ERNST & YOUNG SRL

  |  2016-08-17

Legislative summary

Corporate income tax - Approval of the Norms regarding the deductions for research-development expenses

(Order of the Minister of Public Finances and of Minister of National Education and Scientific Research no. 1056 / 4435 of 5 July 2016, Official Gazette no. 526 / 13 July 2016)

Please refer to Tax Alert no. 23 / 2016 for more details.

Income Tax


Procedural aspects related to reporting and payment of tax on income derived from the transfer of immovable properties from personal patrimony


(Order no. 1.022 / 2.562, Official Gazette no. 524 / 12 July 2016)

 

The Order approves the procedure for reporting, paying and amending the tax on income earned by individuals from the transfer of immovable properties from their personal patrimony, as well as the format and content of related forms (i.e., Form 208, Form 209, Form 253, Form 254). For the cases where the transfer of the ownership right or its dismemberments is realized via other procedure than the notary or the court proceedings, the Form 209 should be filed by the individuals earning the income.

A separate form should be filed for each transfer if the individual is deriving income from the transfer of several immovable properties.


Tax residence in case of individuals

(Order no. 1099 / 2016, Official Gazette no. 577 / 29 July 2016)

 

Among the key aspects, we mention:

 

- Clarifications on partial Romanian tax residence: if an individual arrives to Romania during a tax year, he/she will become subject to taxation on his/her worldwide income as of the moment of being assessed as a Romanian tax resident; he/she will be deemed as non-tax resident in Romania and will be subject to Romanian source income only for the period starting his/her arrival untill the moment of being assessed as tax resident in Romania; - The respective individuals, assessed as Romanian tax residents, who leave Romania for more than 183 days in any twelve consecutive months, shall be deemed as non-residents in Romania from the moment of their departure without being liable to make proof of the change of their tax residence; - The Romanian tax residents, who have their domicile in Romania, shall be deemed as Romanian tax residents, taxable on their worldwide income in Romania, till the change of their tax residence. Thus, in practice this should eliminate the cases when the tax offices does not accept the change in the tax residency for the previous periods;


- Permanent home available to an individual (an important criteria for assessing the tax residence) shall be deemed to be any place permanently available to him/her and/or family members (either owned or rented). Thus, we are of the view that the Order clarifies also the case when certain tax offices did not consider as being permanent home the places rented by a third party for an individual.


- The Order updates the content of the Tax Residence Questionnaires due upon arrival/departure to/from Romania, as well as the Notifications issued by the tax authorities (e.g., the notifications shall indicate the moment since when the individual is assessed as a Romanian tax or non-tax resident).


VAT


Application of the VAT exemption in relation to supplies of vessels intended for navigation on the high seas and supplies of goods/services for the direct needs of such vessels


(Order of Minister of Public Finance no. 1058 / 2016, Official Gazette no. 529 / 14 July 2016)


The Order brings amendments inter-alia regarding the Instructions for applying the VAT exemption in relation to supplies of vessels intented for navigation on the high seas and supplies of goods/services for the direct needs of vessels intented for navigation on the high seas and supplies of goods/services for the direct needs of vessels. The main amendments are:


 The term ‘shipowner’ is replaced by ‘owner/operator of ships’;
 In order to fulfill the condition that the vessel is effectively and predominantly used for navigation on the high seas, the period between the date the vessel was acquired and the date of supply of the vessel / supply of goods/services for the direct need of the vessel should be considered for at most 5 years prior to the date of supply of the vessel / supply of goods/services for the direct need of the vessel;
 In case of supplies of new vessels, it is no longer needed to have a sworn statement from the buyer that the vessel will be effectively and predominantly used for navigation on the high seas;

 

The VAT exemption related to the supplies of fuel and food provided under art. 294, par. (1), letter h), pt. 2 of the Tax Code is applied also for the case where other intermediaries intervene in the supply, provided that at the moment of the supply, the final destination of the goods is known and the transfer of property of the respective goods to these intermediaries occurred, at the earliest, at the same time with the moment when the operators of the ship were entitled to actually dispose of these goods (as the Justice Court of the European Union has decide in Cause C-526/13 ‘Fast Bunkering Klaipeda’ UAB).


Form 306


(NAFA President Order no. 2037 / 2016, Official Gazette no. 534 / 15 July 2016)


The Order replaces NAFA Order no. 6/2010 and implements the Procedure for the approval of the biannual/annual tax period for the VAT registered taxable persons, as well as the template and content of form 306 ‘Request regarding the use of the semester or the calendar year as tax period’.


Form 088


(NAFA President Order no. 2048 / 2016, Official Gazette no. 533 / 15 July 2016)

The Order brings certain amendments to the template and content of the 088 Form.


Please refer to our Tax Alert no. 22 / 2016 for the most important amendments.


