Tax News OUG 115

New changes to the fiscal legislative framework were published on 15.12.2023, as follows:

Corporation Tax

  • New rules for deducting the amounts paid to employees for early education, within the limit of 1,500 lei per month/child
  • The deductibility of the expenses with the employees accommodation is carried out at the level of the surfaces in the Housing Law (eliminates the 10% surplus previously provided for)
  • limits to 50% the deduction of maintenance expenses related to a premises owned by a natural person that is also used for personal purposes, maintaining the limit regarding the percentage of use for economic purposes provided for in the Contract
  • limits to 50% the deduction of maintenance expenses related to a premises purchased in residential buildings if it is not used exclusively for the purpose of economic activity. If the property is used for personal purposes by the associates, the expenses are fully non-deductible and represent expenses incurred for their benefit. Depreciation will be treated similarly
  • eliminate private scholarships from the category of facilities specific to expenses similar to sponsorships. Scholarships will still be deducted within the specific limits of sponsorships, but no more than 1500 lei/scholarship
  • the provisions regarding the tax deduction of the amounts paid for early education are abrogated (they will be considered as limitedly deductible)
  • the tax credit for the amounts paid for the purchase of cash registers is canceled
  • reduces to 30% (from 50%) the deduction percentage of expenses with provisions for commercial receivables – limits the application of the deduction to receivables resulting from the sale of goods/services
  • Fiscal losses will be carried forward for 5 years and only within the limit of 70%. Fiscal losses recorded until 2023 will be recovered over the next 7 years, but still within the limit of 70%
  • Borrowing costs will be deducted within the limit of 1 million Euros per year, but borrowing costs in relation to affiliated persons, which do not finance the acquisition of certain categories of assets, are deductible within the limit of 500 thousand Euros per year

 

Micro Companies

  • The number of micro-companies that can have common associates in a percentage greater than 25% is limited to one
  • the ceiling of 500 thousand euros is checked taking into account the revenues of the related enterprises (cf. the definition of Law  346/2004). This provision will further limit the possibility of establishing micro-companies
  • the derogation from the ceiling of 500 thousand for companies in the HORECA field is eliminated
  • for the application of the micro company system in 2024, the financial statements must be submitted by 31.03.2024 – it probably refers only to those not submitted on time!
  • eliminate all tax deductions, for example sponsorships, cash registers, etc.

 

Payroll tax

  • modify the tax exemption for early education, which was not applied anyway, will be included in the category of limited exemptions accumulated to 33% of the salary
  • repeal the tax exemption for teleworking
  • limits the exemption for sports subscriptions paid to employees to 100 E per year

 

Income tax – rents

  • repeals the provision according to which the incomes related to a number of more than 5 rental contracts are similar to the incomes from independent activities
  • reintroduces the deduction of some flat-rate deductible expenses for rental income – at a rate of 20%
  • the option for determining rental income based on books is abrogated
  • rental income will be taxed at source if the income payer is an entity that has the obligation to keep accounting records

 

VAT

  • Limits to 50% the right to deduct VAT related to the purchase and expenses of buildings located in residential premises if the use is not exclusive for economic purposes

 

Pay in cash

  • The ceiling for cash payments representing an advance for settlement will be 5,000 lei
  • cash operations between legal entities and physical persons representing: payment for deliveries or services, dividends, assignments of receivables are capped at 10,000 lei
  • cash operations between legal entities and physical persons representing loans are carried out exclusively without cash

 

E-Invoice

  • Simplified invoices are excluded from reporting obligations in the E-Invoice system
  • The application of fines for not entering invoices in the E-invoice system is postponed until 01.07.2024

 

 

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