Tax & Legal Weekly Alerts
Our weekly Tax & Legal Alerts provide you with information on different tax and legal issues in Romania.
Amendments to the Tax Code
On May 23th 2019, the Emergency Ordinance supplementing Law 227/2015 on the Tax Code was published. The applicability of the reduced VAT rate of 5% was extended to mountain, bio and traditional food. The amendment enters into force as of June 1st, 2019.
Amendments to fiscal legislation
On May 23th 2019, the Emergency Ordinance regarding certain modifications to normative acts with reference to the health insurance contribution, due for the period 2014-2017, was published.
Contributions to the Environmental Fund: Changes regarding the management of packaging and packaging waste
The management of the contributions to the Environmental Fund has suffered some changes, referring mainly to the management of packaging and packaging waste, as per Order no. 149/2019, published on February 27.
Amendments brought to the tax return no. 112
The main amendments and clarifications for the tax return no. 112 refer to the conditions for applying the tax incentives in the construction field.
The EU alarm signal on computation of goods origin
Almost 40% of EU exporters face difficulties in performing computation of goods origin and 70% have difficulties in obtaining the supplier declaration, shows a study performed by the European Commission in 2018 on origin rules application at exporter level.
Romania risks new infringement: European Commission requests amendment of national law regarding customs debt
The European Commission decided last week to send Romania a letter of delay for requesting law amendment related to customs debt, the stage preceding the infringement procedure.
The amendments to the Tax Code and the Fiscal Procedure Code
A series of amendments, completions are introduced by Law no. 30/2019 published at January 17, 2019:
- Additional conditions for granting sponsorships for corporate tax payers;
- Amendments of the thresholds regarding interest deductibility and other equivalent costs;
- The regulation of income obtained from virtual currency transfers and the tax base calculation method for this type of income;
- The redistribution of the amount representing up to 3.5% from the income tax due on certain types of income to nonprofit entities, cult units and private scholarships;
- Amendments on the moment when it is allowed the adjustment of the VAT taxable amount in case of the bankruptcy of the beneficiary;
- Amendments on the application of the 5% VAT rate for the supply of residential housing as part of social policy;
- Amendments to the Fiscal Procedure Code, establishing the legal framework applicable to the criteria according to which the taxpayers are classified as fiscal risk categories.
Approval of the “Unique statement regarding the income tax and social security contributions due by individuals” form for 2019
Draft GEO on consumer protection: proposed increase in the sanctions to be applied by ANPC
The National Consumer Protection Authority (ANPC) has issued on 14 January, on its own web-site, in a decisional transparency procedure, an emergency government ordinance proposal regarding the amendment and supplementation of certain legal enactments governing consumer protection.
EU-Japan Free Trade Agreement will enter into force on the 1st of February, 2019
Signed on 17th of July at Tokyo, the FTA will reduce or remove most part of the customs duties applicable for the trade of goods originating from the two territories. Registration in the REX system is necessary in order to be able to issue the proof of origin.
Changes regarding the management of packaging and packaging waste
On 14 January 2019 the Law on the approval of Government Emergency Ordinance no. 74/2018 was published, which brings changes to the management of packaging and packaging waste.
At the same time, on 15 January 2019, the order approving the authorization procedure, annual approval and withdrawal of the operating right of the organizations that implement the obligations of extended producer responsibility was published.
Certificates for wholesale or retail sales of energy products will become invalid starting with February 1, 2019
Economic operators who perform wholesale or retail sales of energy products (petrol, diesel fuel, lamp oil, GPL and biofuels) and who intend to continue their activity after January 31st, 2018, will have to submit a new application for authorisation, according to the new conditions established by NAFA Order no. 3236/2018.
