Profit tax
- Clarifications have been introduced vis-à-vis the start date of the taxable period for foreign legal entities who have their place of effective management in Romania.
- The rules for applying the Parent-Subsidiary European Directive have been supplemented. More precisely, the provisions apply if the parent company/subsidiary pays profit tax in Romania or another tax that is substitute for profit tax, according to the national legislation.
- As of 1 January 2022, the deductibility limit for expenses with bad allowances will increase from 30% to 50%.
- The tax on dividends that are distributed but unpaid by the end of the year in which the distribution was approved (previously the year in which the annual financial statements were approved), is to be declared and paid by 25 January of the following year.
- For taxpayers applying the prepayment corporate tax regime and the tax incentives provided for in art. I of Government Emergency Ordinance no. 153/2020 (on the maintenance/increase of equity), the prepayment amount for the first quarter of each fiscal year will be based on the accounting profit for that period. These provisions will apply from the first quarter of the 2022 fiscal year.
Income tax
- Taxpayers who obtain income from the transfer of the use of goods (with the exception of income obtained from the lease of agricultural goods and income obtained from the rental for tourism purposes of rooms located in personal property) can opt to have their net income determined using the real system based on accounting records, under certain conditions.
- Dividend tax is to be declared and paid by 25 January of the year following the distribution in the event that the dividends are not paid by the end of the year in which their distribution was approved (previously the year in which the annual financial statements were approved).
- Starting with income pertaining to September, employers who are Romanian tax residents or non-residents subject to the European legislation on social security may opt for the calculation, withholding and payment of mandatory social insurance contributions for individuals who obtain salary income from non-resident third parties.
Withholding tax
- For dividends distributed to non-residents but unpaid by the end of the year in which they were approved (previously the year in which the annual financial statements were approved), the dividend tax is to be declared, withheld and paid by 25 January of the following year.
- The transposed provisions of Parent – Subsidiary European Directive have been supplemented with the result that an exemption will be granted if both companies pay corporate tax or a tax that is a substitute for profit tax.
- The applicability of tax exemptions on dividends has been extended to payments made to legal persons resident in a Member State of the European Economic Area as well as in Iceland, Liechtenstein or Norway, provided that at the date of payment the recipient of the dividends has held at least 10% of the shares in the Romanian income payer for a period of at least one year.
- The obligation to submit an annual information return lies with the income payer (with the exception of payers of salary income), even where the tax due by the non-resident is born by the income payer.
Value added tax
- The idea of “distance sales of goods imported from third party territories or third countries” has been introduced as a result of the new provisions implemented at European level. At the same time the definition of “distance selling of goods” was updated.
- Non-resident taxable persons established in Romania through a fixed establishment must register for VAT purposes in Romania if they opt to apply the One Stop Shop scheme.
Source: Government Ordinance no. 8/2021 amending and supplementing Law no. 227/2015 (The Fiscal Code) in the format published on 31 August 2021.
Tax & Legal Newsletter_September 2021
