Important changes to the Tax Code – applicable from 1 January 2023 (1)

Income tax on micro-enterprises:

 

We remind you that, starting with January 1, 2023, the conditions for inclusion in the category of microenterprises income tax payers have been modified, the new cumulative conditions being the following:

  • the company has achieved revenues that did not exceed the equivalent in lei of 500,000 euro. The exchange rate for determining the equivalent in euro is the one valid at the end of the financial year in which the income was recorded 9474 lei/euro (previously the limit  was 1,000,000 euro) the provision applies starting with the income for the year 2023;

  • the share capital of the company is held by persons other than the state and administrative-territorial units;

  • is not in dissolution, followed by liquidation, registered in the commercial register or with the courts, according to the law;

  • has achieved more than 80% of its income, other than from consultancy and/or management, with the exception of income from tax consultancy, corresponding to CAEN code: 6920 – “Accounting and financial auditing activities; tax consultancy” of the total income (new condition);

  • has at least one employee, with the exception of the situation referred to in Article 48 paragraph (3) (new condition);

  • has associates/shareholders who hold more than 25% of the value/number of shares or voting rights in no more than three Romanian legal entities that are eligible to apply the income tax system for micro-enterprises, including the person who verifies the fulfilment of the conditions (new condition).

 

Please note that in the category of legal entities exempted from paying income tax on microenterprises have been added:

 

  • banking companies;

  • insurance and reinsurance companies, capital market companies, including intermediation;

  • gambling companies;

  • companies engaged in exploration, development, exploitation of oil and gas fields.

 

.

According to Article 48, paragraph (1), the income tax system for micro-enterprises becomes optional from 01.01.2023.

 

Romanian legal entities, with the exception of those in the HoReCa field (Romanian legal entities that carry out activities corresponding to CAEN codes: 5510 – “Hotels and other similar accommodation facilities”, 5520 – “Accommodation facilities for vacations and short periods”, 5530 – “Parks for caravans, campsites and camps”, 5590 – “Other accommodation services”, 5610 – “Restaurants”, 5621 – “Food activities (catering) for events”, 5629 – “Other food services n.e.c.”, 5630 – “Bars and other activities serving drinks”), may opt to apply the microenterprise income tax starting from the tax year following the one in which they meet the microenterprise conditions provided for in Article 47 paragraph (1) and if they have not been paying microenterprise income tax after 1 January 2023.

 

Starting from 1 January 2023, as an exception to the provisions of Article 47 paragraph (1) of the Tax Code, Romanian legal entities carrying out activities in the HoReCa sector may opt for the payment of income tax on microenterprises, without applying the provisions of Article 52 of the Tax Code (Article 47 paragraph (2) of the Tax Code).

Micro-enterprises may not opt for the payment of income tax during the tax year, the option may be exercised starting from the following tax year, with the exceptions provided for in Article 52 of the Tax Code (rules for exiting the income tax system for micro-enterprises during the year).

 

If Romanian legal entities carrying out activities in the HoReCa sector obtain income during the year from other activities than those corresponding to the CAEN codes related to this sector, they shall apply the system of declaration and payment of the corporate income tax provided for by Title II “Corporate income tax”, if they meet any of the following conditions:

 

  1. a) it generates more than 20% of its total income from consultancy and/or management;

  2. b) carries out the activities referred to in Article 47(3)(f) to (i);

  3. c) income from other activities exceeded the equivalent in RON of 500.000 euro. The exchange rate for the determination of the euro equivalent shall be the one valid at the end 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.

 

  • According to article 51 paragraph (1) of the Tax Code, the 1% tax rate is maintained and the 3% rate is eliminated (with the obligation to have at least one employee and to comply with all other conditions).

 

  • From 1 January 2023, the option to pay corporate income tax for micro-enterprises with a subscribed share capital of at least 45,000 lei and at least 2 employees has been eliminated.

 

  • According to article 56 paragraph (1^8) – paragraph (1^9) of the Tax Code, the order of reduction of income tax on microenterprises has been established:

 

  1. sponsorships;

  2. the cost of electronic fiscal cash registers;

  3. reduction according to Government Emergency Ordinance No 153/2020 for the establishment of certain fiscal measures to stimulate the maintenance/growth of own capital, as well as for the completion of certain normative acts;

 

During the period of application of the provisions of OUG no.153/2020, the informative statement 107 (Informative statement on the beneficiaries of sponsorships/sponsorships/scholarships) shall be submitted up to and including 25 June of the following year.

 

  • Starting from 1 January 2023, taxpayers who are subject to the provisions of Law no.170/2016 until 31 December 2022, may opt, by exception to the provisions of Article 47 paragraph (1) of the Tax Code, for the payment of income tax on microenterprises, according to Title III of the Tax Code, or for the payment of corporate income tax, according to Title II of the Tax Code.

 

Starting from 1 January 2023, taxpayers who are subject to the provisions of Law no.170/2016 until 31 December 2022, may opt, by exception to the provisions of Article 47 paragraph (1) of the Tax Code, for the payment of income tax on microenterprises, according to Title III of the Tax Code, or for the payment of corporate income tax, according to Title II of the Tax Code.

 

Legal basis:

-Government Ordinance no.16/2022 for amending and supplementing Law no.227/2015 on the tax code, repeal of some normative acts and other financial-fiscal measures;

-Government Emergency Ordinance no.168/2022 on some fiscal-budgetary measures, extension of some deadlines, as well as for the modification and completion of some normative acts;

-Law no.370/2022 on the approval of Government Ordinance no.16/2022 for the amendment and completion of Law no.227/2015 on the Fiscal Code, the repeal of some normative acts and other financial-fiscal measures;

-Law no.34/2023 for the modification and completion of Law no. 227/2015 on the Fiscal Code;

-Law no.39/2023 for the completion of article 291 paragraph (3) of Law no. 227/2015 on the Fiscal Code.