Tax Flash nr. 60
17 September 2021
In the Official Gazette no. 832/31 August 2021, Ordinance no 8/2021 on amending the Tax Code and Ordinance no 11/2021 amending the Tax Procedure Code were published. Please find below the most important amendments:
TAX CODE AMENDMENTS
I. CORPORATE INCOME TAX
The main changes from a corporate income tax perspective are the following:
- The conditions for non-taxation of dividends received from the Member States of the European Union provided at art. 24 of the Tax Code are completed with provisions related to the payment of another tax that substitutes the corporate income tax, as a condition that must be fulfilled for the non-taxation of dividends.
- The provision introduced by Law no 296/2020 regarding the full deduction of impairment adjustments for receivables that are not cashed in a period exceeding 270 days from the due date, which should have entered into force starting with 1st January 2022, is eliminated. At the same time, starting with 1st January 2022, the deductibility limit of these impairment adjustments for receivables is increased from 30% to 50%, if the conditions are cumulatively met.
- The ordinance amends the provisions of art. 43 of the Tax Code regarding the declaration, withholding and payment of the tax on dividends distributed to a Romanian legal person and not paid, by eliminating the reference to the year in which the annual financial statements were approved and replacing it with the reference to the year in which the distribution of dividends was approved.
- Starting with the tax year 2022 and until the tax year 2026 inclusive, taxpayers who apply the system of declaration and anticipated payment of the corporate income tax and who benefit from the tax incentives for maintenance/increase of equity according to GEO no 153/2020, perform the advance payment for the first quarter of each tax year at the level of the amount resulting from the application of the tax rate on the accounting profit of the period for which the advance payment is made.
II. INCOME TAX AND MANDATORY SOCIAL CONTRIBUTIONS
- The employer, a Romanian tax resident or a Romanian tax non-resident who is subject to the applicable European legislation regarding social security, has now the possibility of choosing to compute, deduct and pay the mandatory social contributions (pension, health and work insurance contribution) for the individuals who obtain benefits in kind or in nature from third parties that are not Romanian tax residents (this provision will be applied starting with the income related to October 2021).
- Clarifications are provided regarding the method of determining the net income from rent (income norm or real system), depending on the number of rooms rented for tourism purposes.
- It is clarified the method of calculating the tax due for gambling income characteristic to casinos, poker clubs, slot-machine and lotteries, which have a bigger value than the non-taxable threshold of 66,750 lei, by deducting the amount of 667.5 lei from the result obtained after applying the scale on the gross income.
- It was introduced the possibility of submitting, by the taxpayer, the 230 form „Application regarding the destination of the amount representing up to 3.5% of the annual income tax due " to the non-profit entities and cult units which will forward to the competent tax authority, by electronic means, a centralized form containing all the received applications from the taxpayers.
III. WITHHOLDING TAX ON INCOME OBTAINED BY NON-RESIDENTS FROM ROMANIA
The main changes introduced for withholding tax refer to the following:
- Similar to the provisions applicable to dividends distributed to a Romanian legal person, clarifications are made regarding the moment at which the tax is withheld, declared and paid for the dividends distributed to non-residents, but not paid. Thus, the tax is calculated and paid until 25th of January of the following year in which the distribution of dividends was approved, respectively until the 25th of the first month of the amended tax year following the year in which the distribution of dividends was approved, and not following the year in which the financial statements were approved, as was previously stated in the legislation.
- Regarding the conditions for applying the tax exemption in Romania for income from dividends obtained by legal entities resident in another Member State of the European Union, it is extended the condition regarding the obligation of the beneficiary foreign legal entity / income payer to pay exclusively corporate income tax, by introducing the tax exemption on dividends income paid by the resident legal entity to its non-resident shareholder, if both the non-resident person and the resident legal entity are subject to corporate income tax, or a substitute of the corporate income tax (micro-enterprises income tax, specific tax, in the case of Romanian legal entities which pay the income).
- A new tax exemption is introduced for dividends distributed by a Romanian resident to a legal person resident in a Member State of the European Economic Space (other than the Member States of the European Union), respectively Iceland, Liechtenstein, Norway, if the foreign legal person receiving the dividends holds, on the date of payment, at least 10% of the participation titles of the Romanian legal entity for a period of at least 1 year.
- It is provided that the tax residency certificate is accepted, accompanied by an authorized translation into Romanian language, in a certified true copy and the mention that the original or the certified copy of the certificate is held by the income payer / Romanian legal person of which the participation titles are sold / permanent establishment in Romania / legal entity in Romania where the non-resident individual was detached, if the tax residency certificate is submitted by electronic means to the tax authorities.
- It is clarified the obligation to submit the Annual Informative Statement regarding the withholding tax / exempt income per non-resident income beneficiaries (Form 207) also by the payers of income subject to the withholding tax regime, when the tax due by the non-resident is supported by the income payer.
Regarding the Value added tax, the main changes are the following:
- Amending the definitions for “intra-Community distance sale of goods” and “distance sale of goods imported from third territories or third countries” to comply with the new VAT rules on e-commerce.
- New provisions are introduced, according to which:
- The taxable person who has the registered office of the economic activity outside Romania, but who is established in Romania through a fixed establishment, who is not registered nor has the obligation to register for VAT purposes, must apply for registration for VAT purposes if opts for the application of the EU Special Scheme (OSS).
- The taxable person who has the registered office of the economic activity in Romania, if it is not registered and is not obliged to register according to art. 316, may apply to register, if opts for the application of the EU Special Scheme (OSS).
V. LOCAL TAXES
From a local tax perspective, the main amendments are the following:
- The method of calculating the tax on mixed-use buildings owned by individuals is changed, by eliminating the current condition regarding the deduction of utility expenses.
- New provisions are introduced regarding the submission in electronic format to the tax authority of the documents of sale-acquisition of a vehicle, drawn up in electronic form and signed with a qualified electronic signature.
TAX PROCEDURE CODE AMENDMENTS
Government Ordinance no 11/2021 brings significant changes to the Tax Procedure Code, please find below the most important ones:
- A new obligation is established for the taxpayers, that of submitting to the tax authorities an informative statement that includes information from the accounting and tax records, namely the standard tax control file (SAF-T). Also, sanctions are introduced for the non-submission of the SAF-T file.
- The mandatory enrolment in the Virtual Private Space organized by tax authorities is introduced for taxpayers / payers which are legal entities, associations, and other entities without legal personality, as well as individuals who carry on a liberal profession or engage in economic activity independently, starting with 1st March 2022.
- The tax statements can be corrected even after the cancellation of the reserve of the subsequent verification whenever by final court decisions were ruled decisions that generate the adjustment of the tax base or the establishment of differences of additional tax obligations.
- It is provided that, at the taxpayer's request, the payment documents can be corrected. Thus, is considered valid the payment of tax obligations made to a budget other than the one to which the tax receivable is of, provided that the payment has not covered the receivables due to the budget in which the erroneously paid amount was collected.
- The reimbursement of VAT requested through returns with negative amounts will be made with subsequent fiscal inspection, based on a risk analysis, with some exceptions.
- The rescheduling of tax payments, in simplified form, introduced by GEO no 181/2020 becomes a permanent measure, from 1st October 2021.
- Are extended the situations of requesting the cancellation of interest, penalties and all ancillary obligation introduced by GEO no 69/2020 for the tax liabilities due prior to 31st March 2020 and individualized in tax decisions issued as a result of a tax inspection or check of personal tax situation started after the date of entry into force of the GEO no 69/2020 (14 May 2020).