Situation:
A company ABC SRL, established earlier this year, with CAEN code 4120, with activities in construction carried out in March and April, has realized revenues in Romania amounting to 80,000 lei. In May, the company had a single intra-community invoice of 15,000 lei, performing construction activities on EU territory.
Can the company apply the construction facilities in May? If the income made in Romania is more than 80% of the total income, can the facility be applied? CAEN codes
Solution:
We remind you that, according to OG 16/2022 amending the Tax Code, starting from 1 January 2023, tax facilities for the construction sector can be granted if the following conditions provided in the Tax Code are met cumulatively in Article 60, item 5 (exemptions from income tax for individuals):
- individuals for whom the tax exemptions are applied, earn income from wages and salaries on the basis of an individual employment contract;
- the exemptions apply only for the activity actually carried out in Romania;
- gross monthly income from salaries and assimilated salaries made by individuals for whom the exemption applies, are calculated at a gross salary for 8 hours of work/day of at least 4,000 lei per month. The exemption applies to amounts of gross monthly income up to and including 10,000 lei, and the part of gross monthly income exceeding 10,000 lei does not benefit from tax relief;
- employers carrying out activities in the construction sector which include the following CAEN codes:
(i) construction activity defined in CAEN code 41.42.43 – section F – Construction;
(ii) the areas of production of building materials, defined by the following CAEN codes:
2312 – Processing and shaping of flat glass;
2331 – Manufacture of ceramic tiles and flags;
2332 – Manufacture of bricks, tiles and other building products of fired clay;
2361 – Manufacture of concrete products for construction purposes;
2362 – Manufacture of plaster products for construction purposes;
2363 – Manufacture of concrete;
2364 – Manufacture of mortar;
2369 – Manufacture of other articles of concrete, cement and plaster;
2370 – Cutting, shaping and finishing of stone;
2223 – Manufacture of plastic building products;
1623 – Manufacture of other carpentry and joinery for buildings;
2512 – Manufacture of metal doors and windows;
2511 – Manufacture of metal structures and structural metal parts;
0811 – Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate;
0812 – Quarrying of gravel and sand;
2351 – Manufacture of cement;
2352 – Manufacture of lime and plaster;
2399 – Manufacture of other non-metallic mineral products n.e.c.;
(iii) 711 – Architectural, engineering and technical consulting activities;
– employers achieve a turnover from the above activities of at least 80% of their total turnover;
With regard to turnover, the Tax Code makes the following clarifications:
- the indicator turnover actually achieved from construction activity includes only the income from 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.
- for newly established employers, i.e. registered with the trade register/tax registered during the year, turnover is calculated cumulatively from the date of registration, including the month in which the exemption applies.
- Turnover is calculated on the basis of a contract or order and covers labour, materials, machinery, transport, equipment, fixtures and fittings and other ancillary activities necessary for construction activities.
- turnover includes production realised and not invoiced.
Thus, the company was established in January 2023 and carried out construction activities in Romania in March and April, obtaining revenues of 80,000 lei.
In April the company obtained only income from intra-community sales.
In view of the legal provisions mentioned above, the tax facilitation on the income tax of individuals employed in the construction sector can be applied only if the employer’s activity is actually carried out on the territory of Romania and for the income obtained from the activity in Romania.
The activity carried out on the territory of Romania means the activity actually carried out in Romania for the purpose of producing products and providing services.
Therefore, in May, the tax exemption can be applied only if these conditions are met.
As regards the calculation of the minimum 80% of the total turnover from construction activities, this is obtained by dividing the income obtained from the construction activity in Romania by the total income obtained from the entire activity carried out in Romania
Legal basis:
– Government Ordinance (OG) 16/2022 amending and supplementing Law no. 227/2015 on the Fiscal Code, repealing certain normative acts and other financial-fiscal measures;
– 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).