Romania: Tax provisions in force since March 2018, significantly amended and supplemented

Below we list the main provisions of Law 30/2019 amending Government Emergency Ordinance 25/2018.

Corporate income tax

• The Registry of Non-profit Organisations and Religious Institutions will be published on the website of the National Agency for Fiscal Administration (ANAF) (the "Registry"). Inclusion in the Registry of entities that benefit from sponsorships is a condition for allowing the tax credit to taxpayers that grant these sponsorships.   
• For the purpose of determining the deductible excess indebtedness costs the reference threshold is increased from EUR 200,000 to EUR 1m and the percentage of the computation base becomes 30 % instead of 10 %.
• The carried forward excess indebtedness costs can be transferred within corporate reorganisations.

Micro-company income tax

• Micro-companies granting sponsorships to non-profit entities will be allowed to claim tax credit if the entities are included in the Registry.

Income tax

• Net gains obtained from the transfer of virtual currency are taxed as "income from other sources", with certain exceptions.
• Up to 3.5 % of the personal income tax due by individuals can be distributed to non-profit entities included in the Registry. The accreditation of those entities as providers of social services with at least one licensed social service is no longer a condition.

Value Added Tax

• The reduction of the VAT taxable base for the cases where the price of the supplied goods/services cannot be recovered because of the bankruptcy of the beneficiary is allowed starting with (i) the date of the decision by which the beneficiary entered bankruptcy, (ii) 1 January 2019, if the beneficiary entered bankruptcy prior to 1 January 2019 but no court decision has been issued yet for closing the bankruptcy proceedings.
• Individuals will be able to buy an unlimited number of dwellings eligible for the application of the reduced VAT rate of 5 %. In order to apply the 5 % reduced VAT rate for an eligible dwelling, the land on which the dwelling is built may exceed 250 m2.

Fiscal procedure

• Following the risk analysis undertaken by the tax authorities, taxpayers will be included in three main risk categories. General criteria for determining the risk category are introduced. The tax risk qualification attributed by the tax authorities may not be challenged by the taxpayers. Details regarding the main risk categories and the general criteria will be released at a later date via an order of the ANAF.
• A mediation procedure during enforcement proceedings will be possible. Its purpose will be to clarify the outstanding tax liabilities of the taxpayer and to analyse the taxpayer's financial and economic situation to find the optimum way to settle the outstanding amounts.

Law 30/2019 was published in the Official Gazette of Romania No. 44/17.01.2019.

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Co-author: Anamaria Tocaci