Recent tax changes Romania

1. Amendments to the Tax Code
and Fiscal Procedure Code
29th September 2011
Prepared by
Teodora Cicu
Iulia Lascau

2. Registering at the tax authorities the
services contracts with non-residents
 Individuals and permanent establishments in
Romania of foreign legal entities are obliged to
register at the tax authorities the commercial
contracts for rendering of services concluded with
non-residents (foreign legal entities and non-resident
individuals);
 Before changes, only the resident legal entities were
obliged for registration of service contracts;
 Entered into force on January 1, 2012

3. Transactions concluded with
inactive taxpayers
 Expenses related to the transactions concluded with
an inactive taxpayer and the VAT related to such
transactions will be considered as disallowed (non-
deductible) expenses for the corporate income tax
purposes;
 This requires periodic review of the status for existing
and potential partners before signing a contract or
billing for services or goods.
 Verification can be done in the “Register of Inactive
Taxpayers”, which is published on-line by the Ministry
of Finance.

4. The declaration and reactivation of
inactive taxpayers
 Corporate taxpayers or other entities without legal
personality are declared inactive if they comply with one
of the following conditions:
a) On the course of a semester they do not fulfill any of their
legal declarative obligations;
b) Evade the tax inspection by declaring identity tax domicile
data that do not allow identification from the fiscal body;
c) Tax authorities found that the declared fiscal domicile is not
the taxpayer’s place of operation, according to procedure
established by Order of the National Agency for Fiscal
Administration.

5. Recognition of new deductible
expenses for the calculation of
corporate income tax
 Expenses recorded in relation to valuation of fixed
assets received in concession / management
belonging to the public domain of the state or local
administrative authorities;
 Expenditure on land registration or real estate
advertising of the assets in state ownership received
under management or concession;
 Entered into force on September 5, 2011.

6. The taxation of an association
with legal personality established
according to the legislation of
another state
 Foreign legal entities and non-resident individuals within
an association with legal personality, established
according to the laws of another state owe profit tax in
Romania, for the activities carried out in Romania;
 A Romanian legal entity participating in an association
with legal personality established under the laws of
another state is taxed in Romania according to the
participation rate;
 Enters into force on January 1, 2012.

7. Withholding tax for revenues
obtained by non-residents in
Romania
 The declaration and payment of the withholding tax for
revenues obtained in Romania by non-residents from:
– properties or
– sale/cession of equity
can be made only through empowered persons
 Comes into force on September 5, 2011.

8. Option for payments in advance
for the corporate income tax
 The taxpayers, other than the financial institutions, may
choose (starting from January 1 2013) to make payments
in advance for the corporate income tax due, based on
the quarter of the tax owed in the previous period,
adjusted with the inflation index.
 The option is available until January 31 of the year in
which the advance payments apply and is mandatory for
at least 2 years.
 Starting from January 1, 2012, the deadline for submitting
the annual corporate income tax forms becomes March 25
of the year following the reporting period, instead of April
25.

9. Taxes on incomes obtained in
Romania by non-residents (1)
 The individuals that fulfill the residency conditions for 3
consecutive years before December 31, 2011 are
obliged to pay income tax (from any source in Romania or
outside Romania) starting from January 1 2012;
 Non-resident individuals not domiciled in Romania, have
the option to be taxed on the revenues obtained from any
sources in Romania or outside of Romania, starting with
January 1 of the year following the year in which they
became residents of Romania, based on the Tax Code
and the double tax treaties
 Comes into force from January 1 2012.

10. Taxes on incomes obtained in
Romania by non-residents (2)
• Exemption applies to those individuals providing that they
are the resident of a country with which Romania has
concluded double tax treaty agreement.
• Individuals that are resident of other countries with which
Romania has concluded a double tax treaty agreement
must prove its residency through a tax residency
certificate issued by the competent tax authority of that
state or by another document issued by an authority other
than the tax authority which is responsible for tax
residency certificate.
• This certificate / document is valid for the year / years for
which issued.

11. Taxes on incomes obtained in
Romania by non-residents (3)
• Romanian resident individuals, who prove the change of
residence within a state that Romania has not concluded
double tax treaty agreement on avoidance of double
taxation, are still obliged to pay taxes in Romania on their
world wide income for the calendar year in which the
change of residency took place as well as the next 3
calendar years following the residency change.

12. Changing the deadline for payment of
the salary income tax and quarterly
filling of the tax forms D112
 Conditions for the application of the above provision:
 The companies must have had in the previous year an
average number of up to 3 employees exclusively, and
record a total annual income of under 100.000 euro;
 Micro-enterprises with an average number of
employees of up to 3 exclusively;
 Authorized individuals and individual enterprises;
 Liberal professions and associations without legal
personality between individuals who have staff based
on individual labour contract.
 The above provisions will come into force starting from
October 2011.

