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New criteria for large and medium taxpayers: The impact on business

Large and medium taxpayers are established from January 1, 2017 according to new criteria. The new provisions regard tax groups, groups of companies (the parent company and affiliates) and firms that intend to invest over 10 million in the first three years of existence.

The new selection takes into account basic criteria, specific criteria and continuity criteria. Thus, besides basic criteria related to turnover, amount of tax obligations etc., also used until now, there are criteria related to the specificity of business and estimated investments.

There will be considered large taxpayers only the first 1,500 companies, according to basic criteria, in descending order, meaning fewer than now. There will be considered medium taxpayers, companies that do not meet criteria to be large taxpayers, in descending order, to a maximum of 18,478 companies.

How is the selection made?
Large taxpayers are automatically: National Bank of Romania; banks; insurance companies; financial investment companies; Romanian Television Company; Romanian Broadcasting Company.
Taxpayers eligible for large or medium taxpayers :

• Romanian legal entities established under the provisions of Law no. 31/1990, including entities resulted from the merger with other taxpayers;
• branches of foreign legal entities which operate in Romania;
• RAs, companies and national companies and state owned companies;
• national institutes of research and development organized according to Government Ordinance no. 57/2002

After applying the general condition, there are applied:

• specific criteria
• basic criteria
• continuity criteriaSpecific criteria refer to:
• activity- refers to entities that are automatically eligible, such as NBR, banking companies etc.
• investments – startups that commit  to invest at least EUR 10 million over a period of max 3 consecutive years
• fiscal representation – non-resident taxpayers for whom large / medium taxpayers  are representatives or fiscal representatives
• fiscal   group – the fiscal representatives and the members of the fiscal group defined by the Tax Code
• direct participation – legal entities holding directly at least 50% of the value / number of shares of a large taxpayer, as well as legal persons where taxpayers directly holds 50% of the value / number of units.

         Basic criteria
It is the result of aggregating indicators with the following proportions: turnover – 50%, the volume of declared tax obligations – 30%; volume of personnel costs – 20%.

         Continuity criteria
Once considered large or medium taxpayers, the companies remain in administration for at least 3 years. Basically, only companies that do not meet the basic criteria for 3 years will be eliminated from the category of large or medium taxpayers.

Also large taxpayers are considered large taxpayers in case they were under the administration of DGACM until 31 December 2016 and  begin insolvency proceedings in the fiscal year of the selection.
Criteria for large and medium taxpayers are provided by orders 3609/2016 and 3610/2016.