New Fiscal Code Applicable as of 1 January 2016
- Exemption from profit tax of the reinvested profit is granted for assets from group 2.1 and 2.2.9 of the catalogue of fixed assets, namely equipment (machinery and work equipment), computers, cash registers and other related assets;
- The fiscal adjustments are eliminated from the computation of the deductible protocol expenses – these expenses are deductible up to 2% rate applied to the accounting profit plus profit tax and protocol expenses;
- Social expenses may be granted up to 5% of salary expenses;
- The sponsorship expenses reduce the profit tax up to the minimum between 0.5% applied to turnover or 20% of profit tax;
- The deductible interest for loans in foreign currency is of 4%;
- The dividend tax rate is of 5% for dividends paid to Romanian companies.
- The micro-enterprise tax rate is of 1% for micro-enterprise with two employees or more, 2% for micro-enterprise with one employee, 3% for micro-enterprise without employees.
- The standard rate is of 20%;
- The simplification measures (VAT reverse charge mechanism without actual payment of VAT) is extended to (i) buildings, parts of buildings and land (for which VAT is due by law or by option), (ii) mobile phones, (iii) devices with integrated circuits, (iv) game consoles, tablets and laptops if specific conditions are met.
Income tax and social contributions for individuals
- The dividend tax rate is of 5% for dividends distributed after 01.01.2016;
- A freelancer must pay pension contribution and the tax rate is 10.5% applied to the net revenues (revenues minus deductible expenses), whereas the monthly taxable base is capped to 5 x medium gross salaries. This contribution is due even if the freelancer is also an employee.
- The taxable base of building tax due by individuals for residential buildings is increased and the tax rates vary between 0.08% and 0.2% applicable to the building value;
- Specific rules are applicable in case of buildings owned by natural persons which are used both for residential and non-residential purposes;
- For buildings owned by legal persons the building tax will be applied to the building value and will vary (i) between 0.08% and 0.2% for residential buildings; (ii) for non-residential buildings, the tax rate is between 0.2% and 1.3%. The taxable base should be updated every three years through a revaluation; in case no revaluation is performed in the last 5 years, the building tax rate would be of 5%.
Tax on construction
- Construction tax is maintained in 2016 also.