Profit tax 2019 – Calculation, statements and payment terms

What should we know about profit tax? First of all, we want to know how to calculate the profit tax. Another important question follows: when should we pay the profit tax? To avoid penalties we need to know which statements we have to file and, of course, when we have to submit the statements.

  1. How do we calculate the profit tax?

In order to determine the profit tax, the fiscal result is calculated as the difference between the revenues and expenses recorded according to the applicable accounting regulations, from which the non-taxable income and the tax deductions are deducted and to which the non-deductible expenses are added. When establishing the fiscal result, elements similar to the income and expenses as well as the financial losses are taken into account.

The positive fiscal result is a taxable profit. The negative fiscal result is a fiscal loss.

When calculating the taxable profit, the limits of the deductible expenses provided by the legislation in force shall be applied quarterly, so that at the end of the year they fall within the provisions of the law. For taxpayers who pay yearly income tax, the deductible expense limits apply yearly.

In order to determine the taxable profit, we are obliged to draw up a register of fiscal registrations, in a single exemplary. The register of fiscal registrations may be kept in written or in electronic form.

The completion will be done in chronological order, and the recorded information must correspond to the fiscal operations and the data presented in the tax declarations

The fiscal register is completed in all situations in which the information contained in the fiscal statement is obtained following the processing of the data provided from the accounting registrations. The way of completing the fiscal register is at our discretion, depending on the specific activity and its own needs. These refer to: the calculation of interest rates and exchange rate differences deductible tax, tax for depreciation, the reductions, and exemptions of profit tax, the fiscal register of sales with payment in installments, fiscal value in case of operations of reorganization, liquidation and other transfers of assets and securities, as well as other similar operations.

  1. When should the profit tax for 2019 be declared and paid?

2.1. Declaring and paying of the quarterly profit tax

The calculation, declaration, and payment of the profit tax is made quarterly, until the 25th of the first month following the end of the I-III quarters.

 

The finalization and payment of the tax on profit for the respective fiscal year is made until the deadline for submission of the declaration regarding the tax on profit, respectively March 25, including the following year.

Attention!

The legal entities that dissolve with liquidation have the obligation to pay the profit tax until the date of the submission of the financial statements to the trade register.

Form 100 „ Statement on payment obligations to the state budget ”

We have the obligation to submit this declaration until the 25th of the first month following the quarter for which the tax is calculated.

Attention! For the fourth quarter, the statement 100 must not be submitted.

We will submit the declaration regarding the payment obligations to the state budget to the fiscal authority in whose fiscal register we are registered as a taxpayer.

The declaration regarding the payment obligations to the state budget is completed with the help of the assistance program. The form can be downloaded from the website of the National Tax Administration Agency, at the address of the declarations.

The form is submitted to the competent fiscal authority, in PDF format, with an XML file attached, on CD support, accompanied by the paper format, signed according to the law, or transmitted by electronic means of remote transmission, in accordance with the legal provisions in force.

Form 101 „Statement regarding the profit tax”

We have the obligation to submit the form 101 “Declaration regarding the tax on profit” by March 25 inclusively of the following year.

Taxpayers who no longer exist during the fiscal year have the obligation to complete and submit the Declaration regarding the tax on profit until the date of submitting the financial statements at the trade register.

In case that we want to correct the initially submitted declaration, the rectifying declaration is drawn up on the same form template, entering “X” in the special space provided for this purpose.

The statement regarding the profit tax is completed with the help of the assistance program.

The form is submitted to the competent fiscal authority, in PDF format, with an XML file attached, on CD support, accompanied by the paper format, signed and stamped according to the law, or submitted by electronic means of remote transmission, in accordance with the legal provisions in force.

2.2. Declaration and payment of the tax on yearly profit

The credit institutions – Romanian legal entities and the Romanian branches of the credit institutions – foreign legal entities – have the obligation to declare and to pay tax on yearly profit, with advance payments made quarterly. Prepayments are declared in Form 100. The deadline for paying the yearly tax is the deadline for submitting the tax return – Form 101, respectively March 25, of the following year.

Religious cults, pre-university education units, and higher education institutions of higher education, private, accredited, the associations of owners constituted as legal persons and the associations of tenants recognized as owners associations, the National Red Cross Society of Romania, non-profit organizations, trade union organizations, employers’ organizations have the obligation to declare and pay the tax on profit, yearly, until February 25, including the year following the one for which the tax is calculated.

Taxpayers who obtain a majority income from cereals, technical plants and potatoes, fruit trees and viticulture have the obligation to declare and pay the tax on yearly profit, until February 25, including the year following the one for which the tax is calculated.

  1. The option for declaring and paying the yearly profit tax

The taxpayers may choose for the calculation, the declaration and the payment of the tax on yearly profit, with advance payments, made quarterly. The deadline for the payment of the yearly tax is the deadline for submitting the tax return, respectively March 25, of the following year.