Legislative measures with major impact, proposed by the draft GEO
A series of legislative changes with impact on the financial services, electricity, gambling, telecommunications, amongst others, are proposed through a draft of emergency ordinance, published on December 18:
- A tax on the assets of financial institutions – “The Greed Tax” – the rate is progressive, and is determined according to ROBOR;
- Set-up of a minimum contribution for granting and extending the licenses for telecommunications providers;
- A new annual tax for gambling organizers;
- Freezing of the gas selling price by 2022 to 68lei/MWh;
- New rules for setting tariffs and contributions owed by electricity operators;
- Increasing the financial contribution of electricity operators;
- Indexation of local taxes and fees;
- Tax incentives for employees in the construction sector;
- Tax on revenues from advertising on alcohol and tobacco;
- Substantial changes to pension pillar II.
The list of dual-use items has been updated
In order to ensure better control of exports, transfer, brokering and transit of dual-use items, an update was necessary concerning the dual-use list provided by the Council Regulation (EC) 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of such items.
EU Regulation: Unlocking e-commerce in the European Economic Area
Regulation (EU) 2018/302 on the prevention of unjustified geoblocking and other forms of discrimination based on citizenship, nationality or domicile headquarters on the internal market entered into force on December 3rd.
The regulation removes geoblocking, which is a discriminatory practice that prevents online customers from accessing and purchasing products or services from a site based in another Member State.
VAT Rate of 5% for restaurant and catering services: Instructions to clarify the application
The instructions of uniform application try to clarify the main difference – from the perspective of a VAT rate applied (9% or 5%) – between restaurant and catering services and supply of goods operations. Even if the instructions provide some examples, it is necessary to perform a qualitative analysis of the entire operation for the proper fit of the operations, because some uncertainties will also remain, as will be explained in this Tax Alert.
The minimum gross base wage per country shall increase and will vary depending on the study levels, starting with January 1st, 2019
The minimum gross base wage per country shall increase and will vary depending on the study levels, starting with January 1st, 2019, pursuant to Government Decision no. 937/2018, published in the Official Gazette no. 1045 of 10.12.2018.
Reauthorization of the temporary storage and customs warehouse require a customs global guarantee
In order to obtain reauthorization, the economic operators holding authorizations for temporary storage or customs warehousing will also have to obtain an authorization for using a global guarantee. The deadline for reauthorization is the 1st of May, 2019.
Lending conditions – The amendments made by the National Bank of Romania through Regulation no. 6/2018
The main amendments concern especially an extended scope of the Regulation 17/2012, new rules for determining the “total indebtedness level” of debtors (individuals) and new reporting obligations towards the National Bank of Romania (NBR). The new amendments will apply starting with 1 January 2019.
We summarized in this legal alert some of the key amendments.
The environmental authorization and integrated environmental authorization: what are the provisions of the procedure for the issuance of the annual endorsement
The procedure which regulates the conditions for the request, issuance or denial of the annual endorsement of the environmental authorization and integrated environmental authorization was recently approved by an order of the Ministry of Environment. The annual endorsement is a condition for the validity of the authorizations.
The main provisions of the procedure, as well as a series of essential aspects that are not clarified, which have significant consequences for the holders of the authorizations, are summarized below.
The Green Public Procurement Guide: minimum environmental protection requirements for certain product groups and services that are required within tender documentations
The Guide provides contracting authorities/entities with information on the minimum environmental protection requirements to be considered when preparing, in accordance with the law, the documentation for the award of contracts/green procurement framework agreements for product categories and/or existing services. The purpose of the guide is to support a potential bidder in preparing the technical and financial bid in an appropriate manner, in consideration of environmental protection conditions.
Amendments made to the immigration law concerning the right to stay and work in Romania for non-EU/EEA/Swiss citizens
Law no. 247/2018 for modifying and completing some normative acts regarding the regime of foreigners in Romania was published on November 7, 2018. The changes are in force starting November 2018 and cover the conditions to acquire residency and to work in Romania.
Draft amendment: State owned institutions will be able to benefit from exemption from excise duty for the fuel delivered in their own tanks
State owned institutions which involve the defence, the public policy, the public health, the national safety and security could be exempted from excise duty for energy products supplied directly to their own tanks in order to be used as aviation fuel. The proposal was mentioned into a draft amendment of the Methodological Norms of the Tax Code, published by the Ministry for Public Finance.
