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The Romanian Tax Pocket Book
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The participants will be provided with the most up-to-date training on the continuously evolving Romanian and international tax framework and will understand the implications of legislative changes occurred.
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73 74 .Contents Chapter I: Individuals 1 Personal Income Tax » General Principles » Taxation of Residents » Taxation of Non-residents Social Security System » General Principles » Contributions Work authorisations and residency documents 8 9 14 15 15 18 2 3 Chapter II: Taxation of Corporations 1 Corporate Income Tax » General Principles » Taxation of Resident Companies » Taxation of Non-resident Companies Transfer Pricing Corporate Tax Compliance » General Principles » Non-resident Companies Investment Incentives » Tax incentives for Companies » State Aid » EU Funds Local Taxes and Other Taxes 21 22 30 34 36 37 38 40 44 49 2 3 4 5 Chapter III: Indirect Taxes 1 2 3 4 Value Added Tax (VAT) Customs and International Trade Excise Duties » Harmonised Excisable Products » Other Excisable Products (Coffee) Environmental Taxes 51 60 63 65 65 Chapter IV: Tax Procedure Code 1 2 General Principles Specific Tax Procedures 67 68 Appendices Appendix 1 List of Double Tax Treaties Appendix 2 Withholding Tax Rates for Companies in Some Representative Double Tax Treaties This publication aims to provide a general description of the tax system in Romania. The information contained is based on tax legislation and practice as at 1 January 2012.
for at least two years. Income from the transfer of immovable property is taxed based on the holding period and value.3% tax. Interest income earned from deposits in Romania is subject to 16% withholding tax. Taxation of Corporations • The standard corporate income tax rate is 16%. The tax is reduced to nil if the beneficiary is a company resident in an EU (including Romania) or EEA member state that holds. at least 10% of the shares of the company distributing the dividends. • Romanians domiciled in Romania are subject to taxation on their worldwide income (except for salaries received from abroad for activities performed abroad). credit institutions are required to apply International Financial Reporting Standards (IFRS). • Standard withholding tax on interest and royalties paid to non-residents is 16%. income from prizes and some other specific sources of income are subject to a final 16% withholding tax at source. • Micro-companies may opt to pay a 3% income tax on income. • The dividend tax rate is 16% on dividends paid to Romanian companies and to non-resident companies. there are some specific transitional and ongoing rules for tax purposes. From January 2011 these payments are also exempt from withholding tax if the beneficiary of the income is a company resident in the EU or EEA and holds at least 25% of the taxpayer’s shares for a minimum period of two years. which can be reduced under favourable treaties. Capital gains from transfers of securities are taxed at a 16% rate. Non-residents may be eligible for a reduced rate under double tax treaties. declare and pay individual income taxes as well as contributions to the Romanian Social Security system (observing specific criteria) for salaries obtained from foreign employers. • Foreign individuals (and Romanians with a domicile outside Romania) are generally • • • • • • subject to Romanian taxation only for income sourced in Romania.Taxation of Individuals • Most types of income earned by individuals are taxed at a flat rate of 16%. and is subject to 1% . Individuals employed abroad and performing employment activities in Romania are required each month to calculate. In connection with this. • From 1 January 2012. Dividend income. However. instead of profit tax. Salary tax exemption may be applied for employees working on software creation if certain conditions are fulfilled. 6 The Romanian Tax Pocket Book 2012 Edition . such individuals may be taxed on their worldwide income if specific criteria are met (new residency conditions starting with 2012).
transformed. with a few exceptions. transported and stored under excise duties suspensive arrangements. etc. Reduced VAT rates of 9% and 5% apply for certain goods and services.Value Added Tax (VAT) • The standard VAT rate is 24%. • Registration obligation for producers / importers of chemical substances and preparations (REACH). • Rules determining the place of supply for goods and services (and hence the place for VAT taxation) are fully harmonised with EU Directive 112/2006 and EU Directive 8/2008 regarding VAT. standing wood. tyres. air-pollutant emissions from fixed sources. • No customs formalities are applied for goods with community status (goods produced in the EU or goods released for free circulation in the EU). • Romania applies all EU free trade agreements concluded with third countries. • Invoicing deadline is the fifteenth day of the month following that in which the supply was performed. • Import licenses are required for commodities such as oil. Tax warehouse for production and storage purposes. sale of ferrous and non-ferrous waste. • Registration of producers / importers / exporters of EEE (electrical and electronic equipment). Excise Duties • • • • EU “harmonised” excisable products and “non-harmonised” excisable products. • Security required for suspensive customs regimes. Excisable products can be produced. • VAT refund is available for EU and non-EU businesses. Customs and International Trade • Romania applies the EU Common Customs Tariff & EU customs regulations. • Some contributions depend on compliance with waste management obligations. • Compensatory interest is due for Inward Processing & Temporary Admission regime goods released for free circulation in the EU. The Romanian Tax Pocket Book 2012 Edition 7 6 . Registered consignee and consignor. Environmental Fund Contributions • Contributions are due for packaging. certain chemical products and weapons.
• Previously resident Romanian domiciled citizens. 8 The Romanian Tax Pocket Book 2012 Edition . where applicable) – this is a change from previous years when there was a 3 year transition period. who then become residents of a state which has not signed a Double Tax Treaty with Romania. • Romanian citizens not domiciled in Romania and foreign individuals that become tax resident in Romania are taxed during the first year of their stay only on income sourced in Romania.Chapter I: Individuals 1. as well as for the next three calendar years. • Romanian citizens domiciled in Romania are taxed on their worldwide income (except for salaries received from abroad for work performed abroad). • The fiscal year is the calendar year. continue to be taxable in Romania on their worldwide income for the calendar year in which the change of residence occurs. Personal Income Tax 1. or » Is present in Romania for more than 183 days in any 12 consecutive months interval ending in the concerned calendar year. or » Has his / her centre of vital interests in Romania. • All tax resident individuals become taxable on their worldwide income starting with the year following that in which they started their tax residency (while respecting the provisions of the Double Tax Treaties. • A resident is a person who: » Is domiciled in Romania.1 General Principles • The flat income tax rate is 16%.
1. The Romanian Tax Pocket Book 2012 Edition 9 8 . specific categories of freelancers are taxed on the basis of a fixed income annual quota. per diem and other expenses exceeding limits provided by current law.2 Taxation of Residents Types of income and corresponding tax rates Salary income • Salary is defined as income in cash and / or in kind received by individuals based on employment agreements and is taxed at a flat rate of 16%. sponsorship and protocol expenses in excess of the upper limits set by law. • Alternatively. including income from liberal professions. withhold and transfer salary taxes on a monthly basis. late-payment penalties (other than contractual penalties). • Certain types of income are also treated and taxed similar to salaries including remuneration paid according to non-competition clauses and other taxable benefits such as: meal tickets. the individuals are liable to submit a monthly income statement and pay monthly income tax. • The compliance obligations with respect to salary income are: » For employees (and directors remunerated based on mandate agreements) of Romanian companies. Net income is calculated as gross income minus deductible expenses. the Management Council. fees received by members of the General Meeting of Shareholders. donations. private use of company cars and telephones. holiday tickets. private scholarships. nursery tickets. administratorcompensation. the Board of Directors and the Supervision Council are treated as salaries. » For foreign individuals performing activities in Romania based on foreign employment agreements. Income from independent activities • Income from independent activities is taxed at a flat rate of 16% (mandatory social charges are deductible) and covers. » income from intellectual property rights. amounts representing compensatory payments. among others: » income from freelance activities (authorisation needed). gift tickets. their employers are liable to calculate. • Freelancers earning income from independent activities have to make quarterly advance tax payments for the tax due during the fiscal year (up to and including the twenty-fifth day of the last month of each quarter). branches and representative offices of foreign companies. • The following expenses are non-deductible: fines. Moreover. as communicated yearly by the local tax authorities. Freelance activities • Income from freelance activities is assessed on the basis of entries in the single entry bookkeeping ledgers that providers of independent activities are obliged to keep.
10 The Romanian Tax Pocket Book 2012 Edition . • Individuals obtaining income from renting out more than five rooms for tourism purposes determine the net annual income in the real system based on data in the single entry bookkeeping and make anticipated payments in two instalments. • There is also the possibility to opt (starting with the moment the contract is signed) for a final 16% withholding tax on the gross income. • The mandatory social contributions are deductible for Romanian tax purposes. • There is an exception for individuals obtaining income from renting rooms out in their own homes for tourism purposes. • The taxable basis for the income earned from intellectual property rights can be calculated as gross income minus a lump sum equal to 20% of the gross income less any mandatory social charges paid (withheld by the income payer). withhold and pay 10% advance tax. • Net taxable income is determined by deducting a 25% expense allowance from the gross income and is taxed at a flat rate of 16%. Income from pensions • Pensions are taxable at a flat tax rate of 16% for the amount in excess of RON 1. 25% of the gross income is admitted for deductibility purposes. the tax paid during the year will represent anticipated payments for the annual income tax. Rental income • Gross annual income represents the income earned by the owner during the year as stipulated in the rental agreement registered with the Romanian tax authorities. In this case. These individuals subsequently submit a statement regarding the realised income based on which a tax regularisation is made. In case of income from the creation of monumental art. • Individuals earning such income have to make quarterly advance tax payments during the fiscal year. For these individuals there is the option to determine the income tax in the real system. The declaration is the basis on which the tax authority sets the amount of the final tax (the final tax rate is 16%). the tax being final.Intellectual property rights • Payers of royalties must calculate. • Income earned by taxpayers from five or more rental contracts and income from renting out more than five rooms for tourism purposes is considered income from independent activities and taxed accordingly.000 per month. • Receivers include the income in their annual declaration . Homeowners who derive income from the renting out of up to five rooms for tourism purposes owe income tax established based on an annual income allowance and the payment of the tax is made in two annual instalments (by 25 July and 25 November respectively).
