Situation: A company ABC SRL suspends its activity in January 2023. Will this entity be able to keep its microenterprise status in 2023?
Solution:
According to Article 47 paragraph (1) letter c) and g) of Law no.227/2015 on the Fiscal Code, for the purposes of this title, a microenterprise is a Romanian legal entity that cumulatively meets the following conditions, on 31 December of the previous fiscal year: (…)
- has achieved incomes not exceeding the equivalent in lei of 1.000.000 euro. The exchange rate for determining the euro equivalent is that valid at the close of the financial year in which the income was recorded;(…)
- has at least one employee, with the exception of the situation referred to in Article 48 paragraph (3).
It is important to note that, for the year 2023, the above conditions are verified on 31 December 2022.
Therefore, in order for a company to remain liable for income tax on microenterprises in 2023, on 31 December 2022 (the previous tax year) the entity must have at least one full-time employee and the turnover must be below the threshold of 1,000,000 euros, otherwise it will be liable for income tax from 1 January 2023.
In this case the condition regarding employees is not fulfilled, so the company becomes liable to corporate income tax as from 01 January 2023.
Concerning the suspension of activity, according to Article 52 paragraph (2) of the Tax Code, if, during a fiscal year, a micro-enterprise no longer meets the condition laid down in Article 47 paragraph (1) letter g) – the condition of having at least one employee, it owes income tax starting with the quarter in which this condition is no longer met.
By exception, for a micro-enterprise with only one employee, whose employment relationship is terminated, the condition laid down in Article 47 (1) (g) is deemed to be fulfilled if, within 30 days of the termination of the employment relationship, a new employee is hired with an individual employment contract for an indefinite period or for a fixed period of at least 12 months.
Since ABC SRL is suspending its activity in January 2023, the condition of having at least one employee is not fulfilled, so it cannot apply the income tax on microenterprises in 2023.
Legal basis:
- Fiscal Code (approved by Law no.227/2015, published in the Official Gazette no.688 of 10.09.2015), as amended and supplemented;
- Methodological Norms for the application of the Tax Code (approved by Government Decision no.1/2016).