13. New deadlines regarding declarative
obligations for a series of taxpayers
 Declaratia venitului net realizat pentru contribuabilii care obtin venituri
Declaration
din activitati independente (D200) va avea ca termen de New deadline
Obligation Old deadline depunere 25
mai inclusiv a anului urmator celui de realizare a venitului (fata de 15
mai anteriorStatement of net revenue of
modificarii); May 15 of the year May 25 of the year
D200 taxpayers obtained from following the reporting following the
independent activities period reporting period
 Declaratia privind veniturile obtinute din strainatate (D201) va fi
depusa de contribuabilii care obtin astfel de venituri pana la 25 mai
inclusiv a Statement urmator celui de realizare15 of the year (fata deof themai
anului of all revenues obtained May a venitului May 25 15 year
D201 in foreign countries by residents
anterior modificarii); following the reporting following the
taxpayers period reporting period
 Declaratia depusa de platitorii de venituri cu regim de retinere la sursa
Last day of
Statement of taxes retainedfiscale) va avea ca year
a impozitelor (D205 & Fisele under June 30 of the termen de depunere
February of the
D205 withholding regime for incomes following the reporting
ultima zi a lunii februarie inclusiv a anului curent pentru anul expirat
year following the
obtained by residents year
(fata de 30 iunie anterior modificarii). reporting year

14. Supplies of services determined by
successive settlements or payments
 Supplies of services determined by successive
settlements or payments (building-assembling,
consulting, etc.) are deemed to be effected (VAT
chargeable) when:
 work reports or work statements are issued or,
 depending on the contractual provisions, on their
acceptance by the beneficiaries.
 So, the settlement period of such services is no longer
limited to 1 year;
 Comes into force from September 5, 2011.

15. Detailing the waste categories for
which the simplification measurements
apply (reverse charge mechanism)
 Delivery of ferrous waste, scrap and recyclable materials,
used recyclable materials consisting of paper, paperboard,
cardboard, fabric, rubber and plastic, glass and glass
shards;
 Delivery of after processing of materials by cleaning,
polishing, selection, cutting, fragmenting, pressing or
casting into ingots;
 Comes into force on 5 September 2011.

16. The deadline for submitting the VIES
statement (D390)
 The deadline for submitting the VIES statement, starting
with the declaration for August 2011, is 25 of the month
following the reporting month, compared to 15 of the
month following the reporting month as it was previously
provisioned.
 Comes into force starting with the declaration of August
2011.

17. Penalties regarding summary
statement VIES(D390)
 Penalties have been modified for summary
statement VIES, namely:
 for not submitting the fine will be 1.000 RON to
5.000 RON and
 for incorrect or incomplete filing the fine will be
from 500 RON to 1.500 RON.
 The 2% fine from the total amount of
purchases/deliveries of goods undeclared has been
eliminated.

18. Local taxes (1)
 The tax rate on buildings that have not been revaluated in
the past 3 years varies between 10% to 20%, while for
buildings that have not been revaluated in the past 5
years varies between 30% to 40%;
 Even the buildings which are not registered with the
Office of Cadastre and Real Estate Publicity are
obliged to make a tax declaration for local taxes;
 Obligation to pay tax on buildings whose construction
was not completed within the time provided in the
building permit and the authorisation was not renewed;
 Comes into force from 1 January 2012.

19. Local taxes(2)
 Declaring buildings for taxation and registration in the
records of local authorities is a legal obligation of
taxpayers who own these buildings, even if they were
executed without a building permit;
 Setting a fix accomodation tax for hotels which can be
imposed by Local councils, namely a rate of 1% of the
total accomodation tariff / hotel day / tourist;
 Comes into force on January 1, 2012.

20. Local taxes(cont.2)
 Granting discounts on the tax on buildings or
even exemptions for a period of maximum 7
years, starting with October 1 2011, for the
following categories of buildings:
 Rehabilitated buildings under the legal provisions
of the program on increasing the energy
performance of housing blocks;
 Rehabilitated buildings based on the Law 153/2011
on measures to increase the quality of architectural
- environmental buildings.

21. Granting reliefs for outstanding tax
obligations that needs to be settled by
August 31,2011
 Granting reliefs for outstanding tax obligations that
needs to be settled by August 31 2011 (comes into
force on September 5 2011) namely:
a) Cancelation of late payment penalties if the outstanding
obligations and interest are settled through voluntary
payment or compensation until December 31 2011;
b) 50% reduction in penalties for late payment if the
outstanding obligations and interest are settled through
voluntary payment or compensation until June 30 2012.

22. Order of settlement for tax liabilities
• Changes in the order of settlement for tax liabilities in
terms of settling firstly the main obligations in order of their
seniority and after accessories in order of their seniority, to
avoid accumulation of new accessories for taxpayers,
namely:
a) Withholding taxes;
b) Other tax obligations (principal);
c) Tax accessories obligations in relations to taxes
presented at a) and b).

23. Procedure of the tax documentation
 Introducing the verification procedure of the tax
documentation in order to analyze correctly the
taxpayer’s fiscal situation and possibly establish
differences for due tax liabilities if the real situation differs
from declared status.
 The documentary verification consist in performing an
analysis of the taxpayer’s tax position:
– upon on existing documents of the taxpayer’s file and
– on any submitted information and documents provided by third
parties or held by the tax authority, which are relevant to
determining the fiscal situation.

24. Estimation of the fiscal base
 The tax authorities estimate the fiscal base if:
a) tax returns were not filed or
b) accounting records or tax returns or documents
submitted to inspection were incorrect, incomplete
or were not submitted at all
 Tax liabilities resulting from the estimation are
subject to further verification.

25. Order of communication of
administrative acts
 The priority for means of communication of
administrative acts has been established:
 priority by mail;
 by submitting or presentation of the taxpayer / authorized
agent at the tax body;
 by fax, e-mail or other remote electronic means and
 ultimately by advertising.

26. THANK YOU!