Reduced VAT rate of 9%


(Order of the Minister of Public Finances and Minister of Agriculture and Rural Development no. 1155 / 868 of
25 July 2016, Official Gazette no. 572 / 28 July 2016)


The Order defined the types of fertilizers, pesticides, seeds and other agricultural products, as well as some services for which the reduced VAT rate of 9% will be applied.


Please refer to our Tax Alert no. 25 / 2016 for more details.


Statement 394


(NAFA President Order no. 2264 / 2016, Official Gazette no. 578 / 29 July 2016)


The Order brings certain amendments to the reporting obligations and the content of the 394 Form.


Please refer to our Tax Alert no. 26 / 2016 for the most important amendments.


Customs


A series of customs-related norms were issued, aligning the domestic customs legislation with the provisions of the new Union Customs Code and related regulations for implementation.


Please refer to our Tax Alert no. 21 for more details.

 

Technical norms for customs formalities regarding the dispatches by express courier services


(NAFA President Order no. 2066 / 2016, Official Gazette no. 558 / 25 July 2016)


The Order brings an alignment with the new EU customs regulations.


State aid


(Order no. 854 / 2016 amending the annex of Order of Minister of Agriculture and Rural Development no. 3433 / 2015 regarding the approval of the state aid scheme „Encouraging regional development through investments, including in the fruit tree sector for the processing and marketing of agricultural products in order to obtain non-agricultural products”, Official Gazette no. 553 / 22 July 2016)


The objective of granting the aid is to increase the competition between companies through the creation of new products having added value, without affecting the competition on the internal market and the intra-Community trade by a measure contrary to the common interest.


The scheme enters into force as of the date of its publishing in the Official Gazette and is applied until 31 December 2020.
The total estimated value of the state aid to be granted according to the scheme is of EUR 123.3 mil.


(Order no. 857 / 2016 for the approval of the state aid scheme „Support for the first afforestation (”împădurire”) and the creation of wooded areas”, Official Gazette no. 568 / 27 July 2016)


The objective of the scheme is to grant financial support to the public and private owners of agricultural and non-agricultural lands and their forms of association for the purpose of afforestation and creation of wooded areas.


The scheme is applied until 31 December 2020.


The total estimated value of the state aid to be granted according to the scheme is of EUR 123,513,043.
(Order no. 437 / 2016 for the approval of the application of the regulatory framework regarding the state aid Register (‘RegAS’), Official Gazette no. 539 / 18 July 2016)


RegAS represents an electronic evidence system of the state aids granted to all categories of beneficiaries, irrespective of the objective of the grant, the category of funds involved and the type or nature of the supplier.


De minimis state aid schemes


During July 2015, the following normative acts in the field of the de minimis state aid schemes were published in the Official Gazettes:


 Order no. 696 / 2016 of the Vice Prime-Minister, Minister of Economy, Commerce and Relations with the Business Environment, for the approval of the Procedure for implementation of the de minimis state aid scheme within the Programme for the development of commerce with products and market services, published in the Official Gazette no. 509 / 6 July 2016;
 Order no. 695 / 2016 of the Vice Prime-Minister, Minister of Economy, Commerce and Relations with the business environment for the approval of the implementing Procedure of a de minimis state aid scheme within the national multiannual microindustrialisation Programme, published in the Official Gazette no. 511 / 7 July 2016;

 Order no. 694 / 2016 of the Vice Prime-Minister, Minister of Economy, Commerce and Relations with the Business Environment for the approval of the implementing Procedure of a de minimis state aid scheme within the national multiannual Programme for the setting-up and development of small and medium-sized enterprises in rural areas, published in the Official Gazette no. 513 / 7 July 2016;
 Order no. 851 / 2016 of the Minister of Agriculture and Rural Development amending the annex of the Order of the Minister of Agriculture and Rural Development no. 2112 / 2015 regarding the implementation of the de minimis state aid scheme „Aid granted for encouraging investments related to preserving the patrimony and for maintaining the traditions and spiritual heritage”, published in the Official Gazette no. 540 / 19 July 2016;
 Order no. 852 / 2016 of the Minister of Agriculture and Rural Development amending the annex of Order of Minister of Agriculture and Rural Development no. 1731 / 2015 regarding the implementation of the de minimis state aid scheme „Aid granted to microenterprises and small enterprises from rural areas for the establishment and development of non-agricultural economic activities”, published in the Official Gazette no. 543 / 20 July 2016;
 Order no. 859 / 2016 of the Minister of Agriculture and Rural Development amending the annex of Order of the Minister of Agriculture and Rural Development no. 285 / 2016 regarding the approval of the de minimis state aid scheme „Support for consultancy services for the implementation of investment projects, including in the fruit tree area, for the processing and marketing of agricultural products in order to obtain non-agricultural and fruit tree products”, implemented through the state aid scheme „Encouraging regional development through investments, including in the fruit tree sector, for the processing and marketing of agricultural products in order to obtain non-agricultural products”, related to the National Plan of Rural Development 2014 – 2020, published in the Official Gazette no. 568 / 27 July 2016.