Income from investments • Dividends are taxed at a 16% flat tax rate. » The obligation of calculating. • Income from agricultural activities is determined either on a fixed income quota basis. by applying a flat rate of 16% to the taxable income. » A 16% tax is applied on gains obtained by shareholders from the liquidation of a company. The tax withheld is final. with the withheld tax representing anticipated payment for the annual tax. or by single entry accounting. conservatories especially designed for these purposes and / or in irrigated systems. other than shares and transferable securities in non-listed companies can be carried forward for up to seven consecutive tax years. with the tax being final. withholding and wiring the income tax in case of gains from the transfer of shares in case of non-listed companies. lies with the buyer. • Capital gains in Romania are generally taxed at 16%. » Gains from forward transactions with foreign currency are taxed at the 16% rate on each transaction. • The tax due for income earned by individuals from agricultural activities from selling their products to certain designated collection units is calculated and withheld at source and amounts to 2% (flat rate) of the value of the products sold. The following rules apply: » The obligation of calculating and paying the income tax representing advance quarterly payments for the annual income tax on capital gains from the transfer of securities held in listed companies lies with the taxpayers. The legal person is required to calculate. at the moment of acquisition. in greenhouses. • Interest income is subject to the 16% flat tax rate. » Any net annual loss resulting from the transfer of securities.Income from agricultural activities • The following activities are considered agricultural activities: » Farming. decorative plants and mushrooms » Vineyard and fruit farming » The sale of unprocessed agricultural products to specialist units. The Romanian Tax Pocket Book 2012 Edition 10 11 . withhold and pay the income tax. Income from prizes • Tax on income from prizes is withheld at source and determined by levying 16% on the amount exceeding RON 600 paid for each prize. and selling flowers and vegetables » Farming and selling shrubs.
The tax is to be remitted by the twenty-fifth of the month following that when the income was withheld. the income tax is 3%. • Access in the authorised locations is only allowed upon payment of an admission ticket valid for 24 hours from 8 AM to 8 AM. Income from gambling • Tax on income from gambling is determined by levying a 25% tax rate on the net income. • No income tax is due for ownership of estates acquired under special laws. • Income from the transfer of real estate owned for more than three years is taxed as follows: » For values up to RON 200. the income tax is RON 4. The net income is the amount exceeding RON 600 paid by the same organiser or payer of prizes during a single day. the income tax is 2%. • Income tax due for transfer of ownership is withheld by the public notary and calculated at the value declared by the parties in the transfer documents.000 + 1% of the amount exceeding RON 200.000. » Income granted to retired former employees. • The tax calculated and withheld upon disbursement is final. received from insurance companies as a result of insurance contracts concluded between the parties.000.000. » For values exceeding RON 200.000. Other income subject to 16% flat tax rate • The following types of taxable income are included in this category (NB. If the value declared by the parties is lower than the estimated value established by the expert appraisal conducted by the Chamber of Public Notaries. between spouses and in cases of inheritance. » Gains on depreciation drawings. for donation deeds between relatives up to the third degree.Income from real estate transactions • Income from the transfer of real estate owned for less than three years is taxed as follows: » For values up to (and including) RON 200. in the form of discounts for goods. » Income derived by individual taxpayers in the form of fees from commercial arbitration. services and other entitlements. The access fee is RON 20 for casino-type gambling and RON 5 for slot-machine type games. » For values exceeding RON 200.000. provided the procedure is finalised within two years (an income tax of 1% is levied if the procedure is not completed within those two years). 12 The Romanian Tax Pocket Book 2012 Edition . according to clauses in employment agreements or under special laws. the income tax is RON 6.000. the income tax is calculated at the reference value. The list is not exhaustive): » Insurance premiums incurred by a company for the benefit of individuals with whom they have no employment relationship.000 + 2% of the amount exceeding RON 200.
the personal deduction and family members deduction are not applicable. the following amounts are to be deducted from the gross income when calculating the taxable income from salary: » Mandatory state social security contributions. » Amounts received for transport and accommodation expenses incurred during delegation / secondment.Tax-exempt income • The main categories of tax-exempt income are: » Allowances for maternity leave. » Sponsorship and donations. both by the employer and the employee). » Personal deductions calculated in accordance with the relevant laws. » Stock option plan advantages. • For each secondary job. » Inheritance. up to the RON equivalent of EUR 400 annually. » Trade union membership fees. at the moment of being granted and exercised. taxable income is assessed as the difference between the gross income and the social security obligations. The Romanian Tax Pocket Book 2012 Edition 12 13 . » Salary income obtained from certain employment activities rendered abroad. » Income from the sale of movable assets from personal patrimony (with the exception of those described as “capital gains”). » Salaries obtained by seriously disabled individuals. maternity risk and for child care leave paid from the health fund. irrespective of the tax treatment of the income in that foreign country. • Taxpayers may redirect up to 2% of their annual income tax to charitable purposes (sponsorship). » Contributions to facultative pension funds. Deductions from income tax • For the primary job. » Salary income related to the design and creation of software (some criteria need to be met. » Incentives granted as aid to families for child care leave.
» A foreign legal persons’ income derived from real estate situated in Romania or from the sale of shares. » Income from independent professions performed in Romania. » Income from management and consultancy activities if these are obtained from a resident or if the related expenses are those of a permanent establishment in Romania. » Prize income from contests organised in Romania. » Income from dependent activities in Romania. interest. » Income from a partnership setup in Romania. of a Romanian company. » Income obtained from liquidation of Romanian companies. » Income from services rendered in Romania. royalties and commissions received from a resident. among others.1. • Income sourced in Romania includes. the following: » Income derived from conducting independent activities through a permanent establishment in Romania. 14 The Romanian Tax Pocket Book 2012 Edition . » Pension income higher than the monthly cap (RON 1. » Income from the transfer of shares held in a Romanian legal entity. founders or members of the Board of Directors. royalties or commissions paid by non-residents. • Withholding tax (16% flat tax rate) is levied on the following types of income sourced in Romania: » Dividends. » Income from dependent activities. » Some other specified types of income derived in Romania. excluding international transport and related services.3 Taxation of Non-residents • Income earned by non-resident individuals from activities performed in Romania or from income sources in Romania is generally subject to 16% tax unless the tax is reduced or eliminated under an applicable double tax treaty. » Interest. if they have permanent establishments in Romania and the interest / royalty / commission is an expense of those permanent establishments. » Income derived from sports and entertainment activities performed in Romania. » Non-residents’ income attributed to a permanent establishment in Romania. » Income and fees representing remuneration received by administrators.000).
temporary work disabilities. • On capital gains. the taxpayer has the obligation to compute. the more favourable rates under the relevant tax treaty can be applied by Romanian disbursers of income.5% is automatically directed towards private pension funds. 3. as well as other categories of taxpayers. The contribution rates can be modified by the Social Security Contributions Law or by the State Budget Law. • Income from real estate transactions is taxed at the same specific rates as in the case of residents. 2. out of the total rate of the individual social security (pension) contribution. • Ceiling: the assessment base for the individual monthly pension contribution is capped at five times the average gross salary for each place of revenue gain. work accidents and professional illness risks. non-residents may appoint a Romanian fiscal representative or a tax agent.5% » Health fund: 5. while employment security covers. For 2012. if the beneficiaries have produced the required tax residency certificate.117. for 2012 the average gross salary is RON 2.1 General Principles • In Romania. Depending on the details of the transaction. all employers and employees.5% • For 2012. The monthly assessment base is the gross income derived from dependent activities (in Romania and abroad). Social Security System 2.2 Contributions • The percentages paid by employers and employees are applied to a certain computation base that is capped as provided by the Fiscal Code. grants aimed at generating employment. The Romanian Tax Pocket Book 2012 Edition 15 14 . the contribution rates are established as follows: • Employee Contributions: » Social Security contribution: 10. withhold and pay the capital gain tax from sale of shares. minimal unemployment benefits and. on theother hand. on one hand. To fulfil this requirement.• Gambling income obtained by non-residents in Romania is taxed at a 25% rate. have to contribute to the state social. • Social and health security covers pensions. health and employment security system. child benefits. illness and other social care services. foreign individuals are generally subject to the same tax treatment as Romanian individuals. • Where foreigners can claim treaty protection. 2.5% » Unemployment fund: 0.
• Employer Contributions: » Social Security fund: 20. resident and non-resident.8% depending on working conditions (capped) » Health fund: 5. State budget and state social security budget contributions are payable by the twenty-fifth of the month following that to which the salary relates. depending on the risk category. • The list of non-taxable salary benefits has been reduced. etc. risk insurance and occupational disease fund: 0.8%. • Ceiling: the assessment base for the monthly pension contribution is capped at five average gross salaries multiplied by the number of insured individuals in the company. a single tax return (Form 112) is introduced for social security and income tax liabilities and the name list of subscribers. • The monthly basis for calculating medical leave contributions due by employers is capped at 12 minimum gross salaries multiplied by the number of employees covered by this contribution (the current minimum gross salary for 2012 is RON 700).).5% » Work accidents. • The percentage contribution to the work accident insurance fund varies between 0. 25.2% » Medical leave: 0.85%. 16 The Romanian Tax Pocket Book 2012 Edition .8%.85% • The monthly assessment base is the amount of the gross revenue gained by individuals.15% and 0.85% (capped) » Guarantee Fund: 0. as described by the Fiscal Code.15% to 0.25% of the salary fund » Unemployment fund: 0. The obligation to submit this return lies with companies and individuals with employer status or entities similar to employers. 30. Failure (on purpose) to pay these withholding contributions within 15 days of their becoming due is deemed a criminal offence and sanctioned accordingly. • From 2011. • Employers calculate and withhold salary contributions when paying salaries. The criteria for establishing risk categories were established by Government decision. • The individual and employer health and unemployment fund contributions remain uncapped and are computed by reference to the relevant assessment bases stipulated by the Fiscal Code. based on a work contract (or a service report or special status) as well as revenues treated as salaries (administrator remuneration / director on mandate contract.
