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Important legislative changes applied by Law no. 296/2023

01/11/2023
ext

1. Minimum turnover tax (IMCA)

The Law introduces the obligation to pay a 1% turnover tax to the companies that meet the following criteria:

  • companies that record a turnover of more than 50.000.000 EUR in the previous fiscal year 

and

  • companies that determine a cumulated corporate income tax from the beginning of the fiscal year / modified fiscal year, until the end of the quarter / calculation year, which is lower than IMCA.

Moreover, the 1% IMCA is due if the company records a current fiscal loss / recoverable fiscal loss, which would result amounts to be paid less then IMCA. 

The IMCA is determined based on the following formula: IMCA = 1%*(VT – Vs – I – A), where the indicators mean the following:

VT = total revenues

Vs = revenues to be deducted from the total revenues

I = the value of assets under construction, related to the acquisition/production of assets, registered in the accounting records, starting January 1st, 2024, or the first day of the modified fiscal year that begins in 2024.

A = accounting depreciation at the historical cost of acquired / produced assets, starting January 1st, 2024, or the first day of the modified fiscal year that begins in 2024. To be noted that it is not included the depreciation of assets that are included in the value of indicator mentioned above.

If the IMCA calculation results a negative value, IMCA is considered to be 0 (zero).

For comparison purposes, the quarterly/annual corporate income tax is the corporate income tax minus sponsorship/patronage amounts, other amounts to be deducted from the corporate income tax according to special laws, and equity facilities according to the provisions of the Ordinance no. 153/2020.

The following amounts are not deducted from the minimum turnover tax: exempted or reduced corporate income tax, other amounts that are deducted from the corporate income tax, according to the special laws, and the equity facilities according to the provisions of the Ordinance no. 153/2020, however the fiscal credit is granted for sponsorships.

The IMCA provisions are not applicable to the following entities:

  • Credit institutions – Romanian legal entities and branches in Romania of credit institutions – foreign legal entities.
  • Legal entities engaged in the petroleum and natural gas sectors that recorded a turnover of over 50.000.000 EUR in the previous fiscal year for the period of January 1st, 2024, to December 31, 2025. The IMCA provisions are applicable to these sectors starting January 1st, 2026.

For the Credit institutions – Romanian legal entities and branches in Romania of credit institutions – foreign legal entities, an additional turnover tax is due, by applying the following rates:

  • 2%, for the period January 1st, 2024 – December 31, 2025, inclusively;
  • 1%, starting January 1st, 2026.

For legal entities engaged in the petroleum and natural gas sectors, which recorded a turnover of more than 50.000.000 EUR in the previous year for the period from January 1st, 2024, to December 31, 2025, an additional specific turnover tax is due (ICAS).

ICAS is determined based on the following formula: ICAS= 0,5% x (VT – Vs - I - A), where the indicators have the same meaning as the ones in the ICMA formula.

The provisions mentioned above do not apply to the economic operators that are engaged exclusively in distribution / supply / transport of electricity and natural gas, that are regulated / licenced by the National Energy Regulatory Authority

The provisions are applicable starting January 1st, 2024.

2.Microenterprise income tax

Regarding microenterprise income tax, the tax rate has the following changes:

  • 1% for microenterprises with the revenues under 60.000 EUR.
  • 3% for microenterprises with the revenues above 60.000 EUR, or the companies carry out Software or IT activities, HORECA activities, certain legal activities, medical or dental assistance (the complete list of CAEN codes can be found in art. 51 par. (1)).

The tax rate can be changed during the year, from the beginning of the quarter in which the 60.000 EUR limit is exceeded or the activities mentioned commence. Similarly, if the activities cease and revenues do not exceed the limit, the rate can decrease from 3% to 1%.

The 3% rate applies to all revenues of the company engaged in the mentioned activities, not just the revenues related to these activities.

The reporting period and exit from the micro-enterprise system deadline is March 31 of the following year.