The option for the yearly system of declaration and payment of the tax on profit is made at the beginning of the fiscal year for which the application of the yearly system is requested. The option is compulsory for at least 2 consecutive fiscal years. Exit from the yearly system of tax declaration and payment is made at the beginning of the fiscal year for which the application of the yearly system is requested. The taxpayers communicate to the competent tax authorities the modification of the yearly/quarterly system of declaration and payment of the tax on profit until January 31, including the respective fiscal year by submitting the Form (012) “Notification regarding the modification of the yearly/quarterly system of declaration and payment of the profit tax “.

The following entities cannot choose between yearly system of tax return and payment of profit:

– taxpayers who were newly established, with the exception of newly established taxpayers as an effect  of some reorganization operations carried out according to the law;

– who have registered fiscal loss or which did not owe tax on yearly profit;

– who has been in temporary inactivity or have declared, on their own responsibility that they do not carry out activities, at the Trade register or at the Register kept by the competent Courts, according to the legal provisions, as the case may be;

– who were taxpayers on the income of microenterprises.

The following entities cannot choose between yearly system of tax return and payment of profit:

– credit institutions – Romanian legal persons and branches in Romania of credit institutions – foreign legal persons;

– religious cults;

– pre-university education units and higher education institutions;

– the associations of owners constituted as legal persons and the associations of tenants recognized as    the associations of owners;

– The National Red Cross Society of Romania;

– non-profit organizations, trade union organizations, employers’ organizations

– foreign legal entities that make income from the transfer of real estate located in Romania or any rights related to these properties, including renting or transferring the use of real estate property located in Romania, revenues from the exploitation of natural resources located in Romania, as well as income from sale- assignment of participation titles held to a Romanian legal person.

– taxpayers who obtain a majority income from cereals, technical plants, and potatoes, orchards, and viticulture.

  1. The fiscal year is different from the calendar year

Taxpayers who have chosen between a financial year other than the calendar year may choose the fiscal year which corresponds to the financial year.

Taxpayers who have chosen a fiscal year other than the calendar year submit the form (014) “Notification regarding the change of the fiscal year” within 15 days from the beginning of the modified fiscal year or from the date of registration of the taxpayer – if it is chosen from Establishment for a fiscal year different from the calendar year.

The first modified fiscal year also includes the previous period from the calendar year between January 1 and the day before the first day of the modified fiscal year, this being a single fiscal year.

Taxpayers who opt for the fiscal year other than the calendar year apply the following rules for declaring and paying the profit tax:

a) the taxpayers who declare and pay the tax on the quarterly profit and for which the modified fiscal year begins in the second and third months of the calendar quarter, the first month, respectively the first two months of the respective calendar quarter, will constitute a quarter, for which the taxpayer has the obligation to declare and pay the tax on profit, until the 25th of the first month following the end of the respective calendar quarter. These provisions also apply if the amended fiscal year begins in the second and third months of the fourth quarter of the calendar year, respectively.

b) the taxpayers who declare and pay the yearly profit tax, with advance payments made quarterly, for the modified fiscal year, continue to make the anticipated payments at the level established before the change; if the modified fiscal year begins in the second and third months of the calendar quarter, the first month, respectively the first two months of the respective calendar quarter, will constitute a quarter for which the taxpayer has the obligation to declare and make the advance payments, in the sum of 1/12 of the profit tax due for the previous year, for each month of the quarter, up to the 25th of the first month following the end of the respective calendar quarter. These provisions also apply if the amended fiscal year begins in the second and third months of the fourth quarter of the calendar year, respectively.

c) The taxpayers who dissolve with liquidation, for the period between the first day of the fiscal year following the one in which the liquidation procedure was opened and the date of the liquidation procedure, are not subject to the mentioned provisions.

Rules applicable to taxpayers who choose to return to the calendar year or to change the period from which the fiscal year is constituted.

Taxpayers who have opted for a different financial year from the calendar year if they change their financial year, according to the accounting regulations, can opt for the modified fiscal year to correspond with the financial year. To establish the modified fiscal year, these taxpayers apply the following rules:

a) if the modified fiscal year rebecomes a calendar fiscal year, the last modified fiscal year also includes the period between the day following the last day of the modified fiscal year and December 31 of the respective year; the yearly tax return for the last modified fiscal year is submitted until March 25, including the following year;

b) if the period of the modified fiscal year is modified, the first new fiscal year shall also include the period between the day following the last day of the modified fiscal year and the day before the first day of the new fiscal year.

The change of the fiscal year period is communicated to the competent fiscal authorities as follows:

  1. a) taxpayers who change the fiscal year according to letter a), until the 25th of the third month inclusive, from the date on which the modified fiscal year would have been closed;
  2. b) taxpayers who change the fiscal year according to letter. b), within 15 days from the start of the new modified fiscal year.

Applicable normative acts;

Art.16,art.19,art.41 and 42 from the Fiscal Code

Art. 8 from the Title II Tax on profit from the Methodological Norms for applying the Fiscal Code Order of the National Agency for Fiscal Administration no. 587/2016