• The taxable base for individual social security (pension) contributions is capped at five times the medium gross salary used to substantiate the state social security budget and is approved by the state social security budget law.Contributions due for intellectual property rights / civil conventions • For such income (subject to withholding) social security (pension) and health insurance contributions are due. as well as those due by individuals gaining other types of income and those not generating any income. in the case of income from civil conventions. • The individual social security (pension) and health insurance contributions is calculated. » The gross amount. based on employment contracts) are exempted from paying this type of contribution for the income received from intellectual property rights. Provisions applicable as of 1 July 2012: • The National Agency for Fiscal Administration takes over the competency to manage the mandatory social security contributions due by individuals who generate income from independent activities. • Individuals who gain income from intellectual property rights or civil conventions do not have to contribute to the unemployment fund. • The assessment base for social security contributions applicable for 2012 has not suffered significant amendments. • Individuals who already contribute to the health insurance fund (eg. withheld and paid by the payer of the income by the twenty-fifth day of the month following that in which the income was paid. The Romanian Tax Pocket Book 2012 Edition 16 17 . • The method for establishing the assessment base for individual social security contributions is: » The gross amount minus the expense allowance (20% or 25%) for income gained from any exploitation of intellectual property rights. agricultural activities and associations without legal personality.
the EU regulations related to social security now prevail over domestic legislation. Foreigners seconded to Romania may be entitled to certain tax incentives while observing the limitations / exceptions provided by domestic law and/or the EU regulations for immigration and social security). those employed by companies established in the EEA or the Swiss Confederation seconded to Romania.3. EEA or Swiss Confederation citizenship. EU. provided that they obtain the A1 certificate from another EU Member State where their employer is located. Iceland. these individuals have free access to the local labour market. or the E101 certificate from Norway. a procedure for notifying the competent authorities in this respect has been established. foreign individuals working in Romania need to apply for a Romanian work authorisation (before obtaining their residence permit). cross-border workers. secondees. Accordingly. expatriates from EEA or Switzerland working in Romania can be exempted from paying social contributions. • A “foreign individual” is a person not holding Romanian. foreigners performing activities in Romania based on local employment agreements are liable to pay income tax on their entire remuneration received in Romania as well as all social security contributions required by the Romanian legislation. • The types of work authorisations which can be granted to foreign individuals are: authorisation for permanent workers. • For secondees. such as: family members of Romanian citizens. • In certain circumstances. • Further to Romania’s EU accession. • A procedure for notifying the competent authorities is also in place for seconded foreign individuals. Liechtenstein and Switzerland for expatriates whose employers are located in these states. • The type of employment relationship can significantly affect tax and social security liabilities (specifically. probation workers. Work Authorisations and Residency Documents Working rights for citizens of the EEA and Swiss Confederation • EEA and Swiss Confederation citizens working in Romania as employees with a local / secondment contract do not have to obtain an authorisation for work. some categories of foreign individuals can perform work activities without having previously obtained a work authorisation. as well as nominal work permits. seasonal workers. highly skilled workers. 18 The Romanian Tax Pocket Book 2012 Edition . Work authorisations • As a general rule.
stay of more than 90 days). • Individuals seconded to carry out dependent activities for Romanian companies are required to contribute to the health fund. residency permit and the EU Blue Card. » A local employment contract. the foreign individual has first to obtain a work authorisation for secondees and a long-term visa (except for certain cases provided by law).e.e. Residency documents • The documents which attest the right to stay for periods longer than 90 days are: the registration certificate.5% are payable once the right for temporary residency in Romania is extended (i. with salary tax and social charges being withheld monthly by the employer through the payroll. income tax and health fund contributions) on a monthly basis. • Foreign individuals that require a residency permit or registration certificate (for EEA and Swiss Confederation citizens) should use this number as their fiscal identification number upon registering with the Romanian Tax Authorities. contract period. Work authorisation for highly skilled workers • This type of authorisation can be granted to foreign workers who can be employed based on a local employment contract while respecting certain salary-related criteria. etc. the residency card. Work authorisation for secondment purposes • Foreign citizens can be seconded to Romania by companies located in third countries based on a employment contract for a total of one year within a five-year period. Such individuals have to calculate and pay salary taxes (i. • Citizens from the EEA and Swiss Confederation undertaking dependent activities in Romania may have: » A foreign employment contract (secondment). • In order to be seconded to Romania. Fiscal registration number • Foreign individuals including citizens of the European Economic Area (EEA) and Swiss Confederation earning income sourced in Romania and who do not need to obtain a residency permit or a registration certificate but have fiscal obligations in Romania need to request the registration in Romania through a fiscal agent or representative to obtain a fiscal registration number. proving high professional qualifications. Foreign individuals become taxable in Romania from the first day.Work authorisations • Unless exempted under law from the requirement. • The stay in Romania for the holder of such authorisations is conditioned by the holding of an EU Blue Card. a foreign individual has to first obtain a work authorisation and a long-stay visa. Health fund contributions of 5. The Romanian Tax Pocket Book 2012 Edition 18 19 . in order to conclude a local employment contract with a company in Romania.
• However. Foreign nationals from certain countries.Romanian legal residence for EEA and Swiss Confederation individuals and their family members who are not EEA / Swiss Confederation citizens. Japan. for very special situations). The documentary requirements for obtaining Romanian long-term visas / residency permits depend on the purpose of stay. Canada. • One of the advantages of the EU Blue Card for its holder is the possibility to cumulate residency periods in different Member States in order to meet the conditions for being granted the status of long-term resident. foreign individuals whose stay in Romania exceeds 90 days within a six-month period need to apply for temporary residency permits (there are very limited exceptions to this rule. they can extend their legal stay here by obtaining a ‘certificate of registration’ (the certificate is obtained within 24 hours of being requested and has a validity of up to five years). etc).g employment. 20 The Romanian Tax Pocket Book 2012 Edition . including USA. means of support. • One of the types of stay permits released by the Romanian authorities is the EU Blue Card. • EEA and Swiss Confederation nationals can enter and reside in Romania for up to a three- month period without obtaining any formal residency documents (registration certificates). family members who are not EEA / Swiss Confederation citizens themselves are subject to different immigration compliance requirements. are exempted from obtaining Romanian long-term visas. Romanian legal residence for foreign individuals • As a general rule. After this period. Certificates of registration are obtained observing the purpose of stay in Romania (e. as follows: » obtaining Romanian entry visas if necessary. and » obtaining a residency card if their stay in Romania is longer than three months. • Temporary residency permit applications can be made based on long-stay visas which have to be obtained from the Romanian diplomatic mission abroad prior to the application. secondment.
» Foreign companies which derive revenues from or in connection with real estate transactions or from share transactions in Romanian companies. or legal persons set up in accordance with European legislation with the registered head office in Romania). Corporate income tax rate • The standard corporate income tax rate is 16%. The Romanian Tax Pocket Book 2012 Edition 20 21 . Corporate Income Tax 1. • For micro-companies that opt for the special income tax system the rate is 3%. for revenues derived in or outside Romania. » Foreign companies and individuals doing business in Romania in partnerships with or without legal capacity. a company managed and controlled in Romania.Chapter II: Taxation of Corporations 1. » Foreign companies doing business in Romania through permanent establishments. • Entities subject to corporate income tax: » Companies tax resident in Romania (generally meaning a Romanian company. • The tax due for nightclubs and gambling activities is whichever is the higher between 5% of the revenues obtained and 16% of the taxable profit. » Resident individuals who form partnerships without legal capacity with Romanian companies.1 General Principles Territoriality • A company is considered resident if its head office is registered in Romania or has its effective place of management in Romania. applied to their total income.
profit tax computation. if the financial year of the parent company is different from the calendar year. the Romanian company is a profit taxpayer and has held at least 10% of the subsidiary’s shares for a continuous period of at least two years by the date the dividends are paid.e. amortisation and fiscal treatment of deferred profit tax. adjustments for step-down in value.1. » Income from the annullment of a reserve registered as a result of a participation in kind to the capital of other legal entities. Other elements similar to revenues and expenses are also to be taken into account when calculating the taxable profit.e. » Some types of income resulting from taxpayers (financial institutions) switching to International Financial Reporting Standards. Romanian consolidated subsidiaries and subsidiaries of the subsidiaries of foreign companies. Tax base • The taxable profit of a company is calculated as the difference between the revenues derived from any source and the expenses incurred in obtaining taxable revenues throughout the tax year. 22 The Romanian Tax Pocket Book 2012 Edition . except for credit institutions) are allowed to set an accounting year other than the calendar year. i.2 Taxation of Resident Companies Accounting and fiscal period • The fiscal year is considered to be the calendar year or the period during which the entity existed if it was set up or ceased to exist during that calendar year. does not modify the period for which profit tax is calculated as defined by the Fiscal Code – namely the calendar year. different from the calendar year. Non-taxable revenues • The most relevant types of non-taxable revenues stipulated by the Romanian Fiscal Code are: » Dividends received by a Romanian company from another Romanian company (but these may be subject to withholding tax at source unless certain conditions are met). recovery of expenses that were previously non-deductible and revenues from reversal or cancellation of interest and late payment penalties that were previously non-deductible. adjusted for fiscal purposes by deducting non-taxable revenues and adding non-deductible expenses. but certain categories of entities (i. • The accounting year is also usually the calendar year. Romanian branches of foreign companies. » Dividends received by a Romanian company from a subsidiary situated in an EU member state. • Establishing a financial reporting period. » Non-taxable income expressly provided for under agreements and memoranda. » Revenues from reversal or cancellation of provisions / expenses that were previously non-deductible. • For taxpayers which apply the International Financial Reporting Standards there are specific rules in relation to fiscal value assessment. subject to certain conditions.
