Tax group in the field of profit tax

According to the Fiscal Code, with the subsequent amendments and completions, the fiscal group in the field of profit tax consists of at least two of the following entities, hereinafter referred to as members:

  • a Romanian legal entity / legal entity with registered office in Romania established according to European legislation and one or more Romanian legal entities / legal entities with registered office in Romania established under European legislation in which it holds, directly or indirectly, at least 75% of the value / number of participation titles or their voting rights;
  • at least two Romanian legal entities in which a Romanian natural person holds, directly or indirectly, at least 75% of the value / number of participation titles or voting rights;
  • at least two Romanian legal entities held, directly or indirectly, in proportion of at least 75% of the value / number of participation titles or voting rights, by a legal / natural person, resident in a state with which Romania has concluded a convention for the avoidance of double taxation or in a State with which an agreement on the exchange of information has been concluded;
  • at least one Romanian legal person held, directly or indirectly, in proportion of at least 75% of the value / number of participation titles or voting rights, by a legal person resident in a state with which Romania has concluded a convention for the avoidance of double taxation or in a state with which an agreement has been concluded regarding the exchange of information and the permanent registered office / permanent establishment in Romania of this foreign legal entity.

The responsible legal person represents the Romanian legal person / legal person with its registered office in Romania established according to European legislation, member of a fiscal group in the field of profit tax, designated to determine the consolidated fiscal result of the fiscal group, filing the profit tax return and making payment income tax on behalf of the group.

It is very important to mention that the period of application of the fiscal consolidation system in the field of profit tax is 5 fiscal years, calculated starting with the first year of application of the fiscal consolidation system and until the abolition of the fiscal group, and the system is optional. The option is communicated to the competent fiscal body based on a joint request submitted by the legal representative of the responsible legal entity signed by the legal representatives of all members of the group.

The application is submitted at least 60 days before the beginning of the period for which the application of fiscal consolidation is requested.

The fiscal consolidation system in the field of profit tax is applied starting with the fiscal year following the submission of the application.

Some aspects related to the submission of form 173 (consolidation of the tax group):

Although the legal framework of the profit tax groups is completed from August 2021, the functioning of the fiscal consolidation starting from January 2022 depends on the National Agency for Fiscal Administration (ANAF), which has not yet made available the intelligent PDF of form 173, through which companies may request the establishment of such groups.

As established by ANAF Order 1191/2021, the fiscal consolidation of the profit tax, which will allow the establishment of profit tax groups in order to compensate the losses with the profits, should become operational from January 1, 2022.

Thus, the companies that want to set up profit tax groups from January 1, 2022 must submit to ANAF, exclusively online, form 173 until November 2, 2021 (the annual deadline until which the application of fiscal consolidation can be requested in next year).

Although the order mentioned above appeared at the beginning of August 2021 in the Official Gazette, ANAF has not yet published, on its website, the intelligent PDF of form 173.

This means that, currently, companies cannot request the establishment of groups for 2022, and there are only 18 days until the submission deadline.

We specify that Form 173 will be used both for the establishment, modification and dissolution of the group, and for continuing the application of the fiscal consolidation system after the initial period of five years.

The declaration will be signed by the legal representative of each company from the future profit tax group and will be submitted to ANAF by the representative of the future group.

Calculation of the consolidated fiscal result:

According to the rules established by Title II-Income tax, each member of the tax group determines the tax result individually.

By exception, the consolidated fiscal result of the fiscal group is determined by the algebraic summation of the fiscal results determined individually by each member of the fiscal group. The positive consolidated fiscal result is taxable profit, and the negative consolidated fiscal result is tax loss.

The profit tax is calculated by applying the tax rate on the positive consolidated fiscal result of the group.

When determining the profit tax due by the tax group, the amounts representing: the tax credit, the exempt profit tax, exemptions and profit tax reductions calculated according to the legislation in force, the amounts representing the sponsorship and / or patronage expenses and the expenses regarding private exchanges, according to the law, the acquisition cost of electronic fiscal cash registers and other amounts that are deducted from the profit tax, according to the legislation in force, determined by each member and communicated to the responsible legal entity.

These amounts are deducted from the profit tax due by the tax group.

The fiscal losses registered by a member of the group before the application of the fiscal consolidation system in the field of profit tax, are recovered by the respective member, only from his taxable profits.

The fiscal losses registered by a member of the group during the application of the fiscal consolidation system are recovered from the consolidated fiscal result of the group.

Communication of the individual result in the quarterly calculation system:

For the fiscal group that applies the system of declaration and payment of the quarterly profit tax, each member of the fiscal group determines the fiscal result individually and communicates it to the responsible legal entity, until the 25th of the first month following the end of quarters I – III. For the fourth quarter, the communication is made until the deadline for submitting the annual profit tax return.

The calculation, declaration and payment of the quarterly profit tax due by the fiscal group is performed by the responsible legal entity until the 25th of the first month following the end of the first, second and third quarters.

The finalization and payment of the profit tax related to the respective fiscal year is carried out by the responsible legal person until the deadline for submitting the declaration regarding the profit tax provided in article 42 of Law no. 227/2015 on the Fiscal Code.

In the case of the fiscal group that applies the system of declaration and payment of the annual profit tax, with advance payments made quarterly, the quarterly advance payments are established in the amount of a quarter of the profit tax due for the previous year, determined by summing the profit tax due for the previous year by each member of the group with the corresponding application of the other rules for determining / declaring / making quarterly advance payments, as the case may be, according to art. 41 of Law no. 227/2015 on the Fiscal Code.

The responsible legal person is obliged to submit a consolidated annual declaration regarding the profit tax in which it reports the results of the entire fiscal group and is responsible for the payment of the profit tax calculated for the entire fiscal group.

We remind you that the annual income tax return is submitted to the competent tax authority, together with the annual income tax return of each member, until March 25 of the following year / until the 25th of the third month. including, since the end of the amended fiscal year.

Legal basis:

Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions;

Law no. 296/2020 for the amendment and completion of Law no. 227/2015 regarding the Fiscal Code;

ANAF Order 1191/2021 for the approval of the Procedure for the implementation and administration of the fiscal group in the field of profit tax, as well as for the approval of the model and content of some forms;

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