Romania: Major amendments of fiscal legislation
Government Emergency Ordinance no. 3/2017, modifying and completing the Fiscal code, was published in the Official Gazette no. 16/06.01.2017 and brings a series of amendments out of which we hereby present you the most important.
- Starting 06.01.2017, tax payers that perform exclusively innovation, research and development activities as well as related activities are exempted from payment of profit tax in first 10 years of activity. This fiscal incentive could be applied only in case the state aid legislation is observed. This is a new fiscal facility aimed to increase the volume of research and development activities.
- Starting 01.02.2017, the tax payers whose revenues in the previous financial year do not exceed EUR 500.000 (exchange rate valid at 31 December) and fulfill the rest of the three criteria already applicable in microenterprises case, will be held liable for payment of tax on microenterprises. Payers of profit tax at 31.12.2016 that will become payers of microenterprise tax starting 01.02.2017 are held liable for submission of specific tax returns regarding the profit tax due for January 2017 until 25.02.2017. It is not expressly detailed whether the profit tax payers with a share capital of more than RON 45,000 are still required to change the fiscal regime and register as payers of tax on microenterprises. We hope this discrepancy will be solved as soon as possible.
- Microenterprise tax is 1% in case of companies having 1 or more employees and 3% in case of companies without employees. The microenterprise tax of 2% was repealed.
- Microenterprises which realize revenues exceeding EUR 500.000 or the percent of revenues obtained from consultancy and management activities exceeds 20% of their total revenues, will be held liable for payment of profit tax starting with the quarter when one of the above mentioned limits is exceeded.
- Employees who conclude labour agreements for a period of 12 months with Romanian legal persons that perform seasonal activities mentioned by Law no. 170/2016 and obtain salary and salary assimilated incomes, will be exempted from payment of salary tax.
- The amounts of voluntary health insurances and medical services obtained on subscription base will be considered deductible for salary tax computation at individual level within a limit of EUR 400/year. The deduction of subscription for medical services was introduced.
- Incomes obtained by individuals from the sale of buildings/lands will be exempted from payment of income tax if they do not exceed RON 450.000. Amounts exceeding RON 450.000 will be subject to 3% income tax. The computation of the income tax based on the ownership period was repealed.
- Starting 01.02.2017, the taxable base for computation of pension insurance at employee and employer level will not be capped to any further extent to 5 average gross salaries. The limit of 5 average gross salaries applicable in case of taxable base for computation of pension insurance due by individuals who perform independent activities or obtain incomes from intellectual property rights will be maintained.
- Starting 01.02.2017, the taxable base for computation of health insurance due by individuals who perform independent activities or obtain incomes from intellectual property rights will be capped to 5 average gross salaries.
- Starting 01.02.2017, the revenues obtained by individuals from investment activities (e.g. dividends, sale of shares) will not be subject to health contribution if the respective individuals will have, amongst others, employment agreement.
Besides the above amendments of the Fiscal code, the Government Decision no. 1/2017 for establishing the minimum gross salary was published in the Official Gazette no. 15/06.01.2017. The minimum gross salary will be of RON 1.450 starting 01.02.2017.