Is 2013 a lucky year for the Romanian taxation?

Breaking with the tradition of the last few years, the Executive no longer issued an ordinance in late December of 2012 to amend the Tax Code, offering accountants and tax consultants the unexpected opportunity to spend winter holidays in peace, without having to study last year’s issue of The Official Journal of Romania (Monitorul Oficial al Romaniei).


However, our officials seem to have done so for a simpler reason rather than for a greater care, uncovered on the spur of the moment, for this category of professionals: the amending legal provisions, the same as other regulations of high priority, had not yet been finalised, of which I should mention the State Budget Law and the State Social Security Law.
What happened in early 2013 is quite memorable, as the succession of events may be an example worthy of being written down in law books on the manner in which decision-making transparency may be simulated in the tax field!  Specifically, the events succeeded as follows:
  •  Monday morning, the 21st of January, the draft Government Ordinance is displayed on the Webpage of the Ministry of Public Finance;
  •  The same day, at 18.00 hours, the Social Dialogue Commission holds its meeting to discuss a list of 26 bills on various legislative changes (including amendments to the Tax Code);
  •  Wednesday, the 23rd of January, Monitorul Oficial No 54 publishes Government Ordinance No 8/2013 amending and supplementing the Tax Code.
It is quite obvious that the result could be only one: errors were identified in the hastily adopted regulations, some of which being corrected under other legislative acts, while others being still to be remedied in the ensuing period.
Generally, we may say that the Romanian tax legislation continues to show deficits inasmuch as long-term vision and strategy are concerned.  Yet, as a Romanian saying goes, hope dies last.

But what is to be new in the tax legislation in 2013?
General Provisions
  •  We have definition of biological assets which is in line with the new IFRS;
  •  Clarification on the treatment of transactions having no economic purpose and introduction of the notion of artificial transaction;
  •  Additions to the categories of income deemed to have been obtained from Romania.
Profit Tax 
  •  The ceiling on the deduction of research-development expenses valid for the calculation of profit tax;
  • The provisions regarding the assumption of carried forward tax loss by the companies resulting from reorganisation through Amendment of provisions regarding additional deduction of research-development expenses;
  •  Changes to the tax rules concerning the taxpayers that apply accounting regulations in compliance with the International Financial Reporting Standards;
  •  Definition of loans from a debt/equity-ratio perspective;
  •  Aspects related to the tax credit applicable for the taxes paid abroad;
  • Aspects related to depreciation, including limitation on deductibility of depreciation expenses to RON 1,500 per month in the case of certain means of transport, as well as to the deduction of amortisation expenses in the case of intangible fixed assets and biological assets;
  •  Clarification on how the profit tax payable by foreign legal entities should be adjusted when obtaining profit from transfers of securities.
Income Tax 
  •  The cases in which income tax should not be withheld at source as it represents advance payment on the account of the annual tax payable for categories of income achieved from independent activities under civil contracts / conventions concluded in accordance with the Civil Code, i.e. when payments should be made to certain categories of persons;
  •  New, detailed, provisions regarding the manner in which the income achieved from forestry and fish rearing activities should be taxed;
  •  Amendment of salary-related provisions, including categories of income similar to salary, and limitation on secondment and daily allowances from the income-tax perspective; 
  • Changes to the provisions referring to the determination of advance payments by taxpayers obtaining income from independent activities, the assignment of usufruct and from agricultural activities.