CJEU decision on annual leave. Impact over domestic regulations
Court of Justice of the European Union (“CJEU”) ruled that, in certain conditions, the right to annual leave may be lost if the employee refuses without justification to exercise this right.
European Commission warns Romania to end its VAT split payment mechanism
On November 8th the European Commission decided to send a letter of formal notice to Romania regarding VAT split payment mechanism. The Commission concluded that the Romanian measure is against both EU VAT rules (Council Directive 2006/112/EC) and the freedom to provide services (Article 56 of TFEU).
Starting January 1st, 2020, foreign companies will not be able to perform more than 3 customs operations per year, unless they are established in the European Union
A draft amendment of Order no. 2460/2016 on customs representation norms was published on the Romanian General Customs Directorate website.
The Combined Nomenclature in force in 2019
The European Commission has published the Combined Nomenclature (“CN”) applicable starting January 1st, 2019. Consequently, starting January, you will need to use the new CN codes for customs and excise operations, Intrastat declarations and for operations performed on the basis of a customs and fiscal authorisations issued on CN 2018 tariff codes.
Excisable products: On December 31, 2018 certificates for engross trading of energy products and alcoholic beverages/processed tobacco with no storage will lose their validity
According to a draft order published on the website of the General Customs Directorate, the deadline for economic agents to re-authorize under the new conditions will be extended (initially the re-authorization deadline was set for November 9, 2018).
Declaration and payment of the tax obligations for the branded packaging – official clarification
Declaration and payment of tax obligations remains the responsibility of the economic operator holding the brand for which these products (customized packaging) are designed or manufactured, and placed on the national market, including in its own shops. The situation has been clarified by the Environmental Fund Administration, through an informative note.
New rules governing the financial insurance sector
On October 1st, 2018 the Law no. 236/2018 on insurance distribution entered into force. The law transposes the provisions of Directive (EU) 2016/97 and repeals Law no. 32/2000 on the activity and supervision of intermediaries in insurance and reinsurance.
The regulations issued by the Financial Supervisory Authority (FSA) prior to October 1st, 2018 will continue to apply until the new regulations will be enacted, except for contradictory provisions, where Law no. 126/2018 shall prevail. The FSA is expected to issue in the near future implementation rules for the application of the Law no. 236/2018.
We summarized below some of the key aspects provided by Law no. 236/2018.
Amendments to Tax Code – The final form of the law
The amendments to the Tax Code proposed by the draft emergency ordinance of 29 September 2018 were published in the Official Gazette. The most relevant are: 5% VAT rate to certain services, regulations for taxpayers applying IFRS and updates on the applicable deductions for early reporting and/or payment of income tax and social contributions.
Amendments to Tax Code, proposed draft: VAT rate decreased to 5% for certain services
A draft Emergency Ordinance, released by the Ministry of Finance on September 29, proposes several amendments to the Tax Code. The most relevant are: 5% VAT rate to certain services, regulations for taxpayers applying IFRS and updates on the applicable deductions for early reporting and/or payment of income tax and social contributions.
Certain companies established outside the EU may claim VAT refunds by the end of September
Companies not established in the EU, which paid VAT on imports, and/or acquisitions of goods/services performed in Romania, are entitled to tax refund by the Romanian tax authorities if there is a reciprocity agreement concluded between the two countries.
Risk analysis performed by the tax authorities. Formalities and implications
Considering the fact that, in the past two months, the General Directorate for the Administration of Large Taxpayers (“DGAMC”) started sending official notifications to large taxpayers regarding some risk indicators used in the risk analysis, the question arises whether these have any fiscal consequences and if it requires a formal reply from the latter.
Although the documents have, at a declarative level, a purely informative purpose and do not explicitly seek to obtain additional information/ details/ clarifications from the taxpayers, it is recommended to provide explanations on the risk indicators and clarify any possible inconsistencies.
