In light of the general interest to support economic growth and the need to clarify the tax treatment, the Government of Romania adopted an Emergency Ordinance , on 27 October 2015, making major changes to Law no. 227/2015 on the Tax Code.
The main changes include the following:
The tax rate for dividends distributed to individuals and legal entities and dividends obtained in Romania by non-residents shall drop, as of 1 January 2016, from 16% to 5%, although, in the original form of the New Tax Code, this drop was stipulated to start in 2017.
The increase of the ceiling for micro-enterprises from the current EUR 65,000 to EUR 100,000, as of next year, and the distinguishing of the system of tax rates related thereto according to the number of employees, as follows:
- 1% for micro-enterprises with over two employees, inclusively;
- 2% for micro-enterprises with a single employee;
- 3% for micro-enterprises with no employees.
For micro-enterprises, the current tax rate is 3% regardless of the number of employees.
As of 1 January 2016, for the supply of drinking water and water for irrigation, a lowered VAT rate of 9% shall apply, in light of its importance in the consumption of the population, as well as for supporting the sustainability and development of agriculture in Romania.
This legal act also stipulates that, as of next year, not just private universities will be exempted from income tax, but also kindergartens, schools and high schools in the private sector.
For income from salaries or similar to salaries earned outside the basic position, the Ordinance has harmonised its provisions with the regulations on the method of determination of the tax on salaries applicable to income from salaries or similar to salaries for the basic position.
In terms of the mandatory social contributions, the amendments of this legal act are the following:
- Individuals who have insurance for sickness and maternity in a state with which Romania has a bilateral social security agreement shall be exempted from the payment of the social health insurance contributions;
- The provisions of Law no. 223/2015 on military pensions shall be correlated with those of the Tax Code in terms of "the benefits/amounts granted, under the law, for the death of the staff of public defence, public order and national security institutions, dying as a result of participating in military actions, as well as the monthly disability allowances granted to staff as a result of their participation in military actions."
The regulations added in terms of the local taxes are as follows:
- The introduction of a non-criminal fine for failing to disclose the relevant tax information so as to identify taxpayers or the taxable matter;
- The deferring of the deadlines for submitting statements on the buildings owned by individuals or legal entities and intended to be used as non-residential or mixed use buildings, and the statements on the means of transport removed from circulation, as well as the submission of the supporting documents issued in 2015 on exemptions from or reductions of the tax on buildings, land or means of transport in the case of individuals or legal entities who are legally entitled to benefit from these facilities, from the 29th of February to the 31st of March;
- In the case of incorporation or registration of a means of transport during the year, its owner has the obligation to file a statement with the local tax authority in the territorial area of which the same is domiciled, based or has its place of business, within 30 days of the date of purchase.
This act shall enter into force as of 3 November 2015.
- Emergency Ordinance no. 50/2015 amending and supplementing Law no. 227/2015 on the Tax Code and Law no. 207/2015 on the Tax Procedure Code, published in the Official Journal, Part I, no. 817 of 3 November 2015.