Tax on Microenterprises’ Income
 Redefinition of microenterprise, according to which its annual income should be EUR 65,000, at the most, instead of EUR 100,000, while the criterion on its employees’ number has been eliminated. Starting 1 February 2013, the entities meeting the requirements to be considered microenterprises by the end of 2012, inclusive of the newly established ones, shall be subject to taxation in compliance with the tax system provided for this category of taxpayers.
Tax on Non-residents’ Income from Romania
ntroduction of the 50% tax rate applicable to the income paid in a state with which Romania has not entered into a legal act by virtue of which information can be exchanged.
Value Added Tax
  • The rule regarding the place of supply of services related to the lease of means of transportation for long terms;
  •  New rules for the issuance of invoices by suppliers / providers registered in other Member States;
  •  The value-added tax collection system upon receipt of amounts representing the value of deliveries / services.  The related provisions regulate the procedure of transit through / exit from this system, as well as aspects regarding the chargeable event, the right of deduction and the method for collecting the tax.  The system is compulsory for taxpayers recording a turnover below the RON 2,250,000 ceiling
  •  Harmonisation of the deadline for the issuance of invoices for intra-Community transactions, which has already been provided under the national law;
  •  Missing goods which shall be  subject to adjustment of the VAT deduction right and shall no longer be considered taxable supplies of goods for which VAT must be charged;
  •  The provisions regulating issuance of invoices, when taxable persons shall or shall not issue invoices;
  •  Regulations for the issuance of electronic invoices;
  • Extension of the term until which payments should not be made to customs authorities by taxable persons holding certificates of postponement of customs duties;
  •  Clarification on the VAT treatment of operations related to the granting of real rights, usufruct and superficies rights over land and building during a certain period of time in exchange for a consideration;
  •  Introduction of the notion of market value from the VAT calculation perspective; 
  •  Additions to the provisions regarding the determination of the tax base in the case of imports;
  • Clarification on the adjustment of the right of deduction in the case of acquisitions of services and goods other than capital goods;
  •  Amendment of provisions referring to the special VAT return and other declarations; 
  •  Aspects related to the entities recorded in the Register of Intra-Community Operators and to deregistration of such entities. 
Excise Taxes
  •  Obligation of small-sized still wine producers to register with the competent authority before commencing production;
  •  New provision according to which authorised warehouse operators producing alcoholic beverages other than beer may not benefit from the status of small-sized beer producer;
  • New provision permitting an authorised warehouse operator to use the installations for the production of beer for the bottling of fresh beverages and plain water;
  •  Additions to provisions regarding non-harmonised excisable products, including in such category beer-based and fermented beverages other than beer and wine the alcohol content of which, obtained from fermentation, is less than 50%;
  •  Higher excise duty rate on beer and on cigarettes, becoming effective for the latter three (3) month in advance, i.e. on 1 April instead of 1 July.

Mandatory Social Security Contributions
  •  Provisions regarding some employees’ obligation to submit Form D 112 and to pay social security contributions; such employees are paid by non-resident employers, i.e. employers of states that do not fall within the scope of European Union regulations on the coordination of social security systems, or employers of third states which have not entered into accords or conventions on social security with Romania;   
  •  Clearer provisions referring to the individuals insured in personal pension systems that are not integrated into the public pension system;
  •  Provisions clarifying the cases in which the payers of income withhold the compulsory social security contributions representing advance payments on the income achieved from independent activities under civil contracts;
  •  Extension of the sphere of income, on which payment of health insurance contributions is imposed, to the income obtained under specific conditions from plant growing, animal breeding, forestry and fish rearing activities; 
  •  Additional obligations of natural persons obtaining income from salaries paid by employers of states that are not subject to EU regulations concerning the coordination of social security systems, or of states with which Romania has not concluded social security agreements or conventions from the perspective of social contributions;
  • Changes to secondment and daily allowances received either in the country or abroad;
  •  New, special, provisions regarding the treatment of income obtained from agricultural activities in point of social security contributions. 
Local Taxes
  •  Reconsidering Government Ordinance No 1 / 2013 on the regulation of financial and tax measures applicable to local taxes, the leading authority has decided that it is only the local public administration having recorded no arrears that may adopt resolutions on the decrease of taxable values and local taxes; 
  •  The Ordinance sets out several measures providing for an equitable treatment of public administrations that have already adopted such resolutions, as well as of the natural persons who have paid the local taxes for 2013.  These provisions become effective three (3) days after their publication in Monitorul Oficial.
Tax Procedure Code
  •  Provisions regarding the validation of tax returns forwarded by electronic means to the portal e-Romania;
  • Provisions concerning the order in which debts may be extinguished in the case of taxpayers falling within the scope of Law No 85 / 2006, regarding insolvency proceedings;
  • New provisions referring to the suspension of enforcement upon submission of a letter of bank guarantee;
  •  New procedures regarding the verification of the natural persons who are subject to income tax.
Read the full report in attached pdf document