Fiscal Code amendment

Among the news stipulated in the new emergency ordinance, dated October 27th 2015, we can note a decrease of dividend tax to 5% starting with 2016, not since 2017 as established, a decrease of VAT for water supply from 24% to 9%, the classification of private schools of primary and secondary education in the category of Romanian juristic persons who do not own corporate income tax and a modification of microenterprise tax.

The dividend tax shall be established by applying a tax rate of 5% from the gross dividend paid to a Romanian juristic person. Dividend tax is declared and paid to the state budget up to and including the 25thof the month following the one in which the dividend is paid.

Another important measure stipulated in the project refers to a decrease of VAT for water supply, to 9% for all types of services.

The Emergency Ordinance also stipulates that, starting with 2016, exemption from corporate income tax is not applicable eclusively to universities anymore, but also to nursery schools, schools and private high schools.

Regarding the corporate income tax, the document approved within a Government meeting further proposes that, in case of wages and salaries received additionaly to those obtained from the main activity of an employee, the monthly tax shall be determined by applying a rate of 16% from the calculation basis determined as difference between the gross income and compulsory social contributions related to each month, due according to the Romanian law or according to international legal instruments to which Romania is party, as well as, as the case may be, of the individual contribution to the state budget that is due according to law, for each position where such additional income is obtained.

Modifications from the Fiscal Code regarding the chapter of compulsory social contributions, as stipulated in the content of the document launched by the Ministry of Finance, set out an exemption from the payment of health insurance contribution for natural persons that are insured for maternity and health services on the territory of a state with which Romania applies a bilateral agreement for social security containing provisions regarding health and maternity insurance.

From the point of view of local taxes, the normative deed sets the following prerequisites:

  • in case a vehicle is registered or licensed during the year, its owner is bound to file a statement mentioning this to the local tax authority that is competent for the area where they have their permanent residence, office or business establishment, as the case may be, within 30 days from the date when they have obtained such vehicle;
  • declaration regarding the terms between February 29th – March 31st 2016 when they filed the forms regarding buildings owned by natural or juristic persons, to be used for non-residential or mixed purposes, statements regarding vehicles that are deregistered and not used anymore, as well as the filing of supporting documents issued in 2015 regarding exemptions or reductions from the payment of building and land tax or motor vehicle tax in case of natural or juristic persons who are entitled by law to benefit from such facilities.

Starting with 2016, the threshold up to which juristic persons are able to register as microenterprise will be increased up to the level of EUR 100,000 and the system of tax rates applied to microenterprises will be differentiated depending on the number of employees.

As a result, in case in which during a business year a microenterprise obtains income higher than EUR 100,000 or the rate of income obtained from consulting and management services is higher or equal to 20% from the total income, such microenterprise shall pay a corporate income tax of 16%. The corporate income tax is to be caclulated and paid starting with the quarter in which any of the limits stipulated previously have been exceeded.

According to the present Fiscal Code (approved by the Law 571/2003, in new version), valid until December 31st 2015, a microenterprise can obtain income of maximum EUR 65,000 (equivalent in RON).

As a result, according to the ordinance bill, a new system of differentiated tax rates shall be settled for microenterprises as of 2016, depending on the number of employees.

More precisely, tax on microenterprises will be between 1% and 3%, depending on the existence of employees and their number, as follows:

  • tax rate of 1% for microenterprises having at least two employees;
  • tax rate of 2% for microenterprises with a single employee;
  • tax rate of 3% for microenterprises with no employee.

In case the number of employees changes during the tax year, the tax rates stipulated above are to be applied correspondigly, starting with the quarter in which the change occured. For microenterprises that have one, respectively two employees whose contracts are terminated, the condition regarding the number of employees will be considered fulfilled if new employees are hired during the same quarter.

Moreover, in case microenterprises set off with no employees or having at most two employees and the number of their employees increases so that the tax rate stipulated before could be modified or maintained, new employees have to be hired by individual employment contracts for an undetermined period of time or for a determined period of at least 12 months.

According to the new regulations, microenterprises pay a tax of 3%, regardless of the number of employees they have.

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