3. Taxation of individuals

Tax facilities for IT, construction and agriculture are limited as follows:

  • The income tax exemption applies only to the part of the gross monthly income that exceeds 10,000 lei: (i) To a single employer/payer; (ii) On the basis of a single individual employment contract, service report, act of delegation or secondment or a special statute provided by law; (iii) By affidavit submitted to the employer/payer, as the case may be.
  • The pension contribution remains lower by 3.75% for individuals who work in construction and agriculture and meet the other conditions: the rate is reduced by the percentage points corresponding to the rate of contribution to the privately administered pension fund provided by Law no. 411/2004 regarding privately administered pension funds. However, the persons concerned may opt to pay the contribution due to the privately managed fund.
  • The pension contribution for people who carry out activities of creating computer programs is reduced by the percentage points corresponding to the contribution rate to the privately administered pension fund, and those who owe it are exempted from paying it. However, the persons concerned may opt for the payment of the contribution due to the privately managed fund.
  • The exemption from the payment of the Social Health Insurance Contribution is removed for the amounts of the gross monthly income of up to 10,000 lei, including from the construction and agriculture sector. 

The changes will enter into force on November 1, 2023.

Clarifications are made regarding the deduction of the Social Health Insurance Contribution for the income from independent activities made on the basis of sports activity contracts: the tax is calculated by applying the 10% rate on the gross income from which the due health insurance contribution is deducted.

Tax regime for income from wages

  • Expenses with the value of tourist and/or treatment services, including transport, for own employees and family members, during the leave period, are no longer tax-free even if they respect the monthly ceiling of no more than 33% of the basic salary corresponding to the job busy if the employees also benefit from holiday vouchers.
  • Not covered by the Pension Contribution: Valuable tickets in the form of meal vouchers, holiday vouchers, nursery vouchers, cultural vouchers, granted according to the law.
  • The exemption from Social Health Insurance Contributions for meal vouchers and vacation vouchers, granted by employers, is eliminated.

Pension Contribution – it remained stipulated that it cannot be lower than the level of the pension contribution calculated by applying the rate provided as the case may be, on the minimum gross basic salary per country in force in the month for which the social insurance contribution is due, corresponding to the number of working days in the month in which the contract was active.

The changes will come into force starting with the income related to the month of January 2024.

The tax regime in the case of income from independent activities

  • Establishing the annual net taxable income for income from independent activities, in the real system: Summing up all net annual incomes, recalculated from which the social insurance contribution and the social health insurance contribution are deducted.
  • The Social Health Insurance contribution for independent activities: it will be paid at the level of the net income achieved, if the income obtained is 6 minimum wages per economy and capped at the level of 60 minimum wages per economy.
  • If the calculation base of the Social Health Insurance Contribution for these incomes is lower than that corresponding to a calculation base equal to the level of 6 minimum gross salaries per country in force at the time of submission of the single declaration, the taxpayer owes a difference of Social Health Insurance Contribution up to the level corresponding to the calculation base equal to 6 minimum gross salaries per country;

The changes will enter into force starting with the revenues related to the year 2024.

The fiscal regime in the case of income from intellectual property rights

  • Establishing the annual net taxable income for income from intellectual property rights, in the real system: The level of the social insurance contribution and the deductible social health insurance contribution may NOT exceed the level of the recalculated annual net income. Also, the Social Health Insurance Contribution is established proportionally to the weight of the annual net income determined in the real system in the total annual basis for calculating the social health insurance contribution.

The changes will enter into force starting with the revenues related to the year 2024.

Other measures

  • Any income made by individuals ascertained by the tax authorities, under the conditions of Law no. 207/2015 on the Fiscal Procedure Code, the source of which has not been identified, are imposed with a rate of 70% applied to the adjusted taxable base. The measure enters into force on July 1, 2024 and applies to taxation decisions issued starting from the same date.
  • Individuals with severe disabilities are no longer exempt from the payment of the Social Health Insurance Contribution for income from independent activities, salaries, intellectual property rights and for incomes made from salaries and assimilated to salaries as a result of carrying out the research-development activity and innovation. The measure enters into force on November 1, 2023.
  • Separately from the income from independent activities where the Social Health Insurance Contribution will be due on the net income achieved in the amount of 10% compared to 6-60 minimum wages, the Social Health Insurance Contribution will be due separately for the income from rights intellectual property, from association with a legal entity, from agricultural activities, from investments, from other sources, at the level of 6-12-24 minimum wages. The changes will enter into force starting with the revenues related to the year 2024.
  • The possibility of granting a bonus of 10% of the Social Health Insurance Contribution is introduced, through the annual law of the state budget. The changes will enter into force starting with the revenues related to the year 2024.

