Amendments to the Tax Code

and Fiscal Procedure Code

29th September 2011

Prepared by

Teodora Cicu

Iulia Lascau

Registering at the tax authorities the services contracts with non-residents

Individuals and permanent establishments in

Romania of foreign legal entities are obliged to

register at the tax authorities the commercial

contracts for rendering of services concluded with

non-residents (foreign legal entities and non-resident

individuals);

Before changes, only the resident legal entities were

obliged for registration of service contracts;

Entered into force on January 1, 2012

Transactions concluded with

inactive taxpayers Expenses related to the transactions concluded with

an inactive taxpayer and the VAT related to such

transactions will be considered as disallowed (non-

deductible) expenses for the corporate income tax

purposes;

This requires periodic review of the status for existing

and potential partners before signing a contract or

billing for services or goods.

Verification can be done in the “Register of Inactive

Taxpayers”, which is published on-line by the Ministry

of Finance.

The declaration and reactivation of inactive taxpayers

Corporate taxpayers or other entities without legal

personality are declared inactive if they comply with one

of the following conditions:

a) On the course of a semester they do not fulfill any of their

legal declarative obligations;

b) Evade the tax inspection by declaring identity tax domicile

data that do not allow identification from the fiscal body;

c) Tax authorities found that the declared fiscal domicile is not

the taxpayer’s place of operation, according to procedure

established by Order of the National Agency for Fiscal

Administration.

Recognition of new deductible expenses for the calculation of

corporate income tax

Expenses recorded in relation to valuation of fixed

assets received in concession / management

belonging to the public domain of the state or local

administrative authorities;

Expenditure on land registration or real estate

advertising of the assets in state ownership received

under management or concession;

Entered into force on September 5, 2011.

The taxation of an association

with legal personality established according to the legislation of

another state Foreign legal entities and non-resident individuals within

an association with legal personality, established

according to the laws of another state owe profit tax in

Romania, for the activities carried out in Romania;

A Romanian legal entity participating in an association

with legal personality established under the laws of

another state is taxed in Romania according to the

participation rate;

Enters into force on January 1, 2012.

Withholding tax for revenues obtained by non-residents in

Romania The declaration and payment of the withholding tax for

revenues obtained in Romania by non-residents from:

– properties or

– sale/cession of equity

can be made only through empowered persons

Comes into force on September 5, 2011.

Option for payments in advance for the corporate income tax

The taxpayers, other than the financial institutions, may

choose (starting from January 1 2013) to make payments

in advance for the corporate income tax due, based on

the quarter of the tax owed in the previous period,

adjusted with the inflation index.

The option is available until January 31 of the year in

which the advance payments apply and is mandatory for

at least 2 years.

Starting from January 1, 2012, the deadline for submitting

the annual corporate income tax forms becomes March 25

of the year following the reporting period, instead of April

25.

Taxes on incomes obtained in Romania by non-residents (1)

The individuals that fulfill the residency conditions for 3

consecutive years before December 31, 2011 are

obliged to pay income tax (from any source in Romania or

outside Romania) starting from January 1 2012;

Non-resident individuals not domiciled in Romania, have

the option to be taxed on the revenues obtained from any

sources in Romania or outside of Romania, starting with

January 1 of the year following the year in which they

became residents of Romania, based on the Tax Code

and the double tax treaties

Comes into force from January 1 2012.

Taxes on incomes obtained in Romania by non-residents (2)

• Exemption applies to those individuals providing that they

are the resident of a country with which Romania has

concluded double tax treaty agreement.

• Individuals that are resident of other countries with which

Romania has concluded a double tax treaty agreement

must prove its residency through a tax residency

certificate issued by the competent tax authority of that

state or by another document issued by an authority other

than the tax authority which is responsible for tax

residency certificate.

• This certificate / document is valid for the year / years for

which issued.

Taxes on incomes obtained in Romania by non-residents (3)

• Romanian resident individuals, who prove the change of

residence within a state that Romania has not concluded

double tax treaty agreement on avoidance of double

taxation, are still obliged to pay taxes in Romania on their

world wide income for the calendar year in which the

change of residency took place as well as the next 3

calendar years following the residency change.

Changing the deadline for payment of the salary income tax and quarterly

filling of the tax forms D112 Conditions for the application of the above provision:

The companies must have had in the previous year an

average number of up to 3 employees exclusively, and

record a total annual income of under 100.000 euro;

Micro-enterprises with an average number of

employees of up to 3 exclusively;

Authorized individuals and individual enterprises;

Liberal professions and associations without legal

personality between individuals who have staff based

on individual labour contract.

The above provisions will come into force starting from

October 2011.

New deadlines regarding declarative obligations for a series of taxpayers

Declaratia venitului net realizat pentru contribuabilii care obtin venituri

din activitati independente (D200) va avea ca termen de depunere 25

mai inclusiv a anului urmator celui de realizare a venitului (fata de 15

mai anterior modificarii);

Declaratia privind veniturile obtinute din strainatate (D201) va fi

depusa de contribuabilii care obtin astfel de venituri pana la 25 mai

inclusiv a anului urmator celui de realizare a venitului (fata de 15 mai

anterior modificarii);

Declaratia depusa de platitorii de venituri cu regim de retinere la sursa

a impozitelor (D205 & Fisele fiscale) va avea ca termen de depunere

ultima zi a lunii februarie inclusiv a anului curent pentru anul expirat

(fata de 30 iunie anterior modificarii).

