In the Official Gazette (Part I) no.1228 of 20 December 2022 was published Law no.370/2022 on the approval of Government Ordinance (OG) no.16/2022 for the amendment and completion of Law no. 227/2015 on the Fiscal Code, repeal of some normative acts and other financial-fiscal measures.
The most important amendments:
- Corporate income tax:
According to Law no.370/2022, research and development activities eligible for granting the additional deduction when determining the tax result must be from the categories of applied research and/or experimental development activities, relevant to the activity carried out by taxpayers.
Please note that the term technological development has been replaced by experimental development.
- Income tax on microenterprises:
– The condition regarding the new turnover ceiling (500,000 euros instead of 1,000,000 euros) comes into force starting with income for the year 2023
Therefore, even if, on 31 December 2022, a company liable to income tax on microenterprises achieves a turnover between €500,000 and €1,000,000, it will not be liable to income tax from 1 January 2023.
– modification of the condition concerning the nature of consultancy income (Article 47 paragraph (1) letter f) of the Tax Code) concerning the classification as a microenterprise income tax payer.
In view of the amended provisions, a company may apply for the microenterprise income tax if it has realized income, other than income from consulting and/or management, with the exception of income from tax consultancy, corresponding to CAEN code 6920 Accounting and financial auditing activities; tax consultancy, in the proportion of more than 80% of the total income.
In conclusion, a company can apply for income tax for microenterprises, regardless of the share of income from tax consultancy (CAEN 6920) in total income.
– Modification of the exit rules from the micro-enterprise income tax system.
Therefore, if during a fiscal year a microenterprise has revenues exceeding 500,000 euros or the share of revenues from consultancy and/or management, excluding revenues from tax consultancy, corresponding to CAEN code 6920 Accounting and financial auditing activities; tax consultancy, in total revenues is more than 20% inclusive, it will owe corporate income tax starting from the quarter in which any of these limits is exceeded, without the possibility to opt for the following period to apply the provisions of this title.
Thus, even if, during the year, the income from tax consultancy activity is more than 20% of the total income, the company will not be subject to corporation tax (if the other conditions are met).
– New provisions relating to the HoReCa sector:
Provided that Romanian legal entities carrying out activities corresponding to CAEN codes 5510 Hotels and similar accommodation facilities, 5520 Holiday and short-stay accommodation facilities, 5530 Caravan parks, camping sites and campsites, 5590 Other accommodation services, 5610 Restaurants, 5621 Catering activities for events, 5629 Other food service activities n.e.c., 5630 Bars and other beverage serving activities obtain income during the year from activities other than those corresponding to these CAEN codes, for income from other activities the system of declaration and payment of income tax provided for in Title II Income tax applies, if they meet any of the following conditions:
- a) it generates more than 20% of its total income from consultancy and/or management;
- b) carries out the activities referred to in Article 47(3)(f)-(i) (activities in the field of banking, insurance and reinsurance, capital markets, including those carrying out intermediation activities in these fields, activities in the field of gambling, exploration, development, exploitation of oil and gas fields).
- c) income from other activities exceeded the equivalent in lei of 500,000 euro. The exchange rate for determining the equivalent in euro is the one valid at the closing of the financial year preceding the one in which the income was recorded. They owe income tax on income from other activities from the quarter in which any of these conditions is met, for the entire period during which the taxpayer exists.
The tax limits provided for in letters a) and c) are verified on the basis of the cumulative income recorded since the beginning of the fiscal year, and the calculation and payment of the corporate income tax by Romanian legal entities that fall under the provisions of letters a) – c) is made taking into account the income and expenses incurred since the quarter in which any of these conditions was met.
Thus, if a legal person carrying out specific HoReCa activities fulfils any of the three conditions above, it will not be able to apply for the income tax on micro-enterprises, but will be subject to corporate income tax.
- Income tax:
– New provisions on construction tax relief:
According to Law no.370/2022, for the determination of the share of the turnover actually achieved from the construction activity in the total turnover, the indicator turnover actually achieved from the construction activity includes only the income from the construction activity carried out on the territory of Romania, and the indicator total turnover includes the income from the entire activity carried out on the territory of Romania. The activity carried out on the territory of Romania means the activity actually carried out in Romania for the production of products and services.