In this way, the large taxpayers would, on one hand, demonstrate a diligent behaviour by willingness to cooperate with the tax authorities and, on the other hand, prevent a possible assignment in higher risk category with all the consequences of such assignment.
Excisable products: certificates for wholesale trading of energy products, alcoholic beverages or processed tobacco with no storage will lose their validity
Certificates for wholesale trading of energy products, alcoholic beverages or processed tobacco with no storage will lose their validity in 90 days starting with the 10th of August 2018. Within this timeframe, economic operators that have been so authorized can re-register if they hold an authorized wholesale warehouse facility.
European Commission amends the exporter definition from a customs perspective
More than two years after the entry into force of the New Union Customs Code, the European Commission amends the exporter's definition from a customs perspective. The new definition should be less restrictive and limits the conditions to be met in order to act as an exporter to the essential requirements of the functioning of the export customs regime.
Decision of the Court of Justice of the European Union on the VAT exemption for payments and transfers
VAT exemption for payments cannot be applied to a service provider that only instructs banks to transfer sums of money.
Amendments to Law no. 217/2016 regarding the reduction of food waste. Tax implications
The enforcement of measures undertaken for the food waste prevention will become optional, according to Law no. 200/2018 for the amendment and completion of Law no. 217/2016 on the reduction of food waste, published in the Official Gazette no. 647 dated July 25th, 2018.
Additional compliance obligations for companies offering sponsorships
Taxpayers granting sponsorship, acts of patronage or private scholarships will have the obligation to submit a new form, annually, i.e., Form 107 "Informative Statement regarding the beneficiaries of sponsorships/patronages/private scholarships", according to Order no. 1825/2018, published in the Official Gazette no. 646 dated July 25, 2018.
Clarifications on the organization and functioning of the National Office for Centralized Public Procurement
Following the set-up of the National Office for Centralized Procurement (“NOCPP”) by way of GEO no. 46/2018, the Romanian Government brings clarifications on the organization and functioning of the NOCPP by issuing the Government Decision no. 502/2018, published in the Official Gazette no. 614 as of July 17, 2018.
Internship law, main aspects
Internship law published on July 19, 2018 within Official Gazette, settles the legal framework for the manner of performing paid internship programs for persons of at least 16 years, by this manner these persons being able to acquire, among others, the professional experience, practical skills and/or competencies. Internship Law mainly regulates the following that we underline herein below:
- Who can be an intern?
- What entities could conclude internship agreements?
- Organization of internship program and internship agreement
- Amount of internship allowance
- Rights and obligations of hosting organization
The posting of workers in the framework of the provision of services: Main amendments brought to Directive 96/71/EC
Directive 96/71/EC on the posting of workers in the framework of the provision of services was amended by Directive 2018/957/EU, published on July 9, 2018, in order to ensure that a fair balance is struck between the freedom to provide services within the European Union, loyal competition, respectively the social protection of workers by promoting social justice.
Postponing by 2020 the contribution for failure to achieve the collection targets for electrical and electronic equipment and portable batteries and accumulators
On June 27th a law was published amending the Emergency Ordinance no. 196/2005 on the Environment Fund, which postpones until 2020 the payment of the contribution for failure to achieve the collection targets both by economic operators placing on the market electrical and electronic equipment and portable batteries and accumulators, as well as for the collective organizations.
The Constitutional Court upheld: Women can request the continuation of their individual employment agreements until they reach the age of 65
On 5 June 2018, the Constitutional Court upheld the unconstitutionality of art. 56 letter c) first thesis of Law no. 53/2003 - the Labor Code and ascertained that the provisions thereof are constitutional if the collocation “standard retirement age” is construed as not precluding a woman from requesting the continuation of her individual employment agreement, in conditions identical to men, respectively until she reaches the age of 65.
Self-evaluation form - an alternative to ANCEX's denial when exporting dual-use products
The General Directorate of Customs issued a circular to all subordinate institutions introducing a positive measure on dual-use items. As such, exporters can present at the time of customs clearance a self-assessment form as an alternative to the dual-use advice request issued by ANCEX ("ANCEX denial"), thus reducing the time of customs clearance.