Declaration Obligation Old deadline New deadline

D200

Statement of net revenue of

taxpayers obtained from

independent activities

May 15 of the year

following the reporting

period

May 25 of the year

following the

reporting period

D201

Statement of all revenues obtained

in foreign countries by residents

taxpayers

May 15 of the year

following the reporting

period

May 25 of the year

following the

reporting period

D205

Statement of taxes retained under

withholding regime for incomes

obtained by residents

June 30 of the year

following the reporting

year

Last day of

February of the

year following the

reporting year

Supplies of services determined by successive settlements or payments

Supplies of services determined by successive

settlements or payments (building-assembling,

consulting, etc.) are deemed to be effected (VAT

chargeable) when:

work reports or work statements are issued or,

depending on the contractual provisions, on their

acceptance by the beneficiaries.

So, the settlement period of such services is no longer

limited to 1 year;

Comes into force from September 5, 2011.

Detailing the waste categories for

which the simplification measurements apply (reverse charge mechanism)

Delivery of ferrous waste, scrap and recyclable materials,

used recyclable materials consisting of paper, paperboard,

cardboard, fabric, rubber and plastic, glass and glass

shards;

Delivery of after processing of materials by cleaning,

polishing, selection, cutting, fragmenting, pressing or

casting into ingots;

Comes into force on 5 September 2011.

The deadline for submitting the VIES statement (D390)

The deadline for submitting the VIES statement, starting

with the declaration for August 2011, is 25 of the month

following the reporting month, compared to 15 of the

month following the reporting month as it was previously

provisioned.

Comes into force starting with the declaration of August

2011.

Penalties regarding summary statement VIES(D390)

Penalties have been modified for summary

statement VIES, namely:

for not submitting the fine will be 1.000 RON to

5.000 RON and

for incorrect or incomplete filing the fine will be

from 500 RON to 1.500 RON.

The 2% fine from the total amount of

purchases/deliveries of goods undeclared has been

eliminated.

Local taxes (1) The tax rate on buildings that have not been revaluated in

the past 3 years varies between 10% to 20%, while for

buildings that have not been revaluated in the past 5

years varies between 30% to 40%;

Even the buildings which are not registered with the

Office of Cadastre and Real Estate Publicity are

obliged to make a tax declaration for local taxes;

Obligation to pay tax on buildings whose construction

was not completed within the time provided in the

building permit and the authorisation was not renewed;

Comes into force from 1 January 2012.

Local taxes(2)

Declaring buildings for taxation and registration in the

records of local authorities is a legal obligation of

taxpayers who own these buildings, even if they were

executed without a building permit;

Setting a fix accomodation tax for hotels which can be

imposed by Local councils, namely a rate of 1% of the

total accomodation tariff / hotel day / tourist;

Comes into force on January 1, 2012.

Local taxes(cont.2)

Granting discounts on the tax on buildings or

even exemptions for a period of maximum 7

years, starting with October 1 2011, for the

following categories of buildings:

Rehabilitated buildings under the legal provisions

of the program on increasing the energy

performance of housing blocks;

Rehabilitated buildings based on the Law 153/2011

on measures to increase the quality of architectural

- environmental buildings.

Granting reliefs for outstanding tax obligations that needs to be settled by

August 31,2011

Granting reliefs for outstanding tax obligations that

needs to be settled by August 31 2011 (comes into

force on September 5 2011) namely:

a) Cancelation of late payment penalties if the outstanding

obligations and interest are settled through voluntary

payment or compensation until December 31 2011;

b) 50% reduction in penalties for late payment if the

outstanding obligations and interest are settled through

voluntary payment or compensation until June 30 2012.

Order of settlement for tax liabilities

• Changes in the order of settlement for tax liabilities in

terms of settling firstly the main obligations in order of their

seniority and after accessories in order of their seniority, to

avoid accumulation of new accessories for taxpayers,

namely:

a) Withholding taxes;

b) Other tax obligations (principal);

c) Tax accessories obligations in relations to taxes

presented at a) and b).

Procedure of the tax documentation

Introducing the verification procedure of the tax

documentation in order to analyze correctly the

taxpayer’s fiscal situation and possibly establish

differences for due tax liabilities if the real situation differs

from declared status.

The documentary verification consist in performing an

analysis of the taxpayer’s tax position:

– upon on existing documents of the taxpayer’s file and

– on any submitted information and documents provided by third

parties or held by the tax authority, which are relevant to

determining the fiscal situation.

Estimation of the fiscal base

The tax authorities estimate the fiscal base if:

a) tax returns were not filed or

b) accounting records or tax returns or documents

submitted to inspection were incorrect, incomplete

or were not submitted at all

Tax liabilities resulting from the estimation are

subject to further verification.

Order of communication of administrative acts

The priority for means of communication of

administrative acts has been established:

priority by mail;

by submitting or presentation of the taxpayer / authorized

agent at the tax body;

by fax, e-mail or other remote electronic means and

ultimately by advertising.

THANK YOU!