Romania: New tax facilities adopted by the Romanian Government
On 14 May 2020, the Romanian Government adopted Emergency Ordinance no. 69/2020 (“the GEO”) which enables a series of tax facilities for taxpayers, as summarised below:
- Starting in 2021, a reduction of up to 10% in income tax and social insurance contributions payable by individuals may be granted. The percentage of reduction, payment terms and granting conditions will be settled by the annual state budget law;
- During the period of suspension from office of their employees, employers are obliged to pay health insurance contributions at the level of the minimum gross salary;
- The companies’ VAT registration will be performed with a subsequent risk analysis by the tax authorities – until now, the risk analysis was also performed prior to VAT registration;
- The deadline for submitting the Unique Declaration (“Declarația Unică”) is postponed until 30 June 2020. Individuals who submit the Unique Declaration by 30 June 2020 can benefit from a reduction of their tax liabilities (i.e. income tax, social insurance contributions) as follows:
– 5% if the tax liabilities are paid by 30 June 2020, and
– 5% if the Unique Declaration is submitted electronically. This reduction is granted only if the payment is made by 30 June 2020.
In the case of individuals who have already submitted the Unique Declaration, a rectifying declaration can be submitted with a view to benefiting from the reduction. If the tax liabilities have already been paid, the amount of the reduction can be compensated for or refunded.
- Incentives and/or bonuses received by employees who have direct contact with the public in their work, thus having a higher risk of contracting Covid-19, are not subject to social insurance contributions. The exception is valid between 14 May and 30 June 2020.
- Until 14 August 2020, local councils or the General Council of Bucharest can adopt tax measures regarding:
– a reduction of up to 50% on building tax due for non-residential buildings owned by companies or individuals, used for their own economic activity or that of others, based on written agreement (e.g. rent, gratuitous loan), if during the state of emergency their economic activity was totally interrupted or they held a certificate for a state of emergency issued by the Ministry of the Economy, Energy and Business;
– exemption from payment of monthly building tax due by concessionaires, tenants, holders of the right to manage or use a building publicly or privately owned by the state or by the administrative-territorial units, if, during the state of emergency, they were required by law to completely cease their economic activity.
- Waiver of interest, penalties and other additional charges for outstanding debts as of 31 March 2020 for all taxpayers, e.g. natural persons, legal entities, natural persons carrying out economic activities or liberal professions, entities without legal personality, public institutions, etc., as follows:
– Cancellation of interest, penalties and all other charges related to the main budgetary obligations outstanding on 31 March 2020 inclusive in the case of taxpayers which, on that date, had both additional fiscal obligations and main fiscal obligations.
– Cancellation of interest, penalties and all other charges related to the main budgetary obligations additionally declared by the debtor by correcting the tax return and due before 31 March 2020 inclusive.
– Cancellation of interest, penalties and all other charges related to the main budgetary obligations due before 31 March 2020 inclusive if on that date the taxpayers only had additional charges recorded in their balance and the main fiscal obligations had been paid.
– Cancellation of interest, penalties and all other charges related to the main fiscal obligations due before 31 March 2020 inclusive, established by a tax assessment notice issued after a tax inspection or verification of the personal tax situation which was ongoing on the date the emergency ordinance came into force.
In order to be able to benefit from the above, the following conditions must be met:
- he cancellation form must be submitted prior to 15 December 2020, and
- the main budgetary obligations must be paid by the submission date of the cancellation form, and
- the taxpayer has submitted all its tax returns by the submission date of the cancellation form.
Provided that all these conditions are met, the taxpayer can use all 4 tax facilities mentioned above.
Taxpayers who, on the date of entry into force of the GEO, benefited from the payment rescheduling of fiscal obligations, as well as those who obtain the rescheduling in the period between the date of entry into force of the GEO and 15 December 2020 inclusive, may benefit from the cancellation of interest, penalties and all additional charges under the above conditions.
The local public administration authorities are not required to implement these facilities. However, they may opt to implement them if the local council passes a resolution to implement the provisions and the applicable procedure.
The outstanding debts as of 31 March 2020 include:
- budgetary obligations for which the due date or payment term has been met on 31 March 2020 inclusive, as well as main fiscal obligations due in the period between the date of entry into force of Government Emergency Ordinance no. 29/2020 (i.e. 21 March 2020) and 31 March 2020 inclusive;
- the differences in main budgetary obligations established by tax decisions communicated up to 31 March 2020 inclusive, as well as the differences in main budgetary obligations related to fiscal periods up to 31 March 2020 inclusive, established by the tax authorities by a tax decision issued and communicated by the date of entry into force of the GEO, as a result of a tax inspection or verification of the personal tax situation;
- the main budgetary obligations related to the fiscal periods up to and including 31 March 2020, established by a tax decision issued ex officio by the tax authorities or by a tax return submitted late by the taxpayer, between 1 April 2020 and the date of submitting the application for cancellation;
- other payment obligations evidenced in enforceable titles issued according to the law and existing in the records of the tax authorities for recovery on 31 March 2020 inclusive, as well as the main budgetary obligations established by bodies other than tax authorities, related to fiscal periods up to 31 March 2020, sent for recovery to the tax authorities in the period between 1 April 2020 and the date of submission of the application for cancellation.
The outstanding debts as of 31 March 2020 do not include:
- Fiscal obligations for which payment facilities have been granted as of 31 March 2020;
- Fiscal obligations which have their execution suspended by law.
Practice group: Tax