Situation: A PFA operated in 2022 on the income norm, but in November 2022 it reaches the threshold of €100,000. When should the PFA declare the transition to the real system and by which form?
Solution:
According to article 69 paragraph (9) of Law no. 227/2015 on the Tax Code, Taxpayers for whom the net income is determined on the basis of income rules and who in the previous tax year have recorded a gross annual income greater than the equivalent in lei of the amount of 100,000 euros, starting with the next tax year have the obligation to determine the net annual income in real system.
The exchange rate used to determine the RON equivalent of 100,000 euro is the average annual exchange rate communicated by the National Bank of Romania at the end of the fiscal year.
Thus, the PFA has the obligation to complete and submit the single declaration on income tax and social contributions due by individuals by 25 May of the year following the year of income.
Therefore, self-employed activities that are taxed with income rules and obtain a gross income (income received during the year) over 100,000 euro (at the average annual exchange rate communicated by the National Bank of Romania at the end of the fiscal year), starting with the next fiscal year are obliged to establish the net income in real system, according to the rules of single-item accounting.
In this situation, the PFA with income norm that during the year 2022 has exceeded the limit of 100.000 euro (at the average annual exchange rate communicated by the National Bank of Romania, at the end of the fiscal year 2022), must apply the rules of accounting in simple item (real system) starting with the year 2023.
In this regard, he/she is obliged to complete and submit the single declaration on income tax and social contributions owed by individuals by 25 May of the year following the year in which the income was earned, i.e. by 25 May 2023.
Thus, taxation will continue at the income norm throughout 2022 and there is no obligation to file a return this year in this respect.
In conclusion, from 2023 onwards, the transition to the real system of accounting is made by filing the return by 25 May 2023 and completing the chapter on Income realised in 2022 as the method of calculating income tax and the chapter on Income estimated to be realised in 2023 under the real system.
As a matter of fact, we would like to mention that for the income for 2023, the above-mentioned limit has been reduced to 25,000 euro.
As mentioned above, for the income for the year 2022, the limit is 100.000 euro.
Please note that the latest version of the Single Declaration (the smart PDF) is published by ANAF on 11 January 2023:
https://static.anaf.ro/static/10/Anaf/Declaratii_R/declaratie_unica.html
Legal basis:
– Fiscal Code (approved by Law no. 227/2015, published in Official Monitor no. 688 of 10.09.2015), with subsequent amendments and additions;
– Methodological Norms for the application of the Fiscal Code (approved by Governmental Decision no. 1/2016);
– www.anaf.ro