Basically, with this change, the calculation of the Total Turnover indicator no longer takes into account revenues from activities carried out outside Romania.
- Tax on income from the transfer of goods:
The annual tax due by taxpayers who earn income from the transfer of the use of goods, other than those for which the annual net income is determined under the real system, lease and rental for tourist purposes of rooms located in personally owned dwellings, as well as those who earn income from intellectual property rights, for which the annual net income is determined in accordance with the provisions of Article 721, is determined by applying the rate of 10% on the taxable income/taxable annual net income, as appropriate.
The initial provision is corrected, taking into account that, in case the net income is determined under the real system, in case of renting and letting for tourist purposes of rooms located in personally owned dwellings there is another taxation regime.
This provision applies as from income for the year 2023.
Dividend tax: in the case of dividends distributed on the basis of interim financial statements drawn up during 2022, the dividend tax rate is 5%, without recalculation of the dividend tax after adjustment of the dividends on the basis of the annual financial statements for the financial year 2022.
– Social security contribution (contribution to the public pension system) (CAS)
The annual basis for calculating the CAS, in the case of individuals who earn income from self-employment and income from intellectual property rights, is the income chosen by the taxpayer, which may not be less than:
- the level of 12 gross minimum wages per country, in force on the deadline for submission of the declaration provided for in Article 120, in the case of income between 12 gross minimum wages per country inclusive and 24 gross minimum wages per country;
- b) the level of 24 gross minimum wages per country, in force on the deadline for submission of the declaration provided for in Article 120, in the case of income equal to at least 24 gross minimum wages per country.
The basis for calculating the CAS is clarified, in the case of individuals obtaining income from self-employment and intellectual property rights, fixed at the level of 12 salaries, respectively 24 gross minimum wages per economy.
The calculation basis applies from income for the year 2023.
- Social health insurance contribution (CASS)
The basis for calculating the social health insurance contribution for individuals who earn income from self-employment, intellectual property rights, rents, dividends, interest, agricultural activities, associations and other sources is:
- a) the level of 6 gross minimum wages per country, in force on the deadline for submission of the declaration provided for in Article 120, in the case of income between 6 gross minimum wages per country inclusive and 12 gross minimum wages per country;
- b) the level of 12 gross minimum wages per country, in force on the deadline for submission of the declaration provided for in Article 120, in the case of realised income between 12 gross minimum wages per country inclusive and 24 gross minimum wages per country;
- c) the level of 24 gross minimum wages per country, in force on the deadline for submission of the declaration provided for in Article 120, in the case of income equal to at least 24 gross minimum wages per country.
Similar to CAS, the basis of calculation of CASS is clarified, if individuals obtain income from the activities mentioned above, fixed at the level of 6 salaries, 12 salaries, respectively 24 gross minimum wages on economy.
Similarly, the calculation basis is applied starting with income for the year 2023.
- Changes to excise duties
As from 1 January 2024, for certain products (listed under items 1 to 5 of Annex 1 of Title VIII Excise and other special taxes), the level of excise duty applicable on 1 January of each year shall be the level set out in Annex 1, updated by the increase in consumer prices over the last 12 months, calculated in September of the year preceding the year of application, in relation to the period October 2022 to September 2023, officially communicated by the National Institute of Statistics by 15 October. The updated excise duty rate is published on the Ministry of Finance website, as a rule by 20 October, but no later than 31 December each year.
Annex No 1 of Title VIII Excise and other special taxes is replaced.
- Amendments concerning local taxes and charges
- Amendments to GEO No 193/2002 on the introduction of modern payment systems:
The obligation to equip with POS intervenes in the case of legal entities that realize during a year cash receipts with a value of more than 50.000 lei, the condition regarding the higher turnover is waived (the obligation to equip with POS is linked to the volume of cash receipts). In addition, it is regulated that the category of services for which the obligation to equip with POS (in case of exceeding the ceiling on cash receipts) includes any operation that does not constitute the delivery of goods.
Mention: Law no.370/2022 approving Government Ordinance no.16/2022 amending and supplementing Law no.227/2015 on the Fiscal Code, repealing some normative acts and other financial-fiscal measures will be transmitted in full, in the “Legislative News” service tomorrow, 23 December 2022.