Romania: New norms for the application of the fiscal code
Government Decision no. 284/2017, modifying and completing the Methodological Norms for the application of Law no. 227/2015 regarding the fiscal code (“Methodological Norms”), was published in Official Gazette no. 319 of 4 May 2017 to clarify various aspects mentioned in the fiscal code. Below we set out the most important matters.
1. As mentioned in our news bulletin of 22 December 2016, taxable persons whose VAT registration code has been cancelled by the tax authorities and who re-register for VAT purposes after resolving the circumstances that led to the cancellation, can still benefit from VAT deduction right for the acquisitions of goods and/or services made during the period in which their VAT code was cancelled. To do so, they must fill in the input VAT in the first VAT return submitted after VAT re-registration or in a subsequent VAT return. During the period of cancellation, taxable persons are still compelled to collect the VAT on the goods and/or services provided. Depending on the manner in which the taxable person proceeded in this period (e.g. collected VAT or not, issued the invoices for goods/services or not, etc.), the Methodological Norms bring under regulation the manner of issuance of invoices/correction invoices referring to the goods delivered/services rendered in the period when the VAT code was cancelled. The Methodological Norms also specify how these invoices are to be declared in the VAT return submitted as mentioned above.
2. The clients of taxable persons re-registered for VAT purposes under the conditions mentioned above are entitled to deduct VAT on the goods/services purchased in the period when the VAT code of their suppliers was cancelled, based on the invoices issued as mentioned above. The respective purchase invoices will be declared in the VAT return submitted after VAT re-registration of their supplier or in a subsequent VAT return.
3. The Methodological Norms contain multiple examples of how the supplier that is re-registered for VAT purposes and its clients could act in order to accurately collect/deduct the VAT amounts relating to the goods/services delivered/acquired in the period of VAT code cancelation.
4. From a profit tax perspective, the Methodological Norms clarify the date for applying the exemption from payment of profit tax on profit invested in acquiring the right to use IT programs, respectively the exemption is applicable only in the case of IT programs acquired from 1 January 2017.
5. The Methodological Norms clarify the rules for recovering the fiscal losses of taxpayers that are considered as microenterprise taxpayers starting 1 February 2017. The Methodological Norms also clarify which taxpayers are obliged to apply the microenterprise tax regime or profit tax regime.
6. The Methodological Norms define the seasonal nature of activities that benefit of exemption from payment of salary tax and clarify that the exemption is also applicable to part-time employment agreements.
7. In the case of natural persons who transfer immovable properties, specific aspects are clarified regarding the method for establishing taxable income for income tax computation.
8. The Methodological Norms stipulate that the dividends that constitute the monthly basis for the computation of health insurance (if health insurance is due) are distributed gross dividends, irrespective if they were paid during the previous fiscal year or not. This rule appears to be in line with income tax provisions.
9. From a VAT perspective, the Methodological Norms further clarify the VAT settlement in cases where the value of the delivered goods or of the rendered services could not be recovered as a result of the beneficiary's bankruptcy or as a result of a restructuring plan accepted and confirmed by a decree, which modifies or eliminates the creditor’s receivable.
10. The Methodological Norms also specify cases and examples concerning VAT settlement for specific purchases of goods and services.
11. Norms for applying the provisions relating to the special VAT regime for farmers have been published in this normative act.
12. Provisions on the register of intra-community operators have been repealed.
In addition to the above amendments to the Methodological Norms for the application of Law no. 227/2015 regarding the fiscal code, the Official Gazette no. 321 of 4 May 2017 also published the Order of National Agency for Tax Administration no. 1024 of 28 March 2017 for amending annexes no. 1-5 of Order of the president of National Agency for Tax Administration no. 560/2016 for approval of the Procedure for administration and monitoring of the medium taxpayers and for amending specific provisions on administration of medium taxpayers.