Romania: Fiscal measures to stimulate the maintenance/ increase of equity levels

Several fiscal measures, including tax reductions, were introduced recently by Emergency Ordinance no. 153/2020 for the establishment of fiscal measures to stimulate the maintenance / increase of equity levels in Romania, as well as for the amendment of various other pieces of legislation ("GEO 153/2020").

Of the most important changes are the following:

• starting with 2020 tax liabilities, payers of profit tax, of micro-company tax or payers who are liable for a special tax on certain activities (according to Law 170/2016), benefit from the following tax reductions:
  • 2 % if the annual accounting equity is positive and greater than or equal to half of the subscribed share capital;
  • between 5 % and 10 % depending on the increase of the adjusted equity of the year for which the tax is due, compared to that for the previous year. The conditions of the previous point continue to apply;
• starting with 2022 tax liabilities (or with those for the fiscal year beginning in 2022), an additional reduction of 3% is granted if the level of the adjusted equity exceeds the level of the equity corresponding to 2020 (or that corresponding to the modified fiscal year which ended in 2021). GEO 153/2020 establishes the increase rates for the years 2022 – 2025, for which a tax reduction is allowed.

All three reductions mentioned above can be applied cumulatively if taxpayers fulfil all underlying conditions.

Entities that apply the accounting regulations issued by the NBR and the FSA respectively do not benefit from said reductions.

For the purposes of applying the rules set out by GEO 153/2020, the adjusted equity includes the following elements: paid-in subscribed capital / endowment capital; the patrimony of the directorate, public patrimony, private patrimony, the patrimony of the national research-development institutes; capital premiums; reserves; and the net result carried forward.

GEO 153/2020 also establishes the rules for applying the above reductions in case of corporate restructuring (i.e. mergers, spin-offs).

For those tax periods covered by GEO 153/2020 (2020 - 2025), the deadline for submitting certain tax returns will be 25 June of the following year

• for the annual profit tax return, the 25 June deadline is replaced by the 25th day of the sixth month following the end of the modified tax year for taxpayers with a modified tax year;
• for the micro-company tax return related to the fourth quarter; and
• for the return covering the special taxation of certain activities related to the second semester.

GEO 153/2020 also brings some clarity to the calculation method for the bonus regulated by GEO 33/2020 regarding some fiscal measures and the amendment of certain pieces of legislation.

Lastly, according to the amendments brought by GEO 153/2020 to the Fiscal Procedure Code, the provision of documents and information between the Ministry of Public Finance / ANAF and various stakeholders will be effected by electronic means, through the Ministry of Public Finance's own computer system / ANAF called PatrimVen.

GEO 153/2020 was published in the Official Gazette of Romania no. 817 of 4 September 2020, the date on which it entered into force.

The romanian version of the article can be read here.