The Order of the Minister of Finance (M.F) no.1525 on the establishment of the procedure for granting tax facilities in the agricultural sector and in the food industry was published in the Official Gazette (Part I) no.661 of 1 July 2022.
The provisions of the normative act are applicable starting with the income related to June 2022.
According to the recently approved procedure, natural persons, for income from salaries and income assimilated to salaries provided for in article 76 paragraph (1) – (3) of the Tax Code (salaries, income assimilated to salaries, salary benefits), for the activity carried out in Romania, until 31 December 2028 inclusive, in the agricultural sector and in the food industry, benefit from tax facilities if the conditions provided for in article 60 paragraph 7 of the Tax Code are cumulatively fulfilled.
The tax facilities for the agricultural sector and the food industry provided for in Article 60 point 7, Article 1382, Article 154 paragraph (1) letter s) and Article 2203 paragraph (3) of the Fiscal Code refer to:
- a) exemption from income tax for income from salaries and assimilated to salaries;
- b) reduction of the social security contribution rate for income from wages and salaries;
- c) exemption from the payment of the social security contribution for income from wages and salaries;
- d) reduction of the labour insurance contribution rate to the rate that is paid to the Guarantee Fund for the payment of salary claims established under Law no. 200/2006 on the establishment and use of the Guarantee Fund for the payment of salary claims, as subsequently amended;
- e) exemption from the payment of social security contributions due by employers, in the case of special working conditions or special working conditions.
Individuals who earn income from wages and salaries from employers who carry out activities in the agricultural sector and in the food industry that fall under the conditions provided for in Article 60 point 7 may opt for the payment of the 3.75% contribution due to the privately administered pension fund. The option shall be submitted in writing to the employer, who shall withhold the corresponding contribution in accordance with the legal provisions starting with the income of the month following the month in which the option was registered.
The tax facilities are granted for the activity carried out in Romania, including individuals seconded on the territory of Romania, if the income payer to whom they are seconded carries out activities in the agricultural sector and in the food industry and meets the conditions provided for in Article 60 point 7 of the Tax Code.
Tax facilities are not granted to individuals who are seconded outside Romania.
Turnover condition
In order to apply the tax facilities, the employers of the natural persons referred to in point 1.1 of this procedure must achieve turnover from the activities mentioned in Article 60 point 7 letter a) of the Tax Code within the limit of at least 80% of the total turnover.
We remind the activities in the agricultural sector and the food industry, mentioned in article 60 point 7 letter a):
- CAEN code 01: Agriculture, hunting and related service activities
011 – Growing of non-perennial crops;
012 – Growing of perennial crops;
013 – Growing of plants for propagation;
014 – Animal husbandry;
015 – Mixed farming (growing of crops combined with raising of animals);
016 – Activities auxiliary to agriculture and post-harvest crop activities;
- CAEN code 10: Manufacture of food products.
In the case of newly-established employers, i.e. registered in the trade register/tax registered from June 2022 onwards, the turnover from the activities referred to in Article 60 point 7 a) of the Tax Code is calculated cumulatively from the date of registration, including the month in which the exemption applies, and for employers existing on 1 June 2022, the basis of calculation shall be the cumulative turnover from the beginning of the year, or cumulative turnover from the date of registration in the case of those established/registered between the beginning of the year and 1 June 2022, including the month in which the exemption applies.
For employers existing on 1 January of each year after 1 June 2022, the turnover from the activities mentioned in Article 60 point 7 a) of the Tax Code is calculated cumulatively for the corresponding period of the current year, including the month in which the exemption applies.
The turnover calculation mechanism provided for in this procedure shall be applied by employers, registered in the trade register/registered for tax purposes with at least one of the codes mentioned in Article 60 point 7 letter a) of the Tax Code and who actually carry out activity in the agricultural sector and in the food industry.
Employer means the natural or legal person who carries out the activities corresponding to the CAEN codes mentioned in Article 60 point 7 letter a) of the Tax Code, fulfils all the conditions for granting tax benefits and can, according to the law, enter into legal relationships generating income from wages and salaries.
