OFFICIAL GAZETTE 150/01.03 - Decision no. 150/2011 dated on 23.02.2011 amending and supplementing the Methodological Norms for applying Law no. 571/2003 regarding the Fiscal Code, approved by Government Decision no. 44/2004 and also amending and completing Government Decision no. 870/2009 for the approval of Methodological Norms for applying GEO no. 77/2009 regarding the organization and operation of gambling

Income tax

There are brought clarifications regarding the taxation of profits obtained through a permanent establishment located outside the Romanian territory, when it is applied the “exemption method” according to the Convention for the avoidance of double taxation. In this case, both incomes and expenses recorded by the permanent establishment shall be consolidated in Romania as non-taxable incomes and respectively non-deductible expenses when calculating the profit tax, on the condition to make the proof with the justifying document issued by the competent authority of the foreign state which certifies the tax paid abroad.
The present decision clarifies how to calculate the taxable income/ tax loss for 2010, as a result of the abrogation of the minimum tax, a measure that led to the introduction of specific rules for the statement of the tax result for the year 2010.

Thus, taxpayers required to pay on a quarterly basis income tax shall submit the statement regarding the profit tax related to the two periods of 2010 only if, until October 1st, 2010, minimum tax was due for at least 1 quarter.

Those taxpayers that during the period January 1st to September 30th, 2010, as a result of comparison with the minimum tax, were required to pay for the 3 quarters profit tax shall submit only the statement on profit tax for the entire year 2010.

Unlike these, for taxpayers, that are banking companies as well as those individuals who obtain incomes mainly from cereals and industrial crops, fruit growing and viticulture, the establishment of tax period for filing of the the tax declaration is made by comparing the accumulated period between January 1st to September 30th, 2010 and, if during this period is derived minimum tax, they are required to submit 2 statements for 2010. Otherwise, they are required to submit only one statement.

To determine the taxable profit for the period January 1st to September 30th, 2010, respectively October 1st to December 31th, 2010, the following will be taken into consideration:

limited deductible expenses are set according to the corresponding calculation base, related to each period, the established deductible amounts due for each period being final;
to implement the provisions of Title VI “Value added tax” related to the collecting of the tax corresponding to the exceeding of the threshold for protocol expenses, the collected VAT is calculated on the exceeding threshold for each period, by summing up their value;
to determine the tax limit of expenses, in case the limit of 400 euros, 250 euros, respectively 4,000 euros is not exceeded during the period January 1st to September 30th, 2010, for the period October 1st to December 31th, 2010 the related limits will be determined as the difference between 400 euro, 250 euro , respectively 4,000 euros and the limits to which such expenses were deducted in the period January 1 to September 30, 2010;
The tax provisions are deducted in calculating taxable profit in each period if the conditions for deductibility provided under the Fiscal code are met
deduction limit of the legal reserve is established based on the calculation base corresponding to each period, the deductible amounts determined for each period being final;
the level of indebtedness is determined by considering loaned capital and equity capital related to each period, as follows:

– for the period January 1st to September 30th, 2010, the level of indebtedness is determined as the ratio between the loaned capital and the equity capital, as the average of the values existing at the beginning and at the end of this period;

– for the period October 1st to December 31st, 2010, the level of indebtedness is determined as the ratio between the loaned capital and the equity capital, as the average of the values existing at the beginning and at the end of this period;

revenues and expenses obtained in 2010 by a Romanian legal entity through a permanent establishment situated in a foreign state shall be taken into account in determining taxable profit related to the period October 1st to December 31st, 2010;
for the period October 1st to December 31st, 2010, the profit invested during this period represents the balance of the profit and loss account, respectively the accounting profit accumulated at the beginning of the year, less the amount of profit previously invested for which the facility was applied. The exemption form the profit tax related to the realized investments is granted in the limit of profit tax due for the period October 1st to December 31st, 2010.
tax loss for the period January 1st to September 30th, 2010 is to be recovered from the taxable profits obtained in the next 7 consecutive years, the period between October 1st to December 31th, 2010 being considered the first year of recovery of tax loss.
tax loss related to the period October 1th to December 31st, 2010 is to be recovered from the profits obtained in the next 7 consecutive years, respectively n the next 5 consecutive years in case of losses incurred through a permanent establishment situated in a foreign state.
to recover the tax loss recorded in the years preceding 2010, 2010 is considered a single fiscal year in the sense of the 5 years, respectively 7 consecutive years.