» Expenses incurred from professional training and development of employees. » Expenses incurred with the acquisition of packaging materials. interest.Deductibility of expenses • From the deductibility standpoint. this also includes personnel’s transport to and from the workplace. » Travel and accommodation expenses related to business. » Bad debts expenses are fully deductible in any of the following cases: the bankruptcy procedure of the debtor was closed based on a court decision. at the moment they are granted. expenses are deductible only if incurred for the purpose of generating taxable income. » Fines. » Expenses incurred for management improvement. introducing maintening and developing quality management systems. the related insurance contributions and professional risk insurance premiums. and obtaining quality compliance confirmation. » Expenses related to losses from the valuation of shares and long-term bonds. except for purchases made during enforcement proceedings. Deductible expenses • As a general rule. » Research and development expenses that do not meet the requirements to be recognised as intangible assets for accounting purposes. penalties and other increased payments due under commercial contracts. limited deductibility expenses and non-deductible expenses. expenses fall into three categories: deductible expenses. if the benefits are subject to personal income tax. during the useful life set by the taxpayer. The Romanian Tax Pocket Book 2012 Edition 23 22 . » Expenses incurred for environmental protection and resource conservation. • Some of the expenses specifically mentioned by the Fiscal Code are: » Marketing and advertising expenses. the debtor has major financial difficulties affecting its entire patrimony. » Expenses related to benefits granted to employees as equity instruments settled with cash. updating IT systems. » Expenses incurred in relation to work safety. the debtor is deceased and the receivable cannot be recovered from the heirs. • Beneficiaries that acquire goods and/or services from inactive taxpayers (while they are inactive) cannot deduct the expenses related to such acquisitions. prevention of work accidents and occupational diseases. the debtor is dissolved or liquidated.
Rental. but only for one vehicle per person. etc). cars used by sales agents and recruitment agents.Limited deductibility expenses • The deductibility of certain expenses is limited as follows: » Interest and foreign exchange losses under thin capitalisation rules (see details below). » Depreciation of assets under fiscal depreciation rules (see details below). TV vans. per person. Paid transportation services and taxi activities.5 times the ceiling set for public institutions. Among others they can include maternity allowances. safety and security. as well as expenses for the proper operation of certain activities or units under taxpayers’ administration (i. transporting staff to and from work places. funeral benefits and allowances for serious or incurable diseases and prostheses. » Perishable goods capped as set by the relevant central administration bodies. » Taxes and contributions paid to non-government organisations and professional associations related to the taxpayer’s activity are deductible up to the limit of EUR 4. expenses for nursery tickets. » Health insurance premiums are deductible for employers up to the limit of EUR 250 per year. » Expenses from operation. canteens. » 50% of the fuel expenses for company vehicles weighing under 3. kindergartens. » Daily allowances for expenses from domestic and foreign travel by employees are deductible up to the level of 2.500 kg and with fewer than nine passenger seats (including the driver’s seat) and used exclusively for passenger transport. » Protocol expenses are deductible up to the limit of 2% of the difference between total taxable revenue and total expenses related to taxable revenue. courier services. Driving schools. Exceptions to this rule are vehicles used in the following activities: Intervention. 24 The Romanian Tax Pocket Book 2012 Edition . nurseries. health services supplied for occupational diseases and work accidents prior to admission to health establishments. expenses incurred for benefits granted under a collective labour agreement are also deductible within this limit. except for protocol and profit tax expenses.000 per year. private pension insurance premiums are deductible up to the limit of EUR 400 per year. sports clubs. per person. maintenance and repair of vehicles used by individuals in company leadership and management positions for business purposes are deductible within the limits. clubs. repair.e. » Social expenses are deductible up to 2% of salary expenses.
» Expenses incurred from insurance premiums unrelated to company assets or business. except for those specifically exempted from individual income taxation. » Other salary and/or similar expenses (if not taxed at the level of the individual). » Expenses related to withholding tax supported by Romanian taxpayers on behalf of non-residents. » Expenses recorded without justifying documents. unless they are are subject to personal income tax by the recipient. » Some types of expenses resulting from taxpayers (financial institutions) switching to International Financial Reporting Standards. The Romanian Tax Pocket Book 2012 Edition 24 25 . » Sponsorship and patronage expenses and expenses for private scholarships. Note that revenues from dividends have no corresponding expenses. however. expenses registered from the transfer of the patrimony from the constitutor to the fiduciary. » Interest. » Expenses incurred from fixed assets impairments as well as losses in value defined as provisory adjustments by the accounting regulations transposing European Accounting Directives. other than those related to goods or service provided by the shareholders at market value. among others. save for those regarding goods which are bank collateral on loans used to conduct the activity for which the taxpayer is authorised or those used under rental or leasing contracts. fines and penalties due to Romanian or foreign authorities. » Bad debts expenses in excess of the deductible provision. granted a fiscal credit up to whichever is the lower of 0. » In the case of fiducia agreements. assistance or other supply of services if no contracts or any other lawful agreements are entered into and the beneficiary cannot justify the supply of such services for the activities performed and their necessity. Taxpayers are. the following: » Domestic profit tax and profit tax paid in foreign countries. » Expenses related to benefits granted to employees as equity instruments settled with shares.3% of turnover and 20% of the profit tax due. » Expenses related to non-taxable revenues. if the beneficiary is the fiduciary or a third person. » Expenses in favour of shareholders. » Expenses incurred from management. consultancy.Non-deductible expenses • Expenses which are specifically non-deductible include.
in accordance with the rules issued by the National Commission of Movable Assets. The debtor is a company declared bankrupt by a court ruling. Included in the taxable income of the taxpayer. non-banking financial institutions and other similar entities. The reconstruction of the legal reserve is also non-deductible. » Bad debt provisions are fully tax deductible if all the following conditions are met: Receivables are booked after 1 January 2007. » Reserves from revaluation of fixed assets and land. Due by a person not affiliated with the taxpayer. • However. including: » Setting up or increasing the legal reserve fund to a limit of 5% of the yearly accounting profit before tax (with adjustments) until it reaches 20% of the share capital. provisions and reserves are non-deductible for profit tax purposes. Receivables are not guaranteed by another person. Not guaranteed by another person. made after 1 January 2004. is included in the taxable revenues and taxed accordingly. which are deductible through depreciation or through expenses triggered by assets sold or written off. » Provisions for doubtful debts recorded after 1 January 2006 are deductible up to the limit of 30%. in accordance with their regulatory legal framework except for the equalisation reserve. there are certain provisions and reserves which can be considered deductible. distribution towards shareholders in any form. due to changing the destination of the provision or reserve.e. are taxable at the same time and for the same amount as the tax depreciation deduction. » Specific provisions established by credit institutions. merger or any other reason. spin off. The debtor is not a related party. Not collected for a period exceeding 270 days from the due date. » Technical reserves set up by insurance and reinsurance companies. » The reduction or cancellation of any provision or reserve deducted from the taxable profit.Provisions and reserves • In general. i. when the assets are sold or written off. liquidation. 26 The Romanian Tax Pocket Book 2012 Edition . Receivables were included in the taxable income of the taxpayer. if the related receivables meet the following conditions simultaneously: Booked after 1 January 2004. » Risk provisions for transactions carried out on financial markets.
• If the fair value determined upon the revaluation of the fixed assets drops below the fiscal value (i.e. will now be amortizable. computers and peripherals can be depreciated by using any of the above depreciation methods. Expenses representing the un-depreciated fiscal value of the replaced components are also deductible.Accounting and fiscal depreciation • The Fiscal Code makes an explicit distinction between accounting and fiscal depreciation. the accelerated depreciation method may also be applied to equipment used in research and development activities. • Expenses of all intangible assets recognised for accounting purposes. • Fiscal depreciation should be calculated based on the asset’s fiscal value and useful life for tax purposes. • For fixed assets subject to depreciation / intangible assets where components are replaced. The Romanian Tax Pocket Book 2012 Edition 26 27 . • Technical equipment. with the exception of start-up costs and goodwill. adjusted with accounting re-evaluations) the nondepreciated fiscal value of fixed assets is computed based on the fiscal value. • For any other fixed assets only the straight line or degressive method can be used (except for buildings for which only the straight line method can be applied). production cost. fiscal depreciation is to be calculated based on the rules set out by the Fiscal Code and deductibility no longer depends on the level of depreciation recorded in the accounts. • The calculation of depreciation of fixed assets for tax purposes is based on the fiscal value and may need to be adjusted for revaluations according to accounting rules. • Starting from 2009. • The same applies for revaluation of land should it result in a decrease in value to below the fiscal value. Thus. the un-depreciated fiscal value is recalculated for the normal remaining useful life. For fixed assets. market value of the fixed assets acquired for free or contributed to the share capital. by applying one of the permitted depreciation methods: » (i) straight-line method. the new value recognised for fiscal purposes would be the fiscal value. equal to acquisition cost. » (iii) accelerated depreciation and » (iii) reducing balance method.
