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Tax & Legal Weekly Alerts

2018

Our weekly Tax & Legal Alerts provide you with information on different tax and legal issues in Romania.

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.

Approval of the Methodological norms for applying the Law no. 227/2017 regarding the Tax code

The Government Decision no. 354/25.05.2018 for amending and completing the Methodological norms for applying the Law no. 227/2015 regarding the Tax code has been published.

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.

The entrance into force of Law no. 81/2018 regarding the regulation of teleworking

On 2 April 2018, Law no. 81/2018 on the regulation of teleworking activity was published in the Official Gazette no. 296, which shall take effect starting with 5 April 2018.

 

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.

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