I. On August 31, 2021, the Government Ordinance no. 8 for the amendment and supplementing of Law no. 227/2015 regarding the Tax Code (“OG 8/2021”) was published in the Official Gazette no. 832.
We summarize below the main changes introduced by Government Ordinance 8/2021:
1. Corporate tax and dividend income tax:
- In case of foreign legal entities having the place of effective management in Romania, the date from which the tax period begins would be the date of registration to the central tax authority;
- Amendments are made to the conditions under which dividend income is considered non-taxable.
Thus, the condition that the beneficiary must be a corporate tax payer is supplemented by a reference to other taxes that substitute corporate tax;
- The percentage allowed for the deduction of the adjustments made in relation to bad debts impairment is increased from 30%to 50%. The provision applies as of January 1, 2022;
Correlation of the legislative provisions regarding the “exit tax” (Art. 40 of the Tax Code) with those of Directive 2016/1164/EU, respectively exempting the taxpayers from the rule of constituting guarantees in order to benefit from the payment rescheduling of the tax obligation during 5 years, unless there is a real and demonstrable risk of non-recovery.
- The deadline for the payment of the dividend tax will no longer be determined by reference to the year in which the annual financial statements are approved, but the year in which the distribution of dividends is approved;
- Amendment of the reference base in relation to which the advance payment of corporate income taxfor first quarter is calculated in case of taxpayers that benefited from the tax allowances granted by GEO 153/2020;
- The legislative provisions that should have been applied starting with January 1, 2022, according to which the adjustments made in relation to bad debts impairment would have been fully deductible for corporate tax purposes, are repealed.
2. Individual income tax and social security contributions:
- The inclusion in the category of income from agricultural activities established on the basis of the income norms of some plant varieties necessary for animal feeding. The measure applies to revenues obtained starting from 1 January 2022;
- Clarification of the payment deadline related to the dividend tax distributed during the year, but which were not paid until the end of the year. Thus, the deadline for transferring the tax to the State Budget is until January 25th inclusively of the year following the one in which the distribution was made;
- Clarifications regarding the calculation of the tax due for income obtained as a result of participating in gambling activities such as casinos, poker clubs, slot machines and lotteries. Thus, the tax will be calculated, for each gross income that exceeds the non-taxable ceiling of RON 66,750, by applying the specific tax rate, from which the amount of 667.5 lei will be deducted;
- It regulates the possibility of the taxpayer to submit the 230 form “Application for the destination of the amount representing up to 3.5% of the annual tax due” to non-profit entities / religious units and clarifies the use of these amounts by the beneficiary.
- Establishes the possibility for the employer resident in Romania to opt for the calculation, withholding and payment of social security contributions in the case of employees who obtain benefits in cash and / or in kind (i.e. assimilated to salary income) from third parties who are not tax residents. The measure will apply starting with the revenues obtained in October 2021;
3. Withholding tax on income obtained by non-residents in Romania
- Similar to the tax on the income from dividends, the payment deadline of the withholding tax on dividend income tax obtained by non-residents will no longer be established by reference to the year in which the annual financial statements are approved, but the year in which the dividend distribution is approved;
- Similar to corporate tax provisions, amendments are made to the conditions under which dividend income is considered non-taxable. Thus, the condition that the beneficiary must be a corporate tax payer is supplemented by a reference to other taxes that substitutes the corporate tax;
- Dividends paid by a resident legal entity to its shareholder resident in one of the European Economic Area states, namely Iceland, the Principality of Liechtenstein, the Kingdom of Norway, shall be exempt from dividend tax. The conditions for applying the exemption are similar to those applicable in relation
to legal persons resident in the EU, respectively holding at least 10% of the share capital of the other
legal entity, for an uninterrupted period of at least one year;
- Tax residency certificates accompanied by an authorized translation into Romanian, submitted online through the Virtual Private Space to the Romanian tax authorities, will be accepted as true copy, provided that the original certificate or a certified copy thereof is in possession of the income payer;
- It is clarified that the informative declaration regarding the income with withholding tax regime is also submitted when the tax is borne by the income payer;
4. Regarding value added tax
- The terms “distance sell of goods” and “distance selling of goods imported from third territories or third countries” are clarified in the context of the new rules on e-commerce (applicable from 1 July 2021);
- Imports of goods by the European Commission, EU bodies and agencies, as well as supplies of goods / services to them are exempt from VAT when the purchase of goods / services is carried out in order to fulfill a mandate to combat the COVID-19 pandemic;
- It regulates the possibility for taxable persons established in Romania who apply the special exemption regime for small enterprises to opt for the application of the EU regime (on one-stop shop) without giving up the special regime;
- Also, taxable persons established outside Romania, but with a fixed establishment in Romania, who are not registered and do not have the obligation to register for VAT purposes, must apply for registration for VAT purposes according to art. 316, in order to be able to opt for the application of the EU regime (one-stop shop).
5. Local taxes
- No tax will be due on buildings / land related to those buildings used as domicile and the related lands belonging to the persons provided for at Art. 2, letter c) – f) and j) of Law no. 168/2020 for the recognition of the merits of the personnel participating in military actions, as well as to the persons provided for at Art. 1 and Art. 5 Para (1) – (3) of Decree-Law 118/1990 on granting rights to persons persecuted for political reasons, prisoners of war or deportees. The latter category of persons will also benefit from the tax exemption for a single means of transport owned or co-owned by them.
- Regarding the calculation of the building tax, in the case of mixed-use buildings, owned by individuals, the condition regarding the registration of utility expenses is eliminated;
- The sale agreement for means of transport may be drawn up in electronic form, using the qualified electronic signature;
- Clarification of the method for calculating the tax on performance events, in the sense that the calculation basis is represented by the sale of entrance tickets and season tickets, excluding VAT;
II. On September 7, 2021, it was published in the Official Gazette no. 853 the Order of the President of the National Agency of Fiscal Administration for the approval of the Procedure of registration for the application of the special regimes for taxable persons who provide services to non-taxable persons or performs distance sales of goods, as well as for value added tax declaration according to the 2 provisions of Art. 314, Art. 315 and Art. 315 of the Tax Code, in the situation where Romania is the member state of
registration, as well as for the amendment of some procedural provisions.
This Order shall enter into force as of September 10, 2021.