Thin capitalisation rule • The deductibility of interest expenses and net foreign exchange losses related to such loans granted for more than one year is further subject to the debt-to-equity ratio test. Both debt and equity are calculated as the average of values existing at the beginning and at the end of the period for which profit tax is calculated. • Underlying foreign corporate income tax is not creditable against Romanian income tax. 28 The Romanian Tax Pocket Book 2012 Edition . expenses incurred from interest charges and net losses from foreign exchange differences on loans with a maturity exceeding one year as debt are fully non-deductible. however. current year earnings and other equity elements.e. Expenses considered non-deductible after applying this rule e may be carried forward to subsequent fiscal years. • Tax credits may be obtained in Romania for taxes paid to a foreign state only if the Double Tax Treaty concluded between Romania and the foreign state applies.Thin capitalisation rules • The deductibility of interest expenses and net foreign exchange losses related to loans is limited as described below. retained earnings. non-banking financial institutions or other entities that grant credit according to the law. reserves. 16%) to the taxable profits obtained abroad. The Romanian company should have available documentation attesting to the taxes being paid abroad. Debt included in the calculation of the debt-to-equity ratio is represented by all such (nonfinancial institution) loans with a maturity period of over one year. and also do not apply to the interest related to bonds traded on a regulatory market: The safe harbour rule • The Fiscal Code limits the deductibility of interest on such loans to a maximum of 6% for loans denominated in foreign currency* and to the National Bank of Romania’s reference interest rate for RON loans. The rate stated above is valid from fiscal year 2010. Foreign fiscal credit • Partial unilateral relief is provided by way of a credit for income taxes paid abroad which cannot exceed the profit tax calculated by applying the Romanian profit rate (i. However. Interest expenses recorded over this limit is tax non-deductible and cannot be carried forward in future periods. such limitations do not apply to interest and forex related to loans contracted from parties which are credit institutions. share / merger premiums. • If the debt-to-equity ratio is higher than 3:1 or if the company’s equity is negative. and only if documentation is available proving that the taxes were paid in the foreign state concerned. except for corporate income tax calculated by foreign permanent establishments or branches. • The equity includes share capital. and become fully tax deductible in the year the debt-to-equity ratio becomes lower than or equal to 3:1. • * This upper limit for interest rates is to be updated by Government Decisions.
carry forward of losses applies only to revenues and expenses attributable to their permanent establishment in Romania. » Holds a minimum of 10% of the shares in the Romanian company for an uninterrupted period of at least two years before the date of the payment • Distributed dividends are also exempt from taxation if they are invested in the same or in another Romanian company’s share capital. taxpayers subject to the minimum tax for part of the year will have to observe specific rules relating to utilisation of such losses. Dividends. to preserve and increase the number of employees and to develop the company’s registered object of activity. The Romanian Tax Pocket Book 2012 Edition 28 29 . income from interest or royalties derived from Romania by companies or permanent establishments of companies from EEA countries are tax exempt if the beneficial owner of the interest or royalties payments holds a minimum of 25% of the value / number of shares in the Romanian company. and only for a period of five years.Fiscal losses • Companies are allowed to carry forward fiscal losses as declared in the yearly profit tax returns for a period of seven years based on a FIFO method. The seven-year period only applies starting with 2009’s tax loss (for tax losses from previous years. Members of a group must file separate tax returns. Any loss incurred by a permanent establishment of a Romanian company located in a non-EU / EFTA member state that does not have a Double Tax Treaty in place with Romania is only deductible for tax purposes from the revenues derived by that permanent establishment abroad. interest. » Pays profit or a similar tax in their state of residency. royalties paid by resident companies to resident companies • Dividend payments by a Romanian company to another Romanian company are subject to 16% dividend tax. for an uninterrupted period of at least two years before the date of the payment. • For foreign legal persons. • Interest and royalty payments by Romanian companies to other Romanian companies are not subject to withholding tax but are taxable income in the hands of the beneficiary with ordinary corporate income tax. Losses incurred by members of a group cannot be offset against profits made by other group members. Consolidation • There is no tax consolidation or group taxation in Romania. • For fiscal losses incurred during 2010. These are non-taxable if the beneficiary holds for at least two years minimum 10% of the shares in the other company at the date the dividends are paid. • Dividends paid by a Romanian company or a company that has its headquarters in Romania to a company or a permanent establishment of a company resident in another EEA country are tax exempt if the non-resident company which benefits from the dividends: » Is set up according to the law. the carry forward period remains five years). • Starting 1 January 2011.
if the constitutor is also the beneficiary: » The transfer of the patrimony from the constitutor to the fiduciary is not considered a taxable transfer. on a quarterly basis. • In the case of a relocation of the registered office of a European Company (“SE”) and European Cooperative Society (“SCE”) from Romania to another EU Member State. in general. As a result. if certain conditions are met there is no tax on the difference between the market value of the transferred assets and liabilities and their fiscal value. creating a permanent establishment.Capital gains • Capital gains obtained by Romanian resident companies are included in ordinary profit and taxed at 16%. 30 The Romanian Tax Pocket Book 2012 Edition . 1. that are not registered in Romania according to the law) are generally subject to Romanian tax on the income derived from Romania. the income and expenses resulted from the administration of the patrimony.3 Taxation of Non-resident Companies • Foreign entities (legal entities but also any foreign entities. or related to. transfers of assets and exchanges of shares between two Romanian companies should not trigger capital gains tax. thus. Capital losses related to sale of shares are. There will also be no tax on such movements at the shareholder level and. and the Romanian company is dissolved as a result of a cross-border reorganisation. • If the beneficiary is the fiduciary or a third party. Romania. » The fiduciary will keep separate bookkeeping entry for the fiduciary patrimony and will communicate to the constitutor. spin-offs. • If a Romanian company has a permanent establishment in another Member State. tax deductible. • Mergers. the expenses recorded from the transfer of the patrimony from the constitutor to the fiduciary is considered non-deductible. Fiducia contracts • Provisions regarding the fiscal treatment applicable to income realised from fiducia contracts entered into force as of 1 October 2011. • A foreign entity can be subject to taxation by establishing a branch. including mutual investment funds in movable assets without legal personality. representative office or by becoming subject to withholding tax on the Romania sourced income. in the case of Romanian shareholders a tax basis step-up may be achieved. • The extent to which a foreign entity is subject to Romanian taxation depends on its activities undertaken in. the Romanian tax authorities will not have the right to tax the former permanent establishment.
• The branch’s object of activity cannot be more extensive than that of the parent company. therefore. Permanent Establishment • A Permanent Establishment is a tax term that means a taxable presence of a non-resident in Romania. however. As with limited liability companies. While registration of a branch in Romania typically implies a Permanent Establishment.000 per fiscal year on representative offices. » Agency Permanent Establishment – created through agents with a dependent status which operate in Romania on behalf of the foreign company. profits are transferred at year-end. is not a separate legal entity (no share capital. • The registration. Once a Permanent Establishment is created. • There is a flat tax of EUR 4. payable in RON using the exchange rate valid on the payment date. no withholding tax liability arises. therefore. • A Representative Office cannot trade in its own name and cannot engage in any commercial activities. etc. by 25 June and by 25 December. directly or through a dependent agent. • Funds distribution to the head office country are not regarded as dividend distribution. fully or partially. The Romanian Tax Pocket Book 2012 Edition 30 31 . separate name. the tax due for that year is pro-rated for the months the Representative Office is operational in that fiscal year. • In situations where a Representative Office is set up or closed down during the year. Representative offices • A Representative Office can only undertake auxiliary or preparatory activities. filing and payment requirements are similar to those for a Romanian company. The registration. • A branch is considered to have the same legal personality as the parent company and. filing and payment requirements are similar to those for a Romanian company. a Permanent Establishment can also be created without an official registration.). • Thus. The tax is payable in two equal instalments. Romania has the right to tax the profits of the foreign enterprise derived from the activity performed in that Permanent Establishment.Branch of a foreign entity • Branches have to be registered with the Romanian Tax Authorities. • The Romanian legislation explicitly states conditions which trigger a Permanent Establishment: » Fixed base Permanent Establishment – created through a place of business with a certain degree of permanency through which business is conducted in Romania (with some exceptions). after the head office approves the branch’s financial statements. a Permanent Establishment is generally defined as being the place through which the activity of a non-resident is conducted.
such as: » Interest » Royalties » Revenues from services performed in Romania » Dividends » Revenues obtained from management and consultancy services. Thus. As a result. dividend and interest income obtained from Romania by EEA registered pension funds is exempt from withholding tax.Withholding tax • Non-resident companies (not operating through a Permanent Establishment) are also subject to tax in Romania on income from sources in Romania. non-residents are required to present the certificate of tax residence and a declaration stating compliance with the necessary requirements provided by the European Directives. dividends paid by Romanian companies to companies resident in one of the EU and EFTA member states are exempt from WHT if the dividend beneficiary has held a minimum of 10% of the shares of the Romanian company for a continuous period of at least two years by the date of dividends payment. for interest and royalties paid by a Romanian company to a company resident in another EU or EFTA Member State. » From 1 January 2010. • There are certain specific provisions and exceptions to the above rates. 32 The Romanian Tax Pocket Book 2012 Edition . • In order to apply European legislation. irrespective of where the services are performed » Commissions » Revenues derived from liquidation of a Romanian legal entity. » Romania has fully implemented the Interest and Royalties Directive from 1 January 2011. an exemption on withholding tax is granted provided that the non-resident company holds at least 25% of the share capital of the Romanian company for a continuous period of at least two years prior to the date of payment of interest / royalties. as follows: » As Romania is an EU member state (1 January 2007). The following types of income are subject to withholding taxes (unless an applicable double tax treaty applies) 16% on other revenues derived from Romania. the provisions of the Parent Subsidiary Directive apply.
However. under certain conditions. • Such income is taxed with corporate income tax. Please find attached appendix 1 including the list of countries with which Romania has Double Tax Treaties. » Income obtained from a partnership constituted in Romania by a non-resident company. • The following income is not taxable in Romania: » Income of mutual investment funds without legal personality from the transfer of value titles owned directly or indirectly in a Romanian legal entity. • Otherwise. the recipient should provide the payer with a valid tax residency certificate prior to payment of the income. Double tax treaties • Withholding tax rates under the Double Tax Treaties concluded between Romania and the country of residence of the payment beneficiary may be applied.Revenue not covered by withholding tax • The following categories of income derived from Romania by non-residents are exempt from withholding tax: » Bonds issued and/or guaranteed by the Romanian government. • Mergers. • In order to avoid withholding at source. domestic withholding taxes apply and a refund can be requested if the tax residence certificate is made available during the five-years following payment. » Revenues from international transportation and accessory services. spin-offs. Capital gains • Capital gains obtained by non-residents from the sale of real estate located in Romania or from the sale of shares held in Romanian companies are taxable in Romania at 16%. The tax residency certificate valid for the year for which the payments are made is also valid during the first 60 days of the following year provided the residency conditions have not changed. and generally should not trigger capital gains tax. transfers of assets and exchanges of shares between a Romanian company and a company resident in another EU Member State are neutral from a tax perspective. The tax residency certificate should stipulate that the foreign beneficiary was tax resident during the year(s) the Romanian income was obtained. Please find attached appendix 2 including withholding tax rates for companies in some representative Double Tax Treaties. » Income obtained on foreign capital markets from the transfer of value titles issued by Romanian residents. The Romanian Tax Pocket Book 2012 Edition 33 32 . » Prizes paid from public funds. the more favourable provisions of the Double Tax Treaty apply in certain conditions.
