VAT
Starting 1 July 2010, the standard VAT quota is 24% and shall be applied to the taxation base for taxable operations which are not exempt from the tax or which are not subjected to reduced quotas. The reduced VAT quotas – 9% and 5% continue to be in force.
Caution, if you had advances invoiced with 19% VAT and the shipment of goods/services provided takes place before 1 July 2010, the VAT quota applicable for the entire amount value of the goods or services must be that of the date of shipment/services provided. Practically, the sell shall be performed with 24% VAT for the entire value of the goods/services and the advance invoice shall be returned with the 19% VAT.
Income tax
Independent activities
The possibility to reclassify contracts concluded with individuals (self-employed, copyright, civil conventions) has been introduced.
Thus, the definition of dependent activities now contains the criteria based on which an independent activity may be reconsidered as being dependent and, as a consequence, taxed by all social contributions due by the employee and employer.
According to the new definition, any activity performed by an individual, by this meaning self-employed, independent individuals, payments based on copyright contracts, civil conventions, may be reconsidered as a dependant activity if it meets at least one of the following criteria:
the income beneficiary has a subordination relationship with the income payer and the administration bodies of the income payer and meets the labour conditions imposed by these, such as: attributions and means of fulfilling them, place where the activity takes place, working schedule;
when performing activities, the income beneficiary uses the material base of the income payer, which are spaces equipped accordingly, special working or protection gear, working tools and others similar;
the income beneficiary contributes only in physical performance and intellectual capacity, not in personal capital;
the income payer shall bear in the interest of performing the activity the travel expenses of the income beneficiary, such as the delegation-travel expenses in country or abroad, as well as other similar expenses;
the income payer bears the vacancy allowance and the temporary labour incapacity allowance, to the benefit of the income beneficiary;
any other elements which reflect the dependent nature of the activity.
In case the fiscal bodies reconsider an activity performed by an individual as dependent activity, the income tax and mandatory social contributions, set according to law, shall be recalculated and paid, being owed in a solidary manner by the income payer and beneficiary.
In addition, starting from July 1st 2010, for any professional income, other than the employment one, individual social insurance contributions shall be due, and also health and unemployment social insurance. Presently, there isn’t a clear definition of the professional income which is subjected to these provisions, which means that these contributions may be due, including for self-employed income.
Caution, the obligation to declare, calculate, retain and pay contributions falls on the income payer, in accordance with the legal provisions in force. This means that, in case you have payments towards self-employed or independent individuals, starting July 1st 2010 you will have to retain and pay social contributions in the name of these persons.
The calculation basis for these contributions is limited to mean gross salaries, used for reinforcing the budget. Should there be no additional clarifications on this matter, the manner in which these provisions were introduced shows that limiting the taxation basis shall be applied for each and every payment made to individuals.
For the self-employed status imposed based on income norms a minimum limit was set as taxation limit calculated as 12 minimum salaries.
Copyright
The expense flat rate which could be deducted from earned income based on copyright contracts was decreased from 40% to 20% and for monumental art works from 50% to 25%.
Salary income
Starting from July 1st 2010 meal tickets and vacation vouchers for employees shall be taxed. For these tickets only the income tax shall be calculated, without also owing social insurance contributions.
Caution, the employer must continue to observe the granting conditions provided for these tickets.
The amounts granted under the form of tickets become taxable starting with the rights relating to the month of July 2010. Practically, if in the month of July the employees are given meal tickets for the activity period in June, these tickets shall not be taxed.
Having to do with the income tax of individuals, the tax on meal tickets and vacation vouchers will need to be sustained by each employee. Therefore, the employee who receives meal tickets starting July 2010 shall have a decrease in the monthly net salary equivalent to the value of the retained tax and paid by the employer for these tickets.
The gift vouchers were introduced in the salary income of the employees as benefits in kind. Therefore, starting from July 1st 2010 gift vouchers granted to employees shall be taxed, on top of the income tax, and all social insurance contributions, both those owed by the employee and those owed by the employer.
Income from investments
Income in the shape of interests from demand deposits/deposits/current accounts, as well as from client deposits, created on the grounds of legislation regarding savings and credits in a collective system for the real-estate field obtained starting from July 1st 2010, shall be charged at a 16% rate. Up to this date, this income was tax free.
The 1% tax was eliminated from the capital earnings in the cases where securities were held for a period exceeding 365 days. In addition, starting from July 1st 2010, individuals who obtain income from trading securities other than shares or stock in the case of closed down companies, have the obligation to calculate, declare and pay quarterly taxes on earnings obtained. Thus, instead of submitting a single annual statement, these persons will be forced to submit four quarterly statements and an annual one regarding the earnings achieved. Also, losses from security transactions may be carried over the next 7 years, as opposed to one year as was the case previously.
Other income
Gaming income shall be taxed with 25%, and income lower than Lei 600 obtained by a person in a single day from the same organizer will continue to be exempt from tax.
International fiscal aspects regarding individual income
The taxation conditions for income obtained from non-residential individuals who carry out dependent activities in Romania have been modified. Thus, non-resident individuals who carry out dependent activities in Romania shall owe income tax starting with the first day they are present in Romania even if their salary is paid by a non-resident company.
The granting conditions for fiscal credit for resident individuals who obtain income outside Romania have been modified. In this sense, individuals will be able to benefit from fiscal credit only if Romania has concluded a convention against double taxation with the state where the income was made and the individual may present a justifying document issued by the fiscal authorities of the respective state regarding the withholding and payment of taxes. In the past, a document issued by the income payer was sufficient.
Corporate tax
Starting from July 1st 2010, deduction of the taxes paid in a foreign state may be done only in case Romania has concluded a convention against double taxation with the respective state.
Fiscal losses sustained by a permanent headquarters located in a European Union member state, European Association for Free Exchange or with whom Romania has concluded a convention against double taxation shall be deducted from the total revenue of the company, without limiting the deduction to the permanent headquarters. In case the permanent headquarters is established in a different state than those mentioned above, the fiscal losses may only be deducted from the revenue recorded by the respective permanent headquarters, with the possibility to report losses for the following 5 years.
The tax rate for dividends distributed/paid by a Romanian legal person to another Romanian legal person has been increased from 10% to 16%. Dividends will continue to be tax free in the case where a Romanian legal person holds more than 10% of the social capital of the dividend payer for a period of minimum 2 years from the payment date of the dividends.
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