For the determination of 80% of the total turnover, the indicators “Total turnover” and “Turnover actually achieved from the activity in the agricultural sector and the food industry” are calculated as follows:
a) The “total turnover” achieved cumulatively since the beginning of the year, including the reporting month, shall be completed by the sum of the cumulative revenue from the beginning of the year to the end of the reporting month, achieved from the sale of products and the provision of services, to which:
1. add, cumulatively from the beginning of the year up to and including the reporting month, the amounts representing:
(i) income from operating subsidies related to net turnover, recorded in the accounts;
(ii) the monthly credit balances before transfer to the profit and loss account of income relating to the cost of stocks of goods and services in the course of completion, recorded in the accounts at the end of the reporting months in which the credit balance is recorded;
(iii) income from the production of tangible fixed assets, recorded in the accounts;
1. deduct, cumulatively from the beginning of the year up to and including the reporting month, the amounts representing the monthly debit balances before the transfer to the profit and loss account of the income relating to the costs of stocks of goods and services in progress, recorded in the accounts at the end of the reporting months in which the debit balance is recorded.
a) “Turnover actually generated from activities in the agricultural sector and the food industry” is to be completed by employers who carry out one or more activities classified under the CAEN codes provided for in Article 60 point 7 a) of the Fiscal Code, with the turnover actually generated from activities related to the CAEN codes provided for in Article 60 point 7 a) of the Fiscal Code, respectively with the sum of the cumulative income from the beginning of the year to the end of the reporting month, obtained from the sale of products and the provision of services from the activities related to the CAEN codes referred to in Article 60 point 7 letter a) of the Fiscal Code, to which:
1. add, cumulatively from the beginning of the year up to and including the reporting month, the amounts representing:
(i) income from operating subsidies related to the net turnover specific to the activity in the agricultural sector and in the food industry, recorded in the accounts;
(ii) the monthly credit balances before transfer to the profit and loss account of income relating to the costs of stocks of products and services in the course of completion, specific to the agricultural sector and the food industry, recorded in the accounts at the end of the reporting months in which the credit balance is recorded;
(iii) income from the production of tangible fixed assets for the purposes of agricultural and food industry activities, recorded in the accounts
1. the cumulative amounts, from the beginning of the year up to and including the reporting month, representing the monthly debit balances before the transfer to the profit and loss account of the income relating to the costs of stocks of products and services in progress, specific to the activity in the agricultural sector and the food industry, recorded in the accounts at the end of the reporting months in which the debit balance is recorded, shall be deducted.
a) When determining the turnover actually achieved from the activity in the agricultural sector and in the food industry according to Article 60 point 7 of the Fiscal Code, for the determination of income from the sale of products, the income from the sale of finished products, semi-finished products, residual products and goods, which are obtained from own production, is taken into account. Income from the sale of products purchased for resale is not taken into account.
b) The turnover taken into account for the application of the facilities is the turnover achieved on the basis of a contract or order, from activities related to the CAEN codes mentioned in Article 60 point 7 letter a) of the Fiscal Code, and covers labour, materials, machinery, transport, equipment, fittings, as well as other auxiliary activities necessary for the activities mentioned in letter a) of the Fiscal Code. Turnover includes production realised and not invoiced.
- c) In determining the indicators “Total turnover” and “Turnover actually achieved from the activity in the agricultural sector and in the food industry”, the income recorded in the accounts shall be taken into account in compliance with the applicable accounting regulations.
The share of turnover from the activities referred to in Article 60(7) in the total turnover shall be calculated as the ratio between the sum resulting from the calculation made for the determination of the indicator “Turnover actually achieved from activities in the agricultural sector and in the food industry” and the sum resulting from the calculation made for the determination of the indicator “Total turnover”, multiplied by 100.
In order to determine the percentage of at least 80% of the total turnover, which is a condition for granting tax relief in the agricultural sector and in the food industry, the reference is made to the calendar year.
The calculation of the indicator “Turnover actually achieved from the activity in the agricultural sector and in the food industry” is made for the entire activity carried out by the employer on the territory of Romania from the activities referred to in Article 60 point 7 letter a) of the Tax Code, including from the employer’s branches, subsidiaries or working points in Romania.
For determining the percentage of 80% of the total turnover, when calculating the turnover actually achieved from the activity in the agricultural sector and in the food industry, employers shall take into account only the income from the activity carried out on the territory of Romania. Income from activity in the agricultural sector and in the food industry outside the territory of Romania will be taken into account only for the calculation of the total turnover from the entire activity.
For the purposes of this procedure, activity carried out on the territory of Romania means activity actually carried out in Romania in the agricultural sector and in the food industry, for the purpose of producing products and providing services, regardless of the residence status of the beneficiaries.
Turnover is calculated, in the reporting month, under the conditions that employers carrying out one or more activities among which are included the CAEN codes provided for in Article 60 point 7 of the Fiscal Code actually carry out activities related to the CAEN codes provided for in Article 60 point 7 of the Fiscal Code.
Indicator calculation:
- For employers existing on 1 January of each year after 1 June 2022:
(i) the ratio between the “Turnover actually achieved from activity in the agricultural sector and in the food industry” and the “Total turnover”, cumulated for the corresponding period of the current year, including the month in which the exemption applies, is calculated;
(ii) if the percentage resulting from the calculation of the ratio under (i) is at least 80% of the “Total turnover”, the tax relief shall be granted during the current year, subject to the condition provided for in Article 60 point 7 letter a) of the Tax Code for the entire period of application of the tax relief.
- In the case of newly established employers, registered with the trade register/tax registered from June 2022:
(i) the indicators “Turnover actually achieved from activity in the agricultural sector and in the food industry” and “Total turnover” shall be calculated cumulatively from the date of registration up to and including the month in which the exemption applies;
(ii) in order to benefit from the tax relief, the ratio between the “Turnover actually achieved from the activity in the agricultural sector and in the food industry” and the “Total turnover” determined according to (i) must be at least 80%.
- In the case of existing employers on 1 June 2022
(i) The indicators “Turnover actually achieved from activities in the agricultural sector and the food industry” and “Total turnover” determined in accordance with Article 4 shall be calculated cumulatively from the beginning of the year/registration date in the case of those incorporated/registered between the beginning of the year and 1 June 2022 up to and including the month in which the exemption applies;
(ii) in order to benefit from the tax concessions, the ratio between the “Turnover actually achieved from the activity in the agricultural sector and in the food industry” and the “Total turnover” determined under (i) must be at least 80%.
Gross salary condition:
The condition provided for in Article 60 point 7 c) of the Tax Code, regarding the gross salary, is considered fulfilled as follows:
a) in the case of individual full-time employment contracts, concluded according to the law, the gross monthly income from salaries and assimilated salaries is calculated at a gross salary for 8 working hours/day of at least 3,000 lei per month. The minimum gross national wage of 3,000 lei per month is set in proportion to the gross basic earnings for an average working time of 167,333 hours per month. For employees who have part-time employment contracts concluded in accordance with the law, tax relief is granted only if the gross basic earnings are set in proportion to the gross basic earnings for a normal working day of 8 hours/day;
b) in the case of legal relationships generating income from wages and salaries, other than individual employment contracts, i.e. management contracts, agency contracts and others, concluded in accordance with the law, for which the gross monthly income is not calculated at a gross salary for 8 hours of work/day of at least 3,000 lei per month, tax benefits are granted only if the gross monthly income is at least equal to 3,000 lei;
c) in the case of internship contracts, concluded according to the Law no. 176/2018 on internship, with subsequent completions, the tax facilities are granted only if the internship allowance is established proportionally to a gross salary for 8 hours of work/day of at least 3,000 lei per month;
d) in the case of apprenticeship contracts, concluded according to the law, the tax facilities are granted only if the basic monthly salary, provided for in the apprenticeship contract, is established proportionally to a gross salary for 8 working hours/day of at least 3,000 lei per month;
e) in the case of employment relationships concluded with day labourers, by agreement of will of the parties, without a written agreement, the tax facilities are granted only if the gross remuneration received for the activity performed by day labourers, according to the law, is established proportionally to a gross wage for 8 hours of work/day of at least 3,000 lei per month;
f) if a natural person earns income on the basis of more than one legal relationship generating income from wages and similar to wages, such as individual employment contract, agency contract, management contract and the like, concluded according to the law, in the same month, with the same employer, in order to grant tax benefits, it is first verified whether each legal relationship complies with the condition provided for in Article 60 point 7 letter c) first sentence of the Tax Code, namely whether the gross income is calculated at a gross salary for 8 hours of work/day of at least 3. 000 lei per month, in the case of individual employment contracts, or if the gross monthly income is at least equal to 3,000 lei, in the case of other types of contracts. For the granting of tax relief, income from legal relationships that meet the 3,000 lei reporting condition is cumulated. In this case, the tax benefits are granted for income from salaries and similar salaries that do not exceed the threshold provided for in Article 60 point 7 c) of the Tax Code. For the part that exceeds this ceiling, tax benefits are not granted.
It is important to note that, for monthly income from salaries and assimilated salaries, made under an individual employment contract, less than 3,000 lei/month, tax benefits are granted only if the minimum gross basic salary per country guaranteed in payment, not including allowances, bonuses and other allowances, is at least 3,000 lei per month, for an average work schedule of 167,333 hours per month.
Legal basis:
- MF Order no.1525/2022 on the establishment of the procedure for granting tax facilities in the agricultural sector and in the food industry;
- Fiscal Code (approved by Law no.227/2015, published in MO no.688 of 10.09.2015), as amended and supplemented;
- Tax Procedure Code (approved by Law no.207/2015, published in MO no.547 of 23.07.2015), with subsequent amendments and additions;
- Methodological Norms for the application of the Tax Code (approved by GOVERNMENT DECISION no.1/2016).