2. based on generally available information. so as to reflect the market value. • Traditional transfer pricing methods (comparable uncontrolled prices. 34 The Romanian Tax Pocket Book 2012 Edition . • Failure to present the transfer pricing documentation file or presenting an incomplete file following two consecutive requests may trigger estimation of transfer prices by the tax authorities. • The deadline for presenting the transfer pricing documentation file will not exceed three calendar months. as the arithmetic mean of three transactions considered similar. Documentation • Taxpayers engaged in related-party transactions have to prepare and make their transfer pricing documentation file available upon the written request of the Romanian Tax Authorities. The Order is supplemented by the Transfer Pricing Guidelines issued by the OECD Transfer Pricing Guidelines and the Code of Conduct on transfer pricing documentation for associated enterprises in the European Union (EUTDP). • Transactions with Romanian affiliated companies as well as transactions with non-resident related parties fall within the scope of the investigations regarding compliance with transfer pricing legislation. • Domestic legislation expressly stipulates that when applying transfer pricing rules. transactional net margin and profit split methods) may be used for setting transfer prices. as well as any other methods that are in line with the OECD Transfer Pricing Guidelines (i. If transfer prices are not set at arm’s length. cost plus and resale price methods). Transfer Pricing General Principles • Transactions between related parties should observe the arm’s length principle.e. • Transfer pricing audit activity has significantly increased during the past year and requests for presenting the transfer pricing documentation file have started to become common practice. • The content of the transfer pricing documentation file was approved by order of the president of the National Agency for Tax Administration. the Romanian tax authorities also consider the OECD Transfer Pricing Guidelines. the Romanian Tax Authorities have the right to adjust the taxpayer’s revenues or expenses. with the possibility of a single extension equal to the period initially established.
subject to a fee of EUR 1. they can notify the National Agency for Tax Administration within 15 days. In exceptional cases. • If taxpayers do not agree with the content of the APA. The Romanian Tax Pocket Book 2012 Edition 34 35 . The APA is issued for a period of up to five years. it may notify the issuing authority within 15 days. in this case. • The taxpayer may propose the content of the Advance Tax Ruling in the request submitted. Advance Tax Ruling • Companies may request an Advance Tax Ruling be issued by the National Agency for Fiscal Administration. • APAs are applicable and binding on the tax authorities as long as there are no material changes in the critical assumptions. the agreement does not produce any legal effects.Advance Pricing Agreement • Taxpayers engaged in transactions with related parties can request the issuance of an Advance Pricing Agreement (APA) from the National Agency for Tax Administration. the tax ruling does not have legal effect. • Advance Tax Rulings are applicable and mandatory against tax authorities only if their terms and conditions have been observed by the taxpayers. • The term provided by the Fiscal Procedure Code for issuance of an APA is 12 months for unilateral APAs and 18 months for bilateral and multilateral APAs.000. the beneficiaries are obliged to submit an annual report on the compliance with the terms and conditions of the agreement. In this case. In this view. it may be issued for a longer period for long-term agreements. If the taxpayer does not agree with the Advance Tax Ruling.
04% for each day of delay. taxpayers (except those specifically mentioned by law) may opt to declare and pay the annual profit tax by making quarterly advanced payments. are obliged to submit a statement to the tax authorities regarding the tax withheld for each beneficiary by 30 June of the following year. 36 The Romanian Tax Pocket Book 2012 Edition . For fiscal year 2012.e-guvernare. Corporate Tax Compliance 3. • Large and medium size taxpayers have the obligation to submit fiscal forms online.5%. with the exception of salary payers.3. • Newly established companies (e.g. • From 1 January 2013. • Banks and branches of foreign banks in Romania apply the system of anticipated quarterly profit tax payments. The electronic signature of the tax returns can only be made using a qualified certificate issued by a legally-accredited certification services provider. Other categories of taxpayers may use the electronic submitting method as an alternative way of compliance. The decision to take this option has to be transmitted by 31 January of the fiscal year for which the taxpayer wants to apply it and has to be maintained for at least two consecutive years. • The anticipated quarterly payments are calculated as a quarter of the previous year’s profit tax increased by the consumer price index and the payments are due by the twentyfifth of the month following the end of the quarter. without a previous year history) or those which incurred fiscal losses in the previous year make quarterly advance payments at the level of the amount resulted from applying the profit tax rate on the accounting profit of the period for which the anticipated payment is made. using the www. The consumer price index will be published by Order of the Ministry of Finance by 15 April of the year for which the anticipated payments are made.1 General Principles • Taxpayers (except for banks. the consumer price index used to update advance profit tax payments is 3. Starting with 1 July 2010. • The interest rate for late-payment of fiscal liabilities to the State Budget is set at 0. • Non-profit organisations and taxpayers that obtain income mainly from agricultural activities have to declare and pay annual profit tax by 25 February. non-profit organisations. taxpayers deriving most of their income from agriculture) have to declare and pay the quarterly profit tax by the twentyfifth day of the first month following quarters I-III. This declarative obligation refers to tax withheld and paid by Romanian residents for income obtained in Romania by non-residents.ro portal. • Taxpayers required to withhold tax. The annual income tax has to be paid by 25 March of the following year. late-payment penalties also apply (for details see Chapter IV: Tax Procedure Code). • A procedure for assessment by default of tax liabilities subject to self-assessment or withholding is applied for every fiscal obligation in the taxpayer’s fiscal liabilities records. as described in the chapter referring to the taxation of non-residents.
for each fiscal period for which tax returns were not submitted.
3.2 Non-resident Companies
• Non-resident companies deriving income from real estate property located in Romania or
sale of shares held in a Romanian company are obliged to declare and pay the related profit tax. Nonresidents may appoint a tax representative / empowered person to fulfil this requirement. However, if the buyer is a Romanian company or a Romanian permanent establishment of a non-resident company, the obligation to pay and declare the profit tax rests with the buyer.
• For capital gains tax declaration and payment, the Romanian legislation requires the
following tax returns to be submitted:
» Quarterly statements, from the twenty-fifth of the month following the quarter in which
the non-resident first earned capital gains taxable in Romania;
» Annual profit tax return. • The quarterly statements and annual return have to be submitted during the entire period
of time the non-resident is registered with the Romanian tax authorities, even if it no longer carries out transactions generating taxable revenues in Romania.
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4. Investment Incentives 4.1 Tax Incentives for Companies
• Under the Fiscal Code, machinery and equipment, computers and their peripherals, as well as
patents, may be depreciated by using the accelerated method, under which a maximum of 50% of the asset’s fiscal value may be deducted during the first year of usage, while the rest of the asset’s value can be depreciated using the linear method over the remaining useful life.
Special incentives for expenses related to research and development activities
• Companies can benefit from an additional deduction of 20% of the eligible expenses from
research and development activities performed by them. Moreover, accelerated depreciation may be applied for devices and equipment used in research and development activity.
• In order to benefit from this additional deduction, the research and development activities
have to be conducted to obtain results leverageable by the taxpayer for it’s own use.
Dividend tax exemption for reinvestments
• Distributed dividends are exempted from taxation as of 1 January 2009 if they are
invested in the same or in another Romanian company’s share capital.
• To benefit from this exemption, dividends must be reinvested to preserve and increase the
number of employees and to boost existing lines of business.
Reduced VAT rate of 5% for sale of buildings
• Companies selling buildings can apply a reduced VAT rate of 5% in the following cases: » If the buildings are part of a social policy, such as old people’s homes, retirement homes,
orphanages, rehabilitation centres for children with disabilities;
» The building is supplied as housing to an individual / family and has a maximum useful
surface of 120 square metres and a value of less than RON 380,000 (exclusive of VAT).
Local tax exemptions for business located in industrial parks and science technology parks
• No property tax is due for buildings and constructions located in an Industrial Park. Land
within Industrial Parks is also exempt from land tax.
• The incentives granted for the set up and development of industrial parks include: » Lower taxes on tangible assets and land used by the park; » Exemption from taxes on land; » Deferred payment of VAT for materials, equipment and connection to the public utilities
networks during the investment period, until the park is put into operation;
» Development programmes for infrastructure, investments and equipment
endowments granted by local and central public administration, companies and foreign financial assistance;
» Donations, concessions and structural funds for development.
The Romanian Tax Pocket Book 2012 Edition
• The companies operating within the industrial park benefit from: » Various services offered by the park administrator free of charge or with reduced fees; » Advantageous conditions with regard to location, use of the infrastructure and
communications of the park, with payment in instalments.
Tax treatment applicable to micro-companies
• Companies can opt for the micro-company regime if they meet several criteria at the end of
the previous year:
» Derive their income from activities other than banking, capital markets, insurance,
gambling, consultancy and management;
» Have between one and nine employees; » Their annual turnover is lower than the RON equivelent of EUR 100,000; » Their shares are not held by the State, local authorities or a legal entity with move than
• The tax rate applicable to micro-company income is 3%. Payment of the tax and filing of
the returns is made quarterly, by the twenty-fifth of the month following the ending of the quarter for which the tax is calculated.
• The tax assessment base for micro-company income is represented by income derived
from any source.
