Tax benefits for donations to refugees from Ukraine

In the Official Gazette (Part I) no. 231 of 08 March 2022 was published the EMERGENCY ORDINANCE no.20/2022 on the modification and completion of some normative acts, as well as for the establishment of some support and humanitarian assistance measures.

 Medical assistance for foreign citizens or stateless persons in special situations coming from the area of armed conflict in Ukraine:

According to EMERGENCY ORDINANCE 20, foreign citizens or stateless persons in special situations coming from the area of armed conflict in Ukraine and entering Romania and requesting international protection in Romania, who need medical services, sanitary materials, medicines and medical devices, benefit from the basic package of services provided for in the framework contract on the conditions of medical assistance, medicines and medical devices under the social health insurance system and its implementing rules, as well as medicines, medical materials, medical devices and medical services included in the national curative health programmes, as Romanian insured persons, without payment of social health insurance contribution, personal contribution for medicines provided in outpatient treatment and with exemption from co-payment.

It is important to mention that, for the persons mentioned above, medical services in outpatient medical care for clinical specialties included in the basic package of services are granted without the need to present the referral ticket, which is a special form used in the social health insurance system.

Providers of medical services, health materials, medicines and medical devices in contractual relations with health insurance houses, including for national curative health programmes, are obliged to register in the computer application provided by the National Health Insurance House the persons mentioned above and to keep copies of their identity documents, if they exist.

Providers are obliged to draw up separate records for medical services, health materials, medicines or medical devices provided to the persons mentioned above and for which they draw up separate invoices; the invoices accompanied by supporting documents, in the format requested by the National Health Insurance House and copies of identity documents, if they exist, or copies of medical documents from the providers, for persons who do not have identity documents, are reported monthly to the health insurance houses with which they have a contractual relationship for settlement.

Individuals hosting foreign citizens or stateless persons in special situations, coming from the area of the armed conflict in Ukraine, benefit from the settlement from the budget of the County Inspectorates for Emergency Situations / Inspectorate for Emergency Situations Bucharest-Ilfov of food expenses in the amount of 20 lei/day/person hosted. The settlement mechanism shall be established by Government decision.”

  • Education for minors in special situations coming from the area of armed conflict in Ukraine and entering the territory of Romania, including those not seeking international protection
  1. a) the right to education in Romanian educational establishments under the same conditions and with funding from the same budgets as for Romanian pre-schoolers, preschoolers and pupils;
  2. b) the right to free accommodation in boarding schools, food allowance, the right to accommodation, namely: school supplies, clothing, shoes, textbooks.

For the purposes of the present emergency ordinance, by audient is understood the pupil enrolled in another education system in another country, who continues, at the request of the parent or the legal representative of the minor pupil, of the adult pupil or of the competent authority, his or her schooling in an education establishment of the Romanian education system and is enrolled in provisional catalogues, until the equivalence of studies and the support of eventual differences.

After becoming a listener, they have the following rights:

a) the right to participate in educational activities in pre-university educational establishments and in extracurricular activities in the circles set up in children’s clubs and palaces. Participation in extra-curricular activities is not conditional on being an auditor;

b) the right to attend complex hospital-type medical care units, in accordance with the legal provisions, for pupils who are not mobile due to a disability, i.e. for pupils suffering from chronic diseases or who have conditions for which they are hospitalized for a period of more than 4 weeks;

c) the right to benefit from the facilities for local public, surface, naval and underground transport, as well as internal car, rail, naval and river transport, throughout the calendar year, similar to the students enrolled in pre-university education units in Romania;

d) the right to benefit from free of charge for all the categories of transport provided for in letter c), for orphan pupils, pupils with special educational needs, as well as those for whom a special protection measure has been established, under the terms of the law, or guardianship, in accordance with the provisions of Law no. 1/2011, as amended and supplemented;

e) the right to the allocation of basic food to all children in primary and secondary education granted through ongoing social programmes.

  Donations in support of foreign citizens or stateless persons in special situations:

According to Article IX of the EMERGENCY ORDINANCE 20/2022, natural persons and legal entities, with the exception of public institutions and authorities, may donate sums of money to be collected by the General Inspectorate for Emergency Situations in a separate account in lei opened at the Treasury and Public Accounting Activity of the Municipality of Bucharest, for the provision of support and humanitarian assistance to foreign citizens or stateless persons in special situations from the area of armed conflict in Ukraine.

The donation campaign according to the above provisions shall be carried out from the entry into force of this emergency ordinance until 31 December 2022.

              By way of derogation from the provisions of Article 25 of Law no.227/2015 on the Tax Code, with subsequent amendments and additions, taxpayers under Title II “Corporate income tax” of the same act deduct in the calculation of the tax result the amounts representing cash donations granted according to the provisions of EMERGENCY ORDINANCE 20/2022.

              By way of derogation from the provisions of Article 53 of Law no. 227/2015, as amended and supplemented, legal entities – taxpayers under Title III “Tax on the income of micro-enterprises” of the same normative act shall deduct from the taxable base the amounts representing donations in money granted according to the provisions of URGENT ORDINANCE 20/2022.

              By way of derogation from the provisions of Article 68 paragraph (4) and paragraph (7) letter e) of Law no.227/2015, as amended and supplemented, individuals who determine their annual net income, in the real system, based on accounting data may deduct expenses representing cash donations granted according to the provisions of URGENT ORDINANCE 20/2022.

              Opening an account for donations – procedure:

              The General Inspectorate for Emergency Situations (ISGU) requests the opening of the account 50.07.03 “Cash from donations related to humanitarian aid for Ukraine” at the Treasury and Public Accounting Activity of the Municipality of Bucharest and may open accounts in lei and currency at any credit institution, which will be publicly communicated on its own website, the Ministry of Internal Affairs and the Romanian Government website, as well as through other media channels.

