Romania: Amendments to the Implementing Instructions for Applying the Fiscal Code
Listed below are the main amendments included in Government Decision no. 354/2018 amending and supplementing the Implementing Instructions for applying Law 227/2015 regarding the Fiscal Code.
Corporate Income Tax
Clarifications have been provided regarding the tax treatment applied to expenses with receivables assigned between January 1, 2018 and March 26, 2018. The excess indebtedness cost is explained, and newly introduced rules regarding limitation of interest expenses and economically equivalent costs beginning January 1, 2018 are exemplified.
The Tax on Micro-Company Income
Micro-companies may now opt for applying provisions of Title II – Corporate income tax if they meet two cumulative conditions: minimum share capital of RON 45,000 and minimum two employees. Individual labour conventions concluded under special laws are now considered alongside labour contracts when establishing employee count for the 1% income tax rate.
Income Tax
Instructions clarify how tax on sporting activities income is determined. Guidance addresses individuals obtaining freelance income determining annual net income per accounting data. The decision explains how individuals earning from both R&D activities (tax-exempt) and other taxable activities calculate income tax. A process allows individuals to redirect 2% or 3.5% of income tax to support nonprofits, religious organizations, or provide scholarships. The document provides examples for calculating tax on agricultural activities and includes guidance on single returns and tax deductions.
Social Security Contributions
Instructions provide clarification and examples for determining social security contributions in 2018 for individuals obtaining freelance income and intellectual property rights exceeding 12 minimum national gross wages. A new chapter addresses work insurance contributions, clarifying that this obligation extends to employers not established or domiciled in Romania if employees are subject to the Romanian social security system.
Value Added Tax
The decision clarifies application of provisions excluding R&D activities from VAT scope when results are not transferred to another taxpayer for consideration. Guidance confirms that reproduction rights holders make no taxable supply to blank media users, and copyright collection activities are not VAT taxable transactions.
Excise Duties
The formula for complete denaturing of ethylic alcohol per hectolitre of pure alcohol has been updated. Methodology and conditions for granting excise tax refunds for heated tobacco products manufactured in Romanian tax warehouses and supplied to EU or non-EU countries are established.
Local Taxes
Clarification specifies that rental income/expenses and income/expenses from administration or use rights transfers are not considered agricultural activities for land tax computation purposes for legal entities holding urban land registered in the agricultural register under categories other than “land with buildings.”
Decision no. 354/2018 was published in the Official Gazette of Romania no. 442/25.05.2018.