4. Value Added Tax (VAT)

Regarding VAT, the main changes are the following:

  • The VAT rate applicable to the supply of social housing to individuals increases from 5% to 9%. Transitional provisions are in place and the Record Register of homes delivered with a reduced quota, populated by public notaries, will be updated.
  • The definition of housing that can be lived in as such, a condition for classification as social housing, is changed. Thus, several clarifications are made regarding the interior and exterior finishes, plumbing and electrical installations required at the time of delivery.
  • Supplies of sugary non-alcoholic beverages with CN code 2202 (broader than the previous definition which included only subcodes 22021000 and 220299) and food with min 10g/100g of sugar, other than cakes and biscuits, will be subject to a VAT rate of 19% . Similarly, the 19% rate will also apply to non-alcoholic sugary drinks with NC code 2202 that are served in a restaurant or catering system.
  • In view of the increase in the quota for foods with added sugar, a definition of sugary products was also introduced.
  • The VAT rate applicable to the supply of photovoltaic panels and the rest of the category of goods for the generation of green energy, the supply of these goods with installation, components and the extra option for the supply of new constructions increases from 5% to 9%.
  • Increases the VAT rate from 5% to 19% for:

➢  Use of sports facilities;

➢ Tourist transportation: with historic vehicles, cable transport, with animal traction, with tourist boats;

➢  Delivery of bio-eco, mountain foods;

➢  Access to bars, amusement parks.

  • Exemptions introduced during June 2023 for deliveries specifically defined in the medical field made directly to hospitals are eliminated, only those made through NGOs remain valid.

All VAT changes take effect from 1 January 2024.

5. Other changes

✥ Starting from January 1, 2024, the special tax on immovable and movable goods of high value (luxury tax) of 0.3% is introduced and will be due by:

  • individuals who own/jointly own residential buildings worth more than 2,500,000 lei (500,000 EUR);
  • individuals and legal persons who own cars registered/registered in Romania whose value exceeds 375,000 lei (75,000 EUR).

✥ Reduction of the ceilings for cash transactions – the daily ceiling for receipts or payments, as well as that for advances for settlement become 1,000 lei (compared to 5,000 lei, currently), and for cash&carry stores, 2,000 lei.

✥ The possibility of half payment of accounting, fiscal and similar fines disappears. Therefore, they will no longer be able to be paid at half of the minimum within 15 days.

✥ Fines and confiscation of assets for those with unregistered activities or without documents of provenance fines and confiscation of assets are provided for individuals and legal persons who carry out economic activities without being organized according to the law or without provenance documents for the goods owned or transported.

RO e-Factura

The transmission of invoices via RO e-Invoice will be mandatory from January 1, 2024 for established taxable persons (regardless of whether or not they are registered for VAT purposes) and those not established but registered for VAT purposes in Romania, in B2B and B2G relationships.

It applies to operations taking place in Romania, other than intra-Community acquisitions and imports. Invoices for exports and intra-Community deliveries are also specifically exempted. Apparently, the intention of the legislator is that the e-Invoice must be applied to local operations, although certain clarifications are still needed in this regard.

The deadline for submitting invoices in the e-Invoice system is 5 working days from the date of issuance, but no later than 5 working days from the deadline for issuing invoices.

Failure to submit invoices through the e-Invoice system is sanctioned with a fine (after the grace period from January 1, 2024 to March 31, 2024), as follows:

  • with a fine from 5,000 lei to 10,000 lei for large taxpayers,
  • with a fine from 2,500 lei to 5,000 lei for medium taxpayers,
  • and with a fine from 1,000 lei to 2,500 lei, for other legal entities, as well as for natural persons.

In the B2B relationship, non-compliance with the requirements of the e-Invoice system is penalized with a fine at the level of VAT related to the invoices in question.

On the B2G relationship, the beneficiary public authorities will not make the payment if the provisions of the system are not respected.

It is desired to consider the invoice issued via e-Invoice as the only original document in order to exercise the right of deduction. In practice, it will no longer be possible to deduct VAT if the requirements regarding transmission through the RO e-Invoice system are not met.

RO e-Sigiliu

A new system, this time customs, RO e-Seal, will be implemented in order to monitor the transport of goods. Electronic devices will be used, namely smart seals that record data and transmit status and position information to the computer application to track the movement of goods by road.

The application of smart seals and the monitoring of road transport of goods on the national territory is carried out by the National Fiscal Administration Agency and the Romanian Customs Authority based on a risk analysis.

 

Disclaimer

The information contained in this newsletter is intended to give you an overview of new legislation; the newsletter does not contain a comprehensive analysis of each topic. For more information on the topics covered please contact us. No liability is accepted for decisions or omissions following the use of the contents of this newsletter. All Crowe newsletters are available at the address www.crowe.ro.

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