Tax on dividends paid to legal entities

For distributed and unpaid dividends by the end of the year, which tax on dividends was withheld and paid, if the date of actual payment the legal entity that is the beneficiary meets the conditions related to the percentage and the minimum period of ownership for applying the exemption, the legal entity that pays the dividend may demand the reimbursement of the tax on dividends.

Income Tax on micro-enterprises

There have been bought some clarifications regarding the areas where the legal entity can not choose to pay income tax on micro-enterprises, in the sense that legal entity should not record the incomes obtained from those activities, even if the respective activities are specified in NACE code of the company.

The establishment into the category of incomes obtained from consultancy and management activities is done through the analysis of the signed contracts and other documents justifying the nature of incomes.

Micro-enterprises that during a quarter begins to carry out activities of the kind for which it is not allowed to apply income tax on micro-enterprises, are required to pay profit tax taking into account revenues and expenses recorded starting with the respective quarter.

The number of employees means the number of persons employed with individual employment contract, regardless of the duration of the working time, recorded on a monthly basis o the payroll slips and / or under the general register of the employees.

In considering if the condition on the number of employees is met it will be also considered the suspended labor contracts, according to the law. For legal entities which have a single employee who resigns during a month, as well as in case the employment relationship is terminated due to retirement or dissolution of the individual employment contract as a result of performing some acts, which, by law are sanctioned including in this way, the condition regarding the number of employees is considered to be met if during the next month another employee is hired.

Romanian legal entities whose period of temporary inactivity / non-performance of activity ceases during the year, may opt to pay income tax on micro-enterprises, starting with the year following the year when the period of temporary inactivity ceases, if on December 31st of that year meet the conditions provided for micro-enterprises.

In case, during the fiscal year, a micro-enterprise realize incomes exceeding more than 100,000 euros, the taxpayer shall notify the tax authority on the change of type of tax due by filing a statement of specifications. The currency exchange rate used to determine the equivalent in euro is the one valid at the end of the previous financial year.

Micro-enterprises which ceases to exist after a reorganization or liquidation operation, according to the law, and which during its operational period have been income tax payers are required to include in the taxable base the reserves representing the surplus obtained from reserves from revaluation of fixed assets, including lands, which were deducted when calculating taxable income and were not taxable in the period when they were income tax payers.

However, even if a micro-enterprise ceases to exist, there will not be taxed the reserves from net profit, the reserves from favorable currency exchange rate differences related to the social capital constituted in estimates, as well as amounts related to some reductions in corporate income tax rate, distributed as own sources of funding, according to the law, which were established during the period when they were income tax payers.

Income tax

Incomes from salaries

The value of 150 lei of gifts offered by employers for the benefit of minor children of employees at Easter, the June 1st, Christmas and other holidays similar to other religious groups, shall apply for each minor child of each employee. For example, if the employee has two children, gifts amounting to 300 lei granted at the above-mentioned holidays will be considered non-taxable incomes.

Income from independent activities

There have been brought clarifications on how the reorganization of the independent activity is made during the fiscal year. Thus, net income / tax loss is determined separately for each period in which the independent activity was carried out by the taxpayer.

It is determined how to calculate the annual net income based on annual revenue norms in case the activity is carried out in several different places or the taxpayer carries out several activities. Thus, in the situation where a taxpayer carries the same type of activity in two or more different places for which the net income is determined based on annual income norms, the level of the annual net income level is established by adding the level of the income norms, as determined by specific criteria at each place of of performance of the activity

In the category of incomes from intellectual property rights are included incomes in cash, as well as the equivalent in lei of incomes in kind.

