax area:

• Starting with January 1, 2024, taxpayers who registered a turnover bigger than EUR 50,000,000 in the previous year, as well as financial institutions, will determine the profit tax at the level of the minimum turnover tax, if the computed profit tax accumulated from the beginning of the fiscal year to the end of the relevant period is lower than the minimum turnover tax;
• The percentage for the minimum turnover tax computation formula is 1% for other than financial institutions and 2% for the financial institutions

Microenterprises

The Law brings 2 new tax rates:

• The tax rate will be 1% for microenterprises with a turnover below Ron 300,000 (excluding some activities such as IT, hospitality industry, legal services, medical services);
• The tax rate will be 3% for microenterprises with a turnover between Ron 300,000 and up to Ron 2.5 million and for those in the fields: IT, hospitality industry, legal and medical services.

Income tax and social contributions

• The income tax exemption related to salary income, applicable for employees in the IT field, will be limited to a level of RON 10,000 from the gross salary related revenues, in compliance with the eligibility conditions. This facility will be available only until December 31, 2028.
• Income tax exemption for IT, construction, agricultural and food industry employees apply to a single employer/payer of income and only for income obtained under a single full-time or part-time employment contract for work.
• Write-down of the HFC (Health fund contribution) share corresponding to the percentage of the contribution to Pillar II. The beneficiaries are employees from the agricultural, construction, food and IT industries.
• The exemption from health insurance contribution due by employees in the field of construction, in the agricultural sector and in the food industry is canceled.
• Cancels the tax incentive regarding the reduction of WIC (work insurance contribution) up to the level of 0.27% for employees in the field of construction and those in the agricultural sector and the food industry.
• The incomes ascertained by the fiscal bodies whose source has not been identified, will be imposed with a tax rate of 70% (compared to the current provision of 16%).
• Exemption from the health insurance payment of the income obtained by prosumers from the sale of electricity, under certain conditions.
• People who earn income from independent activities will pay health insurance on net income, capped at 60 minimum wages per year.
• The value of meal vouchers and holiday vouchers will be included in the basis to determine the health insurance contribution.

VAT

• Updates the meaning of the expression “homes that can be lived in as such at the time of delivery“. At the same time, changing the VAT rate from 5% to 9% for the delivery of homes that do not exceed the amount of Ron 600,000 (excluding VAT) purchased by individuals. For the houses contracted in 2023 and for which advances have been invoiced and collected and which will be delivered in 2024, the VAT rate of 5% will still be applicable.
• Increasing the VAT rate from 5% to 9% for the delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other efficient heating systems, whose beneficiaries are homes and public entities.
• The “Register of home purchases with a reduced VAT rate” is (re) organized in electronic format and the obligations of public notaries are established.

Special taxes

The following taxpayers will be obliged to pay the special tax on immovable and movable assets of high value:

• natural persons who solely/jointly own residential buildings located in Romania if the taxable value of the building exceeds RON 2,500,000;
• Natural and legal persons who own cars registered in Romania whose individual purchase value exceeds RON 375,000. The payment is due for a period of 5 years starting with the fiscal year in which it was delivered-received.

Tax rates:

• for real estate 0.3% on the difference between the value of the asset and RON 2.5 million;
• for cars 0.3% on the difference between the value of the good and RON 375,000.

E-INVOICE

• Issuing invoices in standard electronic format (E-invoice) becomes mandatory starting from January 1, 2024 for the deliveries of goods and the provision of services that have the place of delivery/performance in Romania.
• The term for the transmission of invoices in the electronic system is 5 working days from the date of issue (or the due date).
• Non-compliance with the deadline for sending the electronic invoice is sanctioned with a fine, after a grace period of 3 months (01.01.2024-31.03.2024).

FINES

• The provision of the Tax Procedure Code that allowed the payment of half of the minimum fine within 15 days from the date of communication of the minutes is repealed.
• The fines stipulated by GEO 28/1999 regarding the obligation of economic operators to use electronic fiscal machines are increasing.

Cash ceilings

• Cash receipts and payments between economic operators will be possible within a daily ceiling of RON 1,000/person, but no more than a total ceiling of RON 2,000/day.
• Cash payments to cash and carry stores are allowed within a total daily ceiling of RON 2,000.
• Advances for cash settlement are limited to RON 1,000/day per person.
• Ceiling at the cash register of a maximum of RON 50,000 in the house register at each work point or social/professional headquarters.
• Cash operations between economic operators and natural persons (trade, dividends, claims and other settlement of other rights) are capped at RON 5,000/person until 31.12.2024 and RON 2,500 starting with 01.01.2025.
• Cash transactions between individuals are limited to RON 10,000 per transaction until 31.12.2024 and RON 5,000 starting from 01.01.2025.