The main legislative changes of September 2023
1. Starting from October 1st, 2023, the minimum wage becomes RON 3.300
The minimum national wage will increase from RON 3.000 to RON 3.300 starting October 1st, 2023. The decision does not apply to the agricultural and food industry sector.
The new minimum wage was established through Decision No 900/2023, published in the Official Gazette No 877 of 28th September 2023.
2. New exception from the 6 months period for changes to the Tax Code
Until recently, the tax law stipulated in Article 4, paragraph (4), that it could only be amended by a law that comes into effect at least 6 months after its publication in the Official Gazette, except for fiscal changes resulting from Romania's international commitments.
However, as of September 20, exceptions to the above rule are also made for modifications, increases, or introductions of new taxes in cases of excessive budget deficit procedures, determined according to European Union treaties (i.e. over 3% of the GDP).
It is worth noting that Romania has been under this procedure since 2019, and according to the current plan, the deficit will only return under the 3% limit in 2024.
This change was published in Official Gazette No. 850 on September 20, 2023, through Emergency Ordinance No. 74/2023 amending paragraph (4) of Article 4 of Law No. 227/2015 on the Fiscal Code.
3. ECJ case regarding the VAT related to transportation of imported goods and the taxation of services provided by non-residents
The Court of Justice of the European Union has published its judgment on case C-461/21, dated September 7, 2023, which clarifies the following two situations regarding a company established in Romania that provided goods transport services and purchased VAT recovery services related to fuel from a non-resident company:
- In the first situation, the service related to transport was directly linked to the import of goods, and the value of the service was included in the taxable base of the imported goods. The company applied a VAT exemption for the service. The tax authority considered the exemption unjustified, arguing that the company should have applied VAT because the documents presented by the company were deemed insufficient to justify that the value of the transport was included in the customs value calculation of the products. In this judgment, the ECJ establishes that the right to a VAT exemption cannot be denied simply because documents other than those expressly provided for by national legislation were presented. If other documents are presented to justify the fulfilment of VAT exemption conditions, and the authenticity and reliability of these documents cannot be questioned, then the VAT exemption must be granted.
- In the second situation, the tax authority imposed withholding tax on payments made to non-residents, considering that the VAT and excise recovery services, which the company purchased from a Danish company, represented a commission under Article 12 of the Double Taxation Convention between Romania and Denmark. The ECJ ruled that the service of recovering VAT and excise duties from multiple EU member states by a non-resident person does not constitute a commission but a service, and the income should be taxed only in the provider's state.
4. Changes in the procedure for granting the customs VAT payment deferral certificate.
The most significant change states that the customs VAT payment deferral certificate can no longer be issued for a period specified by the applicant, instead, it is now set at 6 months.
This procedure has been modified by Order No. 2494/2023 published in Official Gazette No. 829 on September 14, 2023.
5. The procedure for the refund of VAT related to purchases of goods or services made by nonprofit entities.
The provisions of this Order apply to nonprofit entities registered in the Register for entities/ religious units, which make acquisitions of construction services, rehabilitation, and modernization services for hospitals owned by the entity. Additionally, these provisions also apply to the acquisition of medical equipment and devices used for healthcare purposes, as well as the acquisition of maintenance services for these equipment and devices, in accordance with Article 294, paragraph (5), letters (a) and (b) of the Tax Code.
The nonprofit entities can request the refund of the VAT within 90 days from the end of the calendar month for which the refund is requested, based on an application accompanied by documents confirming the acquisitions made.
It should be noted that, according to Article 294, paragraph (6), letter (b) of the Tax Code, the refunded amounts related to the acquisitions made will be used for the purchase of goods and services, as mentioned above. Furthermore, the entities must justify the proper use of the refunded amounts, including amounts that have been offset against tax obligations.
This procedure was published in Official Gazette No. 788 on September 1, 2023, through Order No. 2438/2023.
6. The social security agreement between Romania and Montenegro
In Official Gazette No. 874 dated September 28, 2023, Law No. 259/2023 was published, regarding the ratification of the Agreement between Romania and Montenegro in the field of social security, signed on July 22, 2022, in Podgorica.
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 further information on the topics covered please contact us. No responsibility is accepted for decisions or omissions following the use of the content of this newsletter.
Crowe România