• The decision to opt to be transfered to this tax regime has to be communicated to the tax
authorities by 31 January of the year for which tax on micro-company income is paid. The option is final for the related fiscal year. If during the fiscal year one of the eligibility conditions is no longer met, the micro-company is required to maintain the same taxation system for that fiscal year, without being able to further benefit from these provisions for the next period, even if subsequently they return to being compliant.
Employment incentives for special categories
• For employment of recent graduates, employers can apply for a monthly grant of 1 - 1.5
(depending on the level of educational background) multiplied with the reference social indicator (currently set at RON 500) for each new graduate of a recognised institution for a period of 12 months. Employers benefiting from this incentive are obliged to keep this employment relationship for a time period of at least three years.
• Moreover, employers may also be exempt for these 12 months from paying the unemployment
contribution due for these graduates. In addition, grants amounting to the social security contributions for two years for recent graduates are available if they are still employed by the company for two additional years after the first three years pass.
• The same incentives apply for the employment of recent graduates with disabilities, except that
the period for which the exemption from contributions to the unemployment fund and the monthly grants apply is extended to 18 months.
The Romanian Tax Pocket Book 2012 Edition
if the main fiscal obligations and 75% of the late-payment penalties. the annulment of 25% of the late-payment penalties related to the main fiscal obligations is granted. when Romania’s preparation for EU accession prompted the alignment of national laws with the EU acquis in the field. However. or for each such person who is the sole family supporter. their implementation has not been efficient until recently. specifically in terms of state aid rules implementation and compliance with EU procedures (especially regarding the obligation to provide notification of certain individual state aid).40% depending on the duration of the rescheduling time-frame. if the main fiscal obligations and related interest are paid or set off by 30 June 2012. 4. » For late-payment penalties calculated for local taxes outstanding at 31 August 2011. Other incentives • The tax authorities introduced during 2011 a series of measures aimed at supporting taxpayers in difficulty due to temporary lack of funds. • Regulations on state aid have been in place in Romania since 1999. » In order to benefit from the rescheduling of the tax payment obligations. the correspondent law firm of PwC in Romania. calculated up to the date of payment. as a consequence of the economic downturn: » Rescheduling of tax payment obligations: » The rescheduling may be granted by the tax authorities to individuals and legal entities upon request. the Competition Council (the national authority previously holding full competence in state aid matters) has transferred all of its state aid clearance powers to the European 40 The Romanian Tax Pocket Book 2012 Edition . This monthly grant is available for a period of 12 months. The time-frame for the rescheduling cannot be longer than five years and is set after taking into consideration the taxpayer’s financial situation and the total tax burden. Employers benefiting from this incentive have the obligation to keep this employment relationship for at least two years. subject to certain conditions and limitations. Given Romania’s accession to the EU. taxpayers must meet certain conditions and also constitute a guarantee which covers the rescheduled liabilities. are paid or set off by 30 June 2012. Nevertheless. which will vary between 10 .2 State Aid* * This section is provided by D&B David si Baias. certain efforts are still to be made. » Possibility of reducing late-payment penalties » Late-payment penalties of fiscal obligations outstanding as at 31 August 2011 are reduced by 50%.• Employers can also apply for exemption from unemployment fund contributions and for a monthly grant equal to the reference social indicator for each unemployed person with an age exceeding 45 years. • Employers running professional training programmes for their employees may apply for a refund of 50% of their expenses for up to 20% of their workforce. interest and also a supplementary percentage of the rescheduled liabilities.
State aid schemes available for large investments • In 2011. state aid schemes / individual aid for investments can be granted for the following objectives: » Acquisition of tangible or intangible assets regarding the setting-up of a new unit. • At the same time.Commission since 1 January 2007. » Commencement of certain research and development projects. • In January 2007. the following types of investment incentives can be granted based on state aid schemes or on individual aid: » Non-refundable amounts for the acquisition of tangible or intangible assets. depending on the particularities of each regulator bill. The Romanian Tax Pocket Book 2012 Edition 40 41 . • A new National State Aid Policy was approved by the Government for the period 2006 – 2013. » Acquisition of fixed assets directly linked to a closed unit or to one that would have been closed. the production diversification or a fundamental change of the production process. » Commencement of projects regarding the use of renewable energy resources. The Competition Council currently has the role of supporting and monitoring the state aid granted in Romania. the European Commission approved the regional aid map for Romania for the period 2007 – 2013. state guarantees). as well as other types of incentives prescribed by the legislation in force (for example. » Financial contributions from the state budget for newly-created jobs. currently underway with the competent central authorities. promoting an extensive focus on the state aid schemes. » Creation of new jobs. environment protection and sustainable development. the extension of an existing unit. Other state aid schemes are now in the pipeline to foster the absorption of Structural Funds available to Romania from 1 January 2007. » Professional training of employees. » Subsidised interest on contracted loans.
» Employment and workforce training. and at least 50 new jobs are created as a result of the initial investment. » IT&C. the latter should contribute to the achievement of one of the following objectives: » Development and regional cohesion. and at least 200 new jobs are created as a result of the initial investment. I. 31/1990).2008 for instituting a state aid scheme for sustainable development (“GD 1680/2008”) applicable to companies which are registered in accordance with the Company Law (Law no. » The value of the initial investment is the RON equivalent amount of between EUR 20 million and EUR 30 million inclusively. » The value of the initial investment is the RON equivalent amount of above EUR 30 million.12. » Energy production and supply.• Moreover. waste management. development and innovation. 1680/10. » Environment protection. are investing in Romania and fall within one of the following categories: » The value of the initial investment is the RON equivalent amount of between EUR 5 million and EUR 10 million inclusively. » Research. and at least 300 new jobs are created as a result of the initial investment. • GD 1680/2008 is not applicable to companies found in one of the following situations: » Are declared “in difficulty” as defined by the European Community Guidelines no. State aid scheme for sustainable economic development • Out of the normative acts which regulate the incentives stated above. » Manufacturing industry. 42 The Romanian Tax Pocket Book 2012 Edition . • The main areas of activity which are eligible for this incentive include: » Agro-industrial processing. 800/2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General block exemption Regulation). » Services related to the workforce. production and use of energy from renewable resources. » Increasing energy efficiency. in order to benefit from state aid for investments made in Romania. we mention Government Decision no. » The value of the initial investment is the RON equivalent amount of between EUR 10 million and EUR 20 million inclusively. » Water supply. sanitation. » Environment protection and rehabilitation. » Encouragement of research and development and innovation processes. and at least 100 new jobs are created as a result of the initial investment.
The annual average budget allocated for this scheme is EUR 200 million.07. 753/16.2008 for constituting a state aid scheme regarding the regional development by encouraging investments (GD 753/2008). perform activities in Romania and have to plan initial investments which fulfil the following criteria: » Are the RON equivalent of above EUR 100 million. fishery. • All domains of activity are eligible for state aid schemes. The Romanian Tax Pocket Book 2012 Edition 43 42 . • In addition to the provisions regarding the initial investment and the number of jobs created. subject to a double cap limitation: » The maximum amount granted as state aid is determined based on a specific ratio called “intensity”. the gross intensity of the regional state aid may not exceed 50% of the eligible costs of the investment or the salary costs for a period of 2 years for the newly hired staff. except the primary production of the agricultural products in annex 1 to the Treaty establishing the European Community. • Also. in accordance with the legislation in force. a large company has to be registered under Romanian Company Law (Law no. • As a rule. II. in order to be eligible. » It provides a substantial reduction of the duration for finalising the project. • In order to benefit from this State aid scheme. The maximum intensity level is computed as a percentage of the eligible expenditures for investment. the maximum intensity of the state aid is 40%. transport. regulated by Government Decision no. 31/1990). have registered offices. and » At least 500 new jobs are created as a result of the initial investment. if this decision has not been executed yet. Moreover. but these also depend on whether the investment is in Bucharest and Ilfov district or in other territories within Romania. • Incentives under this State aid scheme are available in the form of non-reimbursable funds. » It provides a substantial increase of the costs borne by the beneficiary. companies have to prove that the state aid so obtained has a “stimulative effect”. coal industry. the investment should not start prior to the signing of a principle approval with the competent authority. steel industry. and » Eligible costs are higher than EUR 50 million. specific intensity levels are indicated for investments below EUR 50 million and for those exceeding EUR 50 million. maritime ship building and synthetic fibres.» Are subject to a state aid reimbursement decision. » It provides a substantial increase in the area of applicability of the project / planned activity. Scheme for regional development by encouraging investments • This state aid scheme. is issued based on national procedures and state aid policies and follows European Union rules for regional state aid. For the investments or the jobs realised in the Bucharest and Ilfov district. » The project would have not been performed had it not been for the state aid. namely: » It provides a substantial increase in the size of the project / planned activity.
