The Romanian authorities recently introduced the following set of legislative and fiscal amendments/clarifications.
Value added tax
- A new legal provision has been introduced regarding an increase to the threshold, from RON 450,000 to RON 700,000, when applying the 5% VAT rate on supplies of residential properties to individuals. Moreover, from 1 January 2022, any natural person may purchase, individually or together with one or more other natural persons, a single residential property using the 5% VAT rate.
- In the case of both supplies of residential properties conducted according to the above-mentioned rules and supplies of residential properties with a price lower than RON 450,000, the lower rate of VAT will only apply to properties that can be occupied in their current state at the moment of the supply.
- In addition, as of this same date, the lower rate of VAT (5%) will also apply to supplies of heat made during the cold season to the population and other categories of consumer (i.e. public and private hospitals, non-governmental organisations and suppliers of social services). The cold season is defined as the 5-month period running from 1 November of the current year until 31 March of the following year.
Income tax and social contributions
- On 1 January 2022, the non-taxable threshold for cash and/or in-kind gifts awarded by employers will increase from RON 150 to RON 300.
- From 1 January 2022, when establishing the monthly taxable income from pensions, the deduction of health insurance contributions may be added to the deduction of the non-taxable monthly amount of RON 2,000, where applicable.
- The exemption from the payment of health insurance contributions for a monthly pension income in excess of RON 4,000 has been eliminated.
- Declaration obligations for pension income obtained abroad by natural persons are to be introduced starting with income pertaining to 2022.
Corporate tax
- The application of incentives for expenses relating to early education has been postponed from 1 January 2022 until 31 December 2022. During this period, all costs incurred in ensuring the proper operation of crèches and kindergartens will be subject to the deductibility rules for social expenditure.
Source: Emergency Ordinance no. 130/2021 on various fiscal measures, the extension of various deadlines and the amendment and supplementation of various normative acts, in the form published on 18 December 2021.
Amendments regarding the reduced rate of VAT on supplies of textbooks, books, newspapers, and magazines
From 1 January 2022, the lower, 5% rate of VAT on supplies of textbooks, books, newspapers, and magazines will apply if the goods in question are supplied in hardcopy format and/or electronically.
As of this date, the 19% VAT rate for goods intended mainly or exclusively for advertising purposes will also be extended to textbooks, books, newspapers, and magazines that have, entirely or predominantly, a video or audio music content (previously, this rate was applicable for the supply of books, newspapers, and magazines intended mainly or exclusively for advertising purposes).
Source: Law no. 291/2021 on the amendment of art. 291, para. (3) lit. a) of Law no. 227/2015 regarding the Fiscal Code, in the form published on 10 December 2021.
Reduced rate of VAT on firewood supplies
From 1 December 2021, the lower, 5% rate of VAT will also apply to firewood supplies to individuals, legal entities or other entities, regardless of the legal form of their organisation, including schools, hospitals, health clinic and social care units, provided certain criteria are met.
Source: Law no. 286/2021 on the supplementation of para. (3) of art. 291 of Law no. 227/2015 regarding the Fiscal Code, in the form published on 9 December 2021, and Law no. 287/2021 on the supplementation of art. 291, para. (3) of Law no. 227/2015 regarding the Fiscal Code, in the form published on 9 December 2021.