Origin of goods – new certification rules in trade between the EU and India, Angola, Congo, Nepal and other GSP countries
Until June 30, 2018, exporters from India, Angola, Congo, Nepal and other GSP countries need to register in the EU Register of Exporters (REX system). After this date, FORM A certificates can no longer be used to certify origin for goods traded between such countries and the European Union.
The first EU regulations on virtual currency exchanges and wallets
On April 19, the European Parliament approved a directive whereby, among others, provides for the first time at European level a legal framework for virtual-fiat currency exchange platforms and custodian wallet providers.
In addition, the approved directive regulates expressly remote and electronic client identification, thus facilitating the digitalization of customer on-boarding across Europe.
Amendments and completions regarding the method of calculation and the procedure for the approval of the maximum prices of medicinal products for human use
By Order of the Minister of Health no. 407 of 30th of March 2018 (the “Order”) published in the Official Gazette no. 288 of 30th of March 2018, it has been approved the amendment and completion of the Order of the Minister of Health no. 368/2017 approving the Norms regarding the method of calculation and the procedure for the approval of the maximum prices of medicinal products for human use (the “Norms”).
Minor offences provided under labor regulations that are object of the prevention law
Law 270/2017 on prevention provides that the public control authorities have the obligation to apply the sanction of warning and to establish a remediation plan if they ascertain that one of the minor offences expressly regulated by law has been committed.
Major changes to the Tax Code
Law no. 72/2018, Government Emergency Ordinance no. 18/2018, Government Emergency Ordinance no. 25/2018 amended recently the Tax Code on profit tax, income tax, withholding tax (“WHT”), microenterprises regime and Value Added Tax (VAT).
Common set of rules for calculating taxable profits (CCCTB), voted by the European Parliament
On 15 March, the European Parliament voted in favour of plans establishing a common consolidated corporate tax base (CCCTB), namely a common set of rules that companies operating in the EU can use to calculate taxable profits.
European Commission directives proposed on taxation of companies in the digital economy
The European Commission proposes two solutions on a long-term and on a short-term for taxation of companies with significant digital presence.
ECOFIN Agreement for the tax intermediaries’ directive and for revising the list of non-cooperative jurisdictions
According to the agreement, tax intermediaries are obliged to report structures including cross-border transactions.
Decision of the Court of Justice of the European Union (CJUE) on time limits for claiming VAT refunds
VAT can be reclaimed after the statute of limitation period has expired.
Opinion of the Advocate General of CJUE on the VAT exemption for transactions concerning payments
VAT exemption denied for instructions to transfer money.
Legislative proposal in connection with the General Data Protection Regulation – Provisions that derogate from the European rules
The Romanian Parliament drafted a legislative proposal regarding the applicable measures for enforcing the (EU) Regulation 2016/679 issued by the European Parliament and the Council on the protection of natural persons with regards to the processing of personal data (“General Data Protection Regulation”).
The companies intending to import, export or produce controlled substances that deplete the ozone layer must register before 8 May 2018
Companies which, in 2019, intend to import or export ozone-depleting substances or which intend to produce or import these substances for essential laboratory and analytical uses, must obtain a license, according to the Notice issued by the European Commission.
Amendments to the Fiscal Code regarding social security contributions section
The government amended the Fiscal Code by the Emergency Ordinance no. 3/2018, published in the Official Gazette no. 125/08.02.2018, regarding social security contributions section, the main subject being, according to the note, to ensure a unitary fiscal regime of the social security contributions.
The deadline to submit the 600 form has been extended
The Government Emergency Ordinance no. 2/ 2018 to extend some deadlines provided by the Law 227/2015 regarding the Tax code has been published. In this respect, the deadline for submitting the 600 form was extended until 15th of April 2018.
Implementation of the New Customs Code - European Commission’s conclusions
In a report published at the end of January on the implementation of the new Customs Code, the European Commission announced, among other things, the amendment of the exporter's definition from the customs legislation’s perspective.