Miscellaneous


EU Anti-Tax Avoidance Directive


(EU Council Directive 2016 / 1164 of 12 July 2016, Official Journal of the European Union no. L193 / 11 of 19.07.2016)
The Directive was developed based on the OECD recommendations of 2015 regarding the fight against base erosion and profit shifting.


Member States will have until 31 December 2018 to transpose the Directive into their national laws and regulations, with some exceptions.

 

Please refer to our Tax Alert no. 24 / 2016 for more details.


European Parliament and Council proposal for the amendment of EU Directive 2013 / 34
(Decision of the Romanian Senate regarding the European Parliament and Council proposal for the amendment of EU Directive 2013 / 34, Official Gazette no. 495 / 1 July 2016)

 

The proposal of the Directive is to impose multinationals to publish a report on the corporate income tax that they pay. Through this Decision, the Senate states that the proposal of the Directive meets the principles of subsidiarity and proportionality.


FATCA and CRS (Common Reporting Standard)


The Ministry of Public Finances published on 18 July 2016, under section ‘Decisional Transparency’ of its website, a draft Order that brings clarifications as regards the fulfillment of the obligation to provide financial information by financial institutions as per the international law legal instruments to which Romania adhered, respectively in the context of FATCA and CRS.


Please refer to the related Tax Alert for more details.


Amendments to the Law no. 321 / 2009 on food products trading


(Law no. 150 / 2016, Official Gazette no. 534 / 15 July 2016)


The Law brings significant changes for both the suppliers and the merchants involved in the food products trading industry.


Please refer to our Legal Alert no. 9 / 2016 for more details.


International Treaties


Amending protocol to the Romania - Uzbekistan Double Tax Treaty


(Source: IBFD website - http://www.ibfd.org/)


On 4 July 2016, Romania and Uzbekistan signed an amending protocol to the Romania - Uzbekistan Income and Capital Tax Treaty (1996). The protocol is not yet into force.


As a significant amendment the protocol introduces Article 27 on the assistance in the collection of taxes.


New Double Tax Treaty with China


(Source: IBFD website - http://www.ibfd.org/)


On 4 July 2016, China and Romania signed an income tax treaty in Bucharest. Once in force and effective, the new treaty will replace the previous treaty from 1991.


Agreement between Romania and Albania on social securities


(Order no. 852 / 2016, Official Gazette no. 539 / 18 July 2016)


The Order mentions that the Agreement between Romania and Albania on social securities signed at Bucharest on 27 February 2015 will enter into force as of 1 September 2016.


Agreement between the Government of Romania and the Government of the Isle of Man for the exchange of information relating to tax matters


(Law no. 161 / 2016, Official Gazette no. 575 / 28 July 2016)


The Law ratifies the agreement between the Government of Romania and the Government of the Isle of Man for the exchange of information relating to tax matters.

 

The Agreement was signed in London at 4 November 2015 and is applicable for income tax and corporate income tax of both states. However, it will also be applied to identical or significantly similar taxes established after the signing date, in addition to, or replacing the existing taxes.


The Agreement will enter into force on the thirtieth day after the later of the dates on which each of the parties has notified the other in writing that the procedures required by its law for the entry into force have been complied with.


Procedure for distributing or refunding in the accounts, respectively from the relevant budget accounts of the amounts cashed in the account 50.86.09 „Cash from amounts collected representing the damages caused and recovered in terms of art.10 of Law no. 241/2005”


(Order no. 2047 / 2016, Official Gazette no. 542 / 19 July 2016)


The Order implements the procedure applicable for situations where taxpayers are suspects or have been charged with criminal charges in cases of tax evasion, pay the damages in full, during the criminal investigation or judgment, by the first term of the judgment, as well as in cases where the court disposes the repayment of amounts paid as damages.


Commission for the review and resolution of debtors’ applications which request the settlement of certain tax liabilities, by transferring in the public property of the state of certain immovable goods


(Order no. 1054 / 2016, Official Gazette no. 565 / 26 July 2016)


The Order refers to the set-up of a Commission with the purpose of analyzing and solving the debtors’ requests which require the settlement of tax receivables, through the passing in the state public property of some immovable goods. It relates to immovable goods which make the subject of commissioning payment. Further on, the Order establishes the content and the regulatory framework governing the Commission.


Types of tax liabilities that can be paid by credit cards through POS terminals


(Order no. 943 / 2016, Official Gazette no. 501 / 5 July 2016)


The Order approves the types of tax liabilities that can be paid by card through POS terminals. The types of tax liabilities mentioned in the Order are inter alia: income tax (including income tax due from non-resident individuals), excise duty, social contributions, VAT.


The provisions of the Order apply only as follows:
a) to individuals identified on the basis of their personal identification number;
b) for paying the tax liabilities to the State Budget through the POS terminals available in the State Treasury’s territorial units.

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