They are intended to be used to support projects which directly address locally identified needs (e. • Companies may benefit from the state aid scheme if they: » Do not have outstanding debts to the State Budget. • GD 753/2008 is not applicable to companies found in one of the following situations: » Are considered companies in difficulty.5 million in any other region). to help train people in new skills. » Contribute at least 25% of the investment costs. the same entity can benefit from up to EUR 30 million for investments in Bucharest and Ilfov district and EUR 37. European Regional Development Fund) and the Cohesion Fund. » Have not been subject to a state aid reimbursement decision. In most cases incentives take the form of development grants. » Keep the initial investment for a certain period of time after finalisation (i. 4. • These funds are designed to reduce regional disparities and to promote economic and social cohesion within the European Union. if this decision has not been execute yet in accordance with the legal provisions in force. established based on the budgeted funds (i. » Have not obtained state aid for the same eligible costs from other state aid suppliers or for other types of regional state aid schemes.e. » Are subject to a state aid reimbursement decision.3 EU Funds • EU membership enables companies to seek financial support through the EU structural and cohesion funds. » Have not been declared “in difficulty” as defined by the European Community Guidelines on state aid for rescuing and restructuring firms in difficulty.» The maximum absolute value. • Eligible expenditures are defined as the higher of: » The investment costs for tangible and intangible assets in the initial investment or » Employment costs estimated for the investment project. in particular to small and medium-sized enterprises.g. or help develop existing businesses). Added to these are the allocations granted out of the complementary funds. five years for large enterprises). as defined by the EU Guidelines regarding state aid for saving and restructuring companies found in difficulty. • Around EUR 20 billion are available for 2007 .e.2013 for Romania under the Structural Funds (European Social Fund. 44 The Romanian Tax Pocket Book 2012 Edition . the European Fund for Agriculture and Rural Development and the European Fisheries Fund. A range of investment incentives are available to qualified applicants active in different economic sectors.
equipment.8 bln. • For companies. With payments of RON 4. etc necessary for R&D activity is financed. » Information and Communication Technology (ITC): Financial support is directed towards ICT applications and their interoperability. respectively RON 3. has a budget of EUR 3.• The implementation of these European funds is usually done by programmes which set allocation priorities and give information about the type of projects financed. The Romanian Tax Pocket Book 2012 Edition 44 45 . computers. according to data published by the Authority for the Coordination of Structural Instruments. POS CCE • POS CCE is managed by the Ministry of Economy.). » Research and development: Companies could get EU funds for industrial research and precompetitive development activities that generate results of economic interest and support the transformation of the research results into new or improved products.08%. In terms of real absorbtion. • The main types of investments funded are: » Productive capacity: The target beneficiaries are existing enterprises especially from the processing industry and construction sector that need to modernise and develop their products and technological processes. this is situated at 5. which translates into an internal absorbtion rate of 15.6 billion (approximately EUR 3 billion. software. support is provided for the development of the research capacities in enterprises. adoption of integrated solutions for companies leading to long-term cost-cutting thus facilitating the access to internal and international market and sustaining more efficient management processes.011 billion and it’s main objective is to increase Romanian companies’ productivity. Applicants for EU grants need to identify the programmes which would best fit their projects. Commerce and Business Environment. calculated as payments actually reimbursed by the EC. In order to raise their level of innovation and their market competitiveness and to create new R&D jobs. observing at the same time the increased security of the electronic networks and the adoption of anti-fraud solutions in order to develop a secure and dynamic e-Business sector. Different forms of collaboration between enterprises and R&D institutions are encouraged with the aim of enhancing their R&D activities and fostering the technology transfer. • At the end of 2011. POR and POSDRU have the highest absorption degrees. the most relevant operational programmes are: » The Sectoral Operational Programme “Increase of Economic Competitiveness” (POS CCE) » The Regional Operational Programme (POR) » The Sectoral Operational Programme “Human Resources Development” (POS DRU) » The “National Programme for Rural Development” (PNDR).4 bln. The procurement of instruments.55% pf the total allocated abounts for 2007-2013. the total of the amounts paid to beneficiaries was approximately RON 13. technologies and services with high demand on the market.
including better health and safety at work and diversity of contractual and working arrangements.minind. Commerce and Business Environment: http://amposcce. For details. One priority of the Operational Programme is to promote entrepreneurial culture. • Projects financed by POR aim. flexibility and adaptability by supporting skilled. the sustainable development of the support structures of businesses of regional importance. The actions also cover support for enterprises on specific training. access the website of the POR Management Authority of the Ministry of Regional Development and Tourism: http://www. has a total budget of approximately EUR 4. Support standards’ implementation. access the website of the POS CCE Management Authority of the Ministry of Economy.4 billion and it’s main objective is to reduce disparities of economic and social development between more developed and undeveloped regions. Support for consultancy granted to small and medium enterprises.ro POR • POR is managed by the Ministry of Regional Development and Tourism. rehabilitation of unused polluted industrial sites and preparation for new activities. amongst others. Support for integrating companies in supply chains or clusters.065. innovative forms of work organisation. For details.ro/ POS DRU • POS DRU is managed by the Ministry of Labour. by linking education and lifelong learning with the labour market. the growth. Investments in installations to reduce industrial users’ energy consumption and investments in upgrading and building new power and heating production capacities by valorisation of renewable energy sources are also eligible for financing. with a focus on new technologies and organisational improvement.089 billion EUR. • According to the proposed indicative calendar of the POS CCE operations launches. The programme supports individuals in creating new business. 46 The Romanian Tax Pocket Book 2012 Edition . in 2012 are available. the following financing schemes for: Finanancial support of up to RON 1. and modernising of the tourism infrastructure for the exploitation of natural resources and the improvement of touristic services. with a view to improving quality and productivity at work. based on energy balance. among others. with a budget of 4. and has the objective of developing human capital and increasing employee competitiveness. Research projects in partnerships between universities / research institutions and companies.inforegio. by improving the infrastructure conditions and the business environment. development.000 granted for investments in small and medium enterprises. Family and Social Security. trained and adaptable labour force.» Energy: The Programme also finances projects aimed at improving end-user energy efficiency and promotes specific types of investments in installations / equipment of industrial operators in order to achieve energy savings.
for new buildings and/or the modernisation of existent agricultural buildings as part of the holding.ro/ PNDR • PPNDR is managed by the Ministry of Agriculture and Rural Development. as well as the connected utilities. which will be able to request financing for employee qualifying / re-qualifying projects.022 billion and supports the restructuring and modernising of the processing and marketing of agricultural and forestry products. both in the vegetable and animal breeding sectors. has a budget of EUR 8. opportunities for companies target accredited suppliers of continuous professional training.ro The Romanian Tax Pocket Book 2012 Edition 46 47 . For details. Family and Social Security: http://www. while observing the principles of sustainable development.• According to the proposed indicative calendar of request launches for proposed projects in 2011. the acquisition of new equipment and machines and the setting-up of plantations is also a Programme priority. access the website of the Payment Agency for Rural Development and Fishing: http://www.apdrp. Promoting the investments in agricultural holdings. access the website of the POS DRU Management Authority of the Ministry of Labour.fseromania. For details.
It also promotes the increased use of renewable energies and energy efficiency. EU grants. 48 The Romanian Tax Pocket Book 2012 Edition . provides better access to finance and delivers business support services in the regions. food. we can offer you far-reaching analyses and knowledge of existing financing opportunities as well as important support with the application preparation and project implementation. transport and aeronautics. from collaborative projects and networks to the coordination of research programmes. tax relief. socioeconomic sciences and the humanities. space and security.Other important European Funds LIFE+ 2007 . to the development and optimisation of methods for monitoring and managing environmental impact. It encourages a better take-up and use of information and communications technologies (ICT) and helps to develop the information society. The Programme focuses on nine thematic areas: health. environment and climate change. and other forms of state aid and non-reimbursable funds. nanotechnologies. PwC can offer comprehensive advisory services related to investment incentives. Seventh Framework Programme for research and technological development (FP7) • This programme is the European Union’s main instrument for funding research over the period 2007 to 2013. energy. information and communication technologies. With small and medium-sized enterprises as its main target. Competitiveness and Innovation Framework Programme (CIP) • The programme aims to encourage competitiveness in European enterprises.2013 • The programme aims to reduce the impact of goods and services on the environment. nano-sciences. the programme supports innovation activities (including eco-innovation). This advice and support is available to both new multinational investors and to established Romanian companies. Support is given to the whole range of research activities carried out in transnational cooperation. agriculture and biotechnology. Thanks to our many years of experience and the broad network of contacts at our disposal. materials and new production technologies. Projects may cover an extremely broad area ranging from the demonstration of innovative clean technologies in various types of industry and other economic sectors.
As a general rule. the building tax rate is set by the Local Council at between 0.5% of the entry value of the building. Building tax • For buildings owned by individuals. in equal instalments. a reduction of up to 10% may be granted to individuals by the Local Council. licensing. to owners which have performed energy rehabilitation work on their apartments or buildings at their own expense. • The tax rate due for buildings with touristic destination which do not operate during the calendar year is a minimum of 5% of the inventory value of the building. tax on revenues from public performances. • Exemptions from building tax can also be granted for a period of five consecutive years for owners performing architectural improvement work on their buildings. land tax. if the case. etc. tax on means of promotion and advertising. • For buildings owned by companies. Various adjustments to the taxable base are provided for dwellings. • Local Councils can increase tax rates by up to 20% per year over the statutory cap (except for the subcategory of tax for large. certifications. by 31 March and 30 September.1% and is levied on the taxable value of the building. Local Taxes and Other Taxes Local taxes • Local taxes include building tax. The Romanian Tax Pocket Book 2012 Edition 48 49 . » between 30% and 40% for buildings not revaluated within the last five years. modification and extension works and the revaluation. authorisations issuance taxes. • If a building has not been revaluated the tax rate will be set as follows: » between 10% and 20% for buildings not revaluated within the last three years. hotel occupancy tax.5. • The Local Council may grant an exemption from or reduction of the building tax. registration. determined depending on the structure. consolidation. The tax increases depending on the number of buildings owned.25% and 1. • The taxable value of fully depreciated buildings is reduced by 15%. heavy load transporter vehicles). adjusted with the value of reconstruction. • Building tax is paid twice a year. zoning and locality rankings. older buildings. if the building tax due for the entire year is paid in advance by 31 March. tax on means of transport. modernisation. over a period of a minimum of seven years. the tax rate is 0.
in equal instalments. 50 The Romanian Tax Pocket Book 2012 Edition . depending on the rank of the locality where the land is located and the area and/or category of land use. land tax is paid twice a year. legal persons’ contributions for disabled unemployed people. local taxes related to the fiduciary patrimony are paid by the fiduciary. Health tax • Providers of advertising services for tobacco products and alcohol pay a 12% health tax. A tax reduction of up to 10% is granted to individuals for full advance payment of this tax by 31 March. in accordance with the classification made by the Local Council. gambling tax