Reverting to the distribution of profits from previous years

Reverting to the distribution of the previous profits, according to the decision of the General Meeting, legally constituted, is possible, and the respective amounts can be distributed on “dividends” if the members decide on this distribution, if there are no losses to cover and the company has liquidity.

The General Meeting of the shareholders is convened, and it is decided on the return on the previous distribution of the profit, according to the provisions of art. 111 of the Law of the commercial companies no. 31/1990, republished, with subsequent modifications.

The General Meeting of the Shareholders votes and signs the decision to distribute the reconstituted profit by switching from other reserves to dividends. The situation of sharing and distribution of dividends is drawn up, depending on the participation of each associate in the share capital of the company. A situation of payment of net dividends is drawn up, in which the related tax and the net amount of payment are highlighted. Based on this situation, the payment of dividends and the payment to the state budget account of the tax on dividends are made.

According to art. 26 of the Fiscal Code, the reduction or cancellation of any provision or reserve that was previously deducted, including the legal reserve, is included in the fiscal result, as taxable income or items similar to the income, regardless of whether the reduction or cancellation is due to the change of the destination of the provision or reserve, distribution of the provision or reserve to the participants in any form, liquidation, division in any form, merger of the taxpayer or any other reason.

At the same time, if You have benefited from the establishment of reserves, tax advantages (deductions), such as for example when setting up the legal reserve (account 1061), you must take this deduction into account when calculating the income tax and consider it an item similar to income ( statement 101). Therefore, the legal reserves established under the law cannot be canceled.

According to art. 97 paragraph (7) of the Fiscal Code, the tax on dividends for the profit of previous years (regardless of the year) and distributed in 2019 is at the rate of 5% and is withheld at the source at the time of dividend payments to associates, is paid to the state budget until the 25th of the month following the month in which these dividends distributed to the associates were actually paid. By the same date, it shall be stated in Declaration 100.

When the distributed dividends are not paid until December 31 of the year in which they were distributed, the company has the obligation to withhold and pay the 5% dividend tax until January 25 of the year following the one in which they were distributed. Until the same date, the declaration of the tax in, Declaration 100” is also made.

For the dividends distributed in the year 2019, the company must submit the Informative Declaration 205 regarding the tax withheld at source and realized earnings/losses, on beneficiaries of income at the competent Fiscal Authority, until the last day of January, including the current year for the expired year.