The contributions chapter has high impact news, which will increase the effective rate of taxation for independent activities (PFA, copyright, civil contracts) and will decrease for the dividends incomes. The changes will come into force in two stages, in 2016 and 2017.
Authorized natural persons (PFA) will owe from January 2016 also the social insurance contribution (CAS) of 10.5%, on the net income achieved, capped at five monthly average gross salaries. Therefore, authorized natural persons will pay, besides the 16% tax and the health insurance contribution (CASS) 5.5%, also 10.5% CAS.
From 2017, CASS of 5,5% wil also be capped at five monthly average gross salaries.
The natural persons who receive dividends will not owe CASS of 5,5%, from 2016, as it was stipulated in the initial version voted by the Parliament, in June. Another change in the new Fiscal Code compared with the text voted during the summer, is that the dividend tax will not be reduced to 5%, but will remain 16% in 2016.
Therefore, the next year, the incomes from dividends will be taxed as currently: if there are incomes from salaries, PFA etc., the CASS will not be owed. Starting with 2017, the income tax will decrease to 5% and CASS to 5.5%, capped at five monthly average gross salaries, will became mandatory, no matter what other income sources exist.
For copywriting incomes, starting with 2016, CAS of 10.5% capped at five monthly average gross wages, will be paid mandatory. Instead, the CASS of 5,5%, will not be owed if there are incomes from salaries, PFA etc.. As a conclusion, in terms of CASS, the situation will not be changed in 2016. Starting with 2017, the CASS, capped at five monthly average gross salaries, will also become mandatory for these incomes, whether there are other sources of revenues. Also about the copyright, it must be mentioned that, the flat rate of expenses will increase up to 40% from 2016, compared with 20% as it is now.
Other important changes in the New Fiscal Code
Income tax
– sponsorship expenses: the limit of 0.3% applied to the turnover for the sponsorship amounts which can be granted, will be increased to 0.5% applied to the turnover.
– the social expenses will be deductible up to 5% compared to 2% – the current limit, from the total salary costs
– the expenses incurred on behalf of an employee for the voluntary pension schemes and with the health insurance premiums will be fully deductible for the company regardless of the amount (if these costs exceed Euro 400/ participant for each of the two types of expenses, the difference will be considered benefit in kind)
– the tax exemption for the reinvested profit: it is introduced a new category of assets – computers and peripheral equipment, machinery and household appliances, control and billing, as well as software.
Microenterprises
The main novelty is the rate of 1%, in force since 2016 for the microenterprises, Romanian legal entities, newly established, who meet the following conditions:
The 1% rate will be applicable for the first 2 years, until the end of the quarter in which it ends the period of 24 months.
According with the new Tax Code, the employee is a person employed with an individual full time working contract, according to the Labor Code.
The condition as regard the employee will be considered accomplished if the microenterprise has persons employed with individual part time working contracts, if the hours represent the equivalent of a full time contract or has established management contracts or mandates, with the remuneration at least at the level of the minimum gross basic salary per country.
The Income tax
There is no longer considered as taxable benefit for the employee, the use of the cars for which it was applied the limitation of the VAT deduction and the expenditure to 50%.
VAT
The standard rate will decrease from 24% to 20% starting with January 1st, 2016 and from 20% to 19% starting with January 1st, 2017.
Other news in 2016:
Excises
There are not important changes. Eliminating additional excise on fuels was postponed for 2017.
Local taxes
The buildings will be taxed depending on the destination, not on the owner – natural person or legal person, as it was until now.
For the residential buildings the rate will be between 0.08% and 0.2%, and for the nonresidential ones, between 0.2% and 1.3%, depending on the decision of the local council. Currently, the rates are set for natural persons (0.1%) and legal persons (0.25% -1.5%).
Therefore, the local taxes will increase for the nonresidential buildings of the natural persons, but it will decrease for the companies. For example, in Bucharest and the other big cities, the rate for buildings owned by companies which is now 1,5%, will be limited at maximum 1,3%.
Important to remember is that for the natural persons, the taxable value of the non-residential buildings can be:
For the buildings with mixed destination, the tax will be calculated by summing the tax for the area used for residential purposes with the one for the non-residential area. If the two types of areas cannot be distinctly evidenced, the tax will be due as for buildings:
To remember! For the legal persons, the tax charges are decreasing for the cases when the revaluation was not done. Therefore, the rate will be 5% from 2016, currently being between 10% and 20%, if the revaluation was not done within the last 3 years, and between 30% and 40%, if it wasn’t realized in the last 5 years.
The tax on special constructions will remain in force also in 2016.
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