For taxpayers that carry out an activity which generates incomes for which annual net income is established based on the income norms, income taxpayers are not required to withhold tax representing advanced-payments according to art. 52 of the Fiscal Code, provided that the income taxpayer makes the proof of a copy of form 260 “Tax decision for advanced payments deemed as tax.”

Declarative and payment obligations

Taxpayers that determine net income based on income norms, and by law they fall during the next year to the real tax system, are required to submit a statement on incomes and expenses estimated to be effected during the fiscal year, by and before May 15th of the taxable year.

The statement regarding the income obtained will be filed between January 1st to May 15th inclusively of the year following the year when the income is obtained.

Other incomes

It is established that incomes obtained from the exploitation through centers of collection of scrap metal, paper, glass and others similar by individuals will be taxed, these incomes falling into the category of income from other sources, even if they are obtained from the household.

Avoidance of Double taxation

Incomes obtained abroad for which the double taxation agreements provide that they are taxable in the other state, and the respective Convention provides as a method for the avoidance of double taxation the “exemption method”, that income will be exempt from tax in Romania. This income is declared in Romania, but is exempt from tax if it is attached to justifying document issued by the competent authority of the foreign state, which certifies the tax paid abroad.

Tax on incomes obtained in Romania by non-residents

There have been brought clarifications to the notion of “payment of a income”, thereby meaning to fulfill the obligation of making funds available to the creditor in the manner established by contract or by other arrangements agreed between the parties leading to the extinction of contractual obligations.

Value added tax

clarifications are made on situations that are considered to be treated as supplies of goods in case of financial leasing contracts whose object tangible goods. Thus, in the event of termination of these contracts, it is considered that the goods are missing from the management inventory of the lessor / financier at the expiration of the deadline stipulated in the contract for restitution of the good by the user, but not later than 30 calendar days from the date of termination of the contract.

in case of the transfer of non-taxable assets, the recipient of the assets is obliged to submit to the transferor a statement at his/her own responsibility out of which it results that he/she does not intend to immediately liquidate the respective activity. In addition, the application of the taxation regime for the transfer of assets will not be sanctioned by the fiscal authorities if the operation in question would have been taxable by law or by choice, except from the situation when it is found that the transaction was charged for tax purposes;

Limiting VAT deductibility in case of protocol expenses is applicable also in the case of micro-enterprises or taxable entities (!!! including PFA) which are not required to submit annual financial statements, their falling being determined according to data reported in the statements of realized incomes;

There are brought clarifications regarding the invoices/ other specific document issued for international transport of goods, other than intra – communitary transport, performed by non-taxable entities as well as for the international transport of passengers;
it is clarified the concept of access to cultural, artistic, sporting, scientific, educational, entertainment events and other similar ancillary services related to the admission to the above-mentioned events;

The currency exchange rate used in case of events determining the adjustment of the taxable base (it concerns discounts given after delivery, total or partial cancellation of an operation or as result of return), will be the same as the one of the main operation;

taxable persons not established in Romania but which register for VAT purposes may exercise their right of deduction related to the acquisitions made before their registration date, no longer being necessary to request the VAT refund according to the 8th Directive;

Beneficiaries of some delivery of goods / performance of services carried out during the enforcement procedure of a taxpayer declared as inactive or of a taxpayer which is on temporary inactivity have the right to deduct VAT for the respective operations, even if the supplier was canceled VAT code;

It is mentioned that tangible fixed assets of the nature of depreciable fixed assets which are the object of leasing are considered capital goods at the lessor’s / at the financer’s if the minimum limit of the normal exploitation duration is equal to or bigger than 5 years;

Clarifications are made about the correction of self-invoices. Thus, in the situation when a self-invoice has been issued incorrectly, this self-invoice is either cancelled and another one is issued correctly, or it is deleted.

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