The electronic transport document can be used as a transit declaration
The electronic transport document can be used as a transit declaration for air transport is one of the main changes to the EU Convention on the Common Transit Procedure.
Deloitte in mass media
Costs of split VAT application across the EU outweigh the benefits, concludes a Deloitte study. The impact for Romania is explained by Vlad Boeriu, Partner Deloitte Romania: https://www2.deloitte.com/ro/en/pages/about-deloitte/articles/costurile-aplicarii-split-tva-in-ue-depasesc-beneficiile-impactul-estimat-pentru-romania.html
New obligation for public constructions operating without a fire safety authorization
The beneficiaries of investments consisting in constructions with public destination operating without obtaining the fire safety authorization are obliged to place notice boards in front of the entrances to the respective areas, with the following content: "This area operates without the fire safety authorization."
Cancelation of certain tax liabilities for individuals that are real estate developers
Tax liabilities that result from reclassification of the income from transfer of real estate from personal patrimony into income from independent activities, incurred up to 1st of June 2017, are canceled according to the Law no. 29/2018, published on 18th of January 2018.
A new category of programmers, exempted from income tax
The conditions of granting the income tax exemption for employees that perform activities representing creation of computer programs were amended by the joint order of MEN, MCSI, MMJS, under the no. 1.168/2017/3.024/2018/492/2018/3.337/2017, published in the Official Gazette no. 52 from 18th January 2018.
Law on public-private partnership, substantial amendments
The architecture of public-private partnership is substantial amended according to the provisions enacted by Emergency Ordinance no. 104/2017 for amending and supplementing Law no. 233/2016 on public-private partnership.
The main amendments consists of:
New definition of some concepts;
The possibility for the public partner to finance the investments with financial resources coming from public funds other than post-accession non-reimbursable external funds or their national contribution.
General and specific terms and conditions, together with the contractual framework agreement model, approved in the field of public procurement
Through Government Decision no. 1/2018 approving general and specific conditions for certain categories of procurement contracts related to publicly funded investment objectives, as published in Official Gazette no. 26 of 11 January, 2018, the general and specific terms and conditions, together with the framework agreement model for public or sectoral procurement contracts covering either the performance of works only or both the design and performance of works, have been approved, if such:
are related to publicly funded investment objectives, including non-reimbursable or reimbursable funds, and
the estimated total value is equal to or greater than the threshold value provided by art. 7 par. 1 lt. a of Law no. 98/2016, respectively 24,977,096 lei.
Legislative proposal regarding the authorization of the execution of construction and demolition works
The new proposal for the law regarding the authorization of the performance of construction and demolition works aims to replace Law no. 50/1991, restructuring the law and bringing forward a series of substantial changes.
The national average gross salary applicable for 2018 was published
The value of the national average gross salary used for establishing the budget of the state social insurance for the year of 2018 is 4,162 lei.
VAT split payment – The final form of the law
Only the companies having VAT debts or in insolvency will mandatory apply the VAT split payment system starting with 1 January 2018, according to the final form of the law on the VAT split payment, published in the Official Gazette.
New calculation rules regarding contributions and taxes due to the Environmental Fund
New methodological rules for calculating the contributions and taxes due to the Environmental Fund came into force on December 28, 2017, according to Order of the Ministry of Environment no. 1503/2017 for modifying and completing the methodology of calculation of taxes and contributions due to the Environment Fund.
New provisions on medical leave and allowances
The main changes concern the introduction of a voluntary insurance contract for medical leave contributions.
Amendments for certain tax and social security forms
Taking into consideration the newly introduced tax provisions, entered into force as of 1st of January 2018, certain tax forms have been updated in order to be in line with the new legislative provisions.
Decision to set quota for work permits that can be issued to foreigners during 2018
On Friday, 29 December 2017, it was published the decision establishing the work permits quota for year 2018 that can be issued to foreign citizens.
Changes to the provisions of the law regarding public pensions
The new provisions refer to the monthly basis for computing the social security contribution for individuals insured under a voluntary insurance contract.