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Regularization of Paid Dividends

Dividend Tax Refund Procedure – Annual Regularization

If a company distributes dividends throughout the year (e.g., quarterly), and at the end of the year, due to a loss in the last quarter, it is found that the distributed dividends exceed the maximum threshold, the company must perform a regularization. According to ANAF Order No. 765/2022, the procedure for refunding the dividend tax after regularization is as follows:

  1. Objective of the Procedure

The procedure aims to refund the excess dividend tax paid as a result of regularizing partially distributed dividends during the year, according to the regulations in Law No. 31/1990 (Company Law), after the return of the amounts received in excess by the partners or shareholders, or after the approval of the annual financial statements in the case of interim, undistributed, unpaid dividends.

  1. Regularization Procedure

If, after regularizing the dividends paid throughout the year, an overpayment of dividend tax is identified, the dividend payer can request its refund. In this case, the following steps must be followed:

  • Filing a corrective declaration: If it is found that the distributed amounts were greater than the owed dividends, a corrective declaration must be submitted to the competent tax authority. This will include the amount of excess dividend tax paid.
  • Filing the refund request: After submitting the corrective declaration, the dividend payer must file a request for the refund of the dividend tax with the competent tax authority. This request can only be filed after the partners have returned the excess paid dividends.
  1. Refund Deadline

The refund request can be filed up to 5 years from January 1st of the year following the year in which the right to refund arose, according to Article 219 of the Fiscal Procedure Code.

  1. Tax Offset and Refund

If the dividend payer has outstanding fiscal obligations (including fines and other budgetary claims), the refunded dividend tax will be offset against these obligations according to Articles 167 and 168 of the Fiscal Procedure Code.

  • If the refunded amount is smaller than the outstanding fiscal obligations, it will be fully offset.
  • If the refunded amount is greater than the outstanding fiscal obligations, the difference will be refunded via bank transfer.
  1. Example of Dividend Tax Refund
  1. Dividend Distribution During 2025 Quarterly dividends of 100,000 RON (gross) are paid throughout 2025, and the dividend tax is 10,000 RON (10%). The net dividends paid are 90,000 RON.
  2. Loss in Q4 At the end of 2025, a loss is recorded, and the total amount available for dividends is 90,000 RON. It is found that 10,000 RON in excess dividends were distributed.
  3. Accounting Entry at the Beginning of 2026
    • Closing the profit and loss account:
      • 121 Profit/Loss = 1171 Retained Earnings: 90,000 RON (loss)
    • Recording final dividends as per the annual financial statements:
      • 1171 Retained Earnings = 457 Dividends Payable: 90,000 RON
    • Offsetting the dividends payable account with the dividends receivable account:
      • 457 Dividends Payable = 463 Receivables from Distributed Dividends: 90,000 RON
  4. Refunding the Dividends The partners return 9,000 RON (from the excess dividends) within 60 days:
    • 5121 Bank Accounts = 463 Receivables from Distributed Dividends: 9,000 RON
  5. Refunding the Dividend Tax
    • Recognizing the excess tax paid:
      • 446 Other Taxes = 463 Receivables from Distributed Dividends: 1,000 RON
    • Refund of the tax:
      • 5121 Bank Accounts = 446 Other Taxes: 1,000 RON

This procedure applies in accordance with ANAF Order No. 765/2022 for the annual regularization of dividends and the refund of the corresponding tax.