We remind you that Law 296/2020 for amending and supplementing Law no. 227/2015 on the Fiscal Code was published in the Official Gazette no. 1269 of December 21, 2020.
Thus, five years after the introduction of the VAT fiscal group, Law 296/2020 took the next step in the field of fiscal consolidation.
The companies part of the same group, which meet certain conditions, can compensate the profit positions with those of fiscal loss and thus owe tax, only on the consolidated profit of the group.
According to the legal provisions, the fiscal group in the field of profit tax consists of at least two of the following entities, hereinafter referred to as members
- a Romanian legal entity / legal entity with registered office in Romania established according to European legislation and one or more Romanian legal entities / legal entities with registered office in Romania established under European legislation in which it holds, directly or indirectly, at least 75% of the value / number of participation titles or their voting rights;
- at least two Romanian legal entities in which a Romanian natural person holds, directly or indirectly, at least 75% of the value / number of participation titles or voting rights;
- at least two Romanian legal entities held, directly or indirectly, in proportion of at least 75% of the value / number of participation titles or voting rights, by a legal / natural person, resident in a state with which Romania has concluded a convention for the avoidance of double taxation or in a State with which an agreement on the exchange of information has been concluded;
- at least one Romanian legal person held, directly or indirectly, in proportion of at least 75% of the value / number of participation titles or voting rights, by a legal person resident in a state with which Romania has concluded a convention for the avoidance of double taxation or in a state with which an agreement has been concluded regarding the exchange of information and the permanent registered office / permanent establishment in Romania of this foreign legal entity.
The responsible legal entity represents the Romanian legal entity / legal entity with registered office in Romania established according to European legislation, member of a fiscal group in the field of profit tax, designated to determine the consolidated fiscal result of the fiscal group, filing the profit tax return and making payment income tax on behalf of the group.
Important! The period of application of the fiscal consolidation system in the field of profit tax is 5 fiscal years, calculated starting with the first year of application of the fiscal consolidation system and until the abolition of the fiscal group, and the system is optional.
The option is communicated to the competent fiscal body based on a joint application submitted by the legal representative of the responsible legal entity signed by the legal representatives of all members of the group.
The application is submitted at least 60 days before the beginning of the period for which the application of fiscal consolidation is requested.
The fiscal consolidation system in the field of profit tax is applied starting with the fiscal year following the submission of the application.
Each member of the tax group determines the tax result individually according to the rules established by Title II-Income tax.
By exception, the consolidated fiscal result of the fiscal group is determined by the algebraic summation of the fiscal results determined individually by each member of the fiscal group.
The positive consolidated fiscal result is taxable profit, and the negative consolidated fiscal result is tax loss. The profit tax is calculated by applying the tax rate on the positive consolidated fiscal result of the group.
When determining the profit tax due by the fiscal group, the amounts representing will be taken into account:
– the tax credit,
– exempt income tax,
– exemptions and reductions of profit tax calculated according to the legislation in force,
– the amounts representing the sponsorship and/or patronage expenses and the expenses regarding the private scholarships, according to the law,
– the acquisition cost of electronic fiscal cash registers and
– other amounts that are deducted from the profit tax, according to the legislation in force, determined by each member and communicated to the responsible legal entity.
These amounts are deducted from the profit tax due by the tax group.
The fiscal losses registered by a member of the group before the application of the fiscal consolidation system in the field of profit tax, are recovered by the respective member, only from his taxable profits.
The fiscal losses registered by a member of the group during the application of the fiscal consolidation system are recovered from the consolidated fiscal result of the group.
Important! The fiscal losses registered by a member of the group before the application of the fiscal consolidation system in the field of profit tax, are recovered by the respective member, only from his taxable profits. The fiscal losses registered by a member of the group during the application of the fiscal consolidation system are recovered from the consolidated fiscal result of the group. Each member of the fiscal group has the obligation to prepare the transfer pricing file which will include with affiliated entities outside the tax group. By derogation from the provisions of paragraph (2) of article 108 of Law no. 207/2015, with subsequent amendments and completions, the files of transfer prices prepared by each member of the fiscal group will be presented by the responsible legal entity.
For the fiscal group that applies the system of declaration and payment of the quarterly profit tax, each member of the fiscal group determines the fiscal result individually and communicates it to the responsible legal person until the 25th of the first month following the end of quarters I – III.
For the fourth quarter, the communication is made until the deadline for submitting the annual profit tax return. The calculation, declaration, and payment of the quarterly profit tax due by the fiscal group is performed by the responsible legal entity until the 25th of the first month following the end of the first, second, and third quarters.
The finalization and payment of the profit tax related to the respective fiscal year are carried out by the responsible legal person until the term for submitting the declaration regarding the profit tax provided in article 42 of Law no. 227/2015 on the Fiscal Code.
In the case of the fiscal group that applies the system of declaration and payment of the annual profit tax, with advance payments made quarterly, the quarterly advance payments are established in the amount of a quarter of the profit tax due for the previous year, determined by summing the profit tax due for the previous year by each member of the group with the corresponding application of the other rules for determining/declaring/making quarterly advance payments, as the case may be, according to article 41 of Law no. 227/2015 on the Fiscal Code.
The responsible legal entity is obliged to submit a consolidated annual declaration regarding the profit tax in which it reports the results of the entire fiscal group and is responsible for the payment of the profit tax calculated for the entire fiscal group.
The annual income tax return is submitted to the competent fiscal body, together with the annual income tax return of each member, until March 25 of the following year / until the 25th of the third month inclusive, by at the end of the modified fiscal year.
Legal basis:
– Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions;
– Law no. 296/2020 for the amendment and completion of Law no. 227/2015 regarding the Fiscal Code.