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Corporate tax – Changes in the Tax Code

Tax exemption on reinvested profits

New: profits invested in assets used in production and processing activities and assets representing refurbishment are also tax exempt.

  1. Tax on dividends paid to a Romanian legal person
  • The tax rate is increased from 5% to 8%.
  • Some of the conditions for the application of the tax exemption are modified.

 Tax on the income of micro-enterprises

  1. The income threshold for the application of this tax system is lowered from EUR 1 million to EUR 500 000.
  2. Further conditions are introduced for a company to qualify as a taxpayer of the microenterprise income tax, as follows:
  • it has made income, other than consultancy and/or management income, of more than 80% of total income;
  • has at least one employee, except for newly established companies;
  • has partners/shareholders holding more than 25% of the value/number of shares or voting rights in no more than three Romanian legal entities that qualify for the microenterprise income tax system.
  1. It allows firms operating in the HoReCa sectors to opt for the payment of the microenterprise income tax from 1 January 2023.

Starting with January 1, 2023, the Romanian legal entities that carry out activities corresponding to the CAEN codes: 5510 – «Hotels and other similar accommodation facilities», 5520 – «Accommodation facilities for holidays and short periods», 5530 – «Parks for caravans, campsites and camps », 5590 -« Other accommodation », 5610 -« Restaurants », 5621 -« Event catering », 5629 -« Other catering services n.c.a. », 5630 -« Bars and other beverage service activities’ may opt for the payment of the tax covered by this Title, without being able to leave this system during the year.

  1. The following are excluded from the scope of the tax on the income of micro-enterprises:
  • a Romanian legal person engaged in banking activities;
  • the Romanian legal person carrying out activities in the fields of insurance and reinsurance, capital market, including the one carrying out intermediation activities in these fields;
  • Romanian legal person engaged in gambling activities;
  • Romanian legal person engaged in exploration, development, exploitation of oil and gas fields.
  1. Tax on the income of micro-enterprises becomes optional.
  2. Romanian legal entities may opt to apply the microenterprise income tax from the tax year following the one in which they meet the microenterprise conditions and if they have not been paying microenterprise income tax after 1 January 2023.
  1. Micro-enterprises may not opt to pay income tax during the tax year, but may exercise the option from the following tax year onwards, with the exception of situations where the company has to exit the system due to failure to meet the conditions (e.g. exceeding the income limit).
  1. A Romanian legal person that is newly established may opt to pay income tax on microenterprises from the first tax year onwards, if the conditions regarding the ownership of share capital and the shareholdings of associates are met at the date of registration in the trade register, and the condition regarding the employment of at least one employee, within 30 days inclusive from the date of registration of the legal person.
  1. Single tax rate of 1% for micro-enterprises.
  1. The order in which the tax facilities are deducted from the tax is clearly specified:

Micro-enterprises that make sponsorships/expenditures on goods, financial means and services to the United Nations Children’s Fund – UNICEF and put into operation electronic tax machines shall deduct these amounts from the income tax of micro-enterprises in the following order:

  1. amounts relating to sponsorship, UNICEF expenditure and amounts carried over, where applicable;
  2. the cost of purchase of electronic fiscal cash registers and carry-over amounts, where applicable.

The tax reduction, according to the provisions of the Government Emergency Ordinance No 153/2020 for the establishment of tax measures to stimulate the maintenance/growth of own capital, as well as for the completion of some normative acts, is applied to the income tax of micro-enterprises after deduction of the above mentioned amounts.

  1. The information statement on the beneficiaries of sponsorships, during the period of application of the provisions of Government Emergency Ordinance No. 153/2020, shall be submitted by 25 June of the following year.

Source: https://ceccar.ro/ro/