              The separate available account in lei opened at the Treasury and Public Accounting Activity of the Municipality of Bucharest does not bear interest and is not subject to enforcement.

              In the separate account in lei opened at the State Treasury, legal entities and individuals can pay amounts by bank transfer, as well as online through the “National Electronic Payment System” – SNEP, developed, implemented, managed and operated by the Authority for the Digitization of Romania, available at www.ghiseul.ro, through debit cards and credit cards.

              Tax relief for expenditure on goods and services for persons affected by the armed conflict in Ukraine:

By way of derogation from the provisions of Articles 25 and 56 of the Law no. 227/2015 on the Fiscal Code, as amended and supplemented, for expenses for goods and services provided to persons affected by the armed conflict in Ukraine, the following tax rules apply, as appropriate:

– for corporate tax payers the following rules shall apply:

  1. deduction limited to the calculation of the tax result; taxpayers who incur these expenses add them to the social expenses provided for in Article 25 paragraph (3) letter b) of Law no. 227/2015, as amended and supplemented, and deduct them up to the rate of 5% applied to the value of staff salary expenses, according to the Labour Code;
  2. non-deduction in the calculation of the tax result; taxpayers who incur these expenses shall add them to those provided for in Article 25 paragraph (4) letter i) of Law no. 227/2015, as amended and supplemented, and deduct their total amount from the income tax due, within the limit provided for in Article 25 paragraph (4) letter i) of the same law;
  3. for microenterprise income tax payers, these expenses are added to those provided for in article 56 paragraph (11) of Law no. 227/2015 (sponsorships and private scholarships), and their total amount is deducted from the tax due, within the limit provided for in article 56 paragraph (11) of the same normative act.

              By derogation from the provisions of Article 68 paragraph (4) and paragraph (7) letter e) of Law no. 227/2015, as amended and supplemented, in the case of individuals who determine their annual net income in the real system, based on accounting data, goods and/or services provided free of charge as humanitarian aid to persons affected by the armed conflict in Ukraine are deductible expenses, provided that they fall within the same limits as those provided for in Article 68 paragraph (5) letter a) and c) of Law no. 227/2015, as amended and supplemented, as appropriate.

              The goods and/or services provided for in the previous paragraphs are intended for persons affected by the armed conflict in Ukraine and are granted or provided based on the request of the Department for Emergency Situations of the Ministry of Internal Affairs, being distributed directly by it or through the non-governmental organizations that have expressed their intention, based on the documents of handing over-receiving the goods/service provision.

 VAT treatment of goods and services provided free of charge for humanitarian purposes to persons affected by the armed conflict in Ukraine:

              Goods granted free of charge as humanitarian aid by taxable persons to persons affected by the armed conflict in Ukraine are considered goods granted free of charge as part of sponsorship or patronage actions according to Article 270 paragraph (8) letter c) of Law No. 227/2015, as amended and supplemented.

              Services provided free of charge for humanitarian purposes by taxable persons to persons affected by the armed conflict in Ukraine shall be deemed to be services provided free of charge in the framework of sponsorship or patronage activities pursuant to Article 271 paragraph (5) letter a) of Law No. 227/2015, as amended and supplemented.

              The above provisions (last 2 paragraphs) shall apply until 31 December 2022 inclusive, starting from the date of entry into force of this Emergency Ordinance.\

              Other aspects amended in the Tax Code:

According to EMERGENCY ORDINANCE 20/2022, expenses relating to goods, financial means and services granted to the United Nations Children’s Fund – UNICEF, as well as to other international organizations operating in accordance with the provisions of special agreements to which Romania is a party, are non-deductible when calculating the tax result; taxpayers who incur these expenses add them to those provided for in point i) (sponsorship and mechanization expenses) and deduct the resulting amount from the income tax due, within the limit provided for in point i).

According to the new normative act, micro-enterprises that incur expenses according to paragraph (2^2) (UNICEF) and sponsorships are obliged to submit the information statement on the beneficiaries of goods/services/sponsorships, for the year in which they recorded the respective expenses, including, if necessary, the beneficiaries of the amounts carried over from previous quarters.

The model and content of the informative statement shall be approved by order of the President of the A.N.A.F.

Micro-enterprises that record expenses related to goods, financial means and services granted to the United Nations Children’s Fund – UNICEF, as well as to other international organizations that carry out their activities according to the provisions of special agreements to which Romania is a party, shall add these expenses to the amounts granted according to paragraph (1^1) (sponsorships and private scholarships) and subtract the resulting amount within the limit provided for in paragraph (1^1).

If the amount determined according to paragraph (1^1) and this paragraph, reduced by the amounts carried forward, according to the law, has not been fully used, taxpayers may order the redirection of the income tax on microenterprises, within the limit of the difference thus calculated for the entire fiscal year, and to the United Nations Children’s Fund – UNICEF and other international organizations operating under the provisions of special agreements to which Romania is a party, within 6 months from the date of filing the tax return for the fourth quarter, by submitting a redirection form/forms.

In this case, the tax redirection is made, according to paragraph (2^1), without the obligation to register the beneficiary entity in the Register of entities/units of worship for which tax deductions are granted.

Legal basis:

-Fiscal Code (approved by Law no.227/2015, published in the Official Gazette no.688 of 10.09.2015), with subsequent amendments and additions;

-Methodological Norms for the application of the Tax Code (approved by Government Decision no.1/2016);

-EMERGENCY ORDINANCE 15/2022 on the provision of humanitarian support and assistance by the Romanian State to foreign citizens or stateless persons in special situations from the area of armed conflict in Ukraine;

-EMERGENCY ORDINANCE 20/2022 on the amendment and completion of some normative acts, as well as for the establishment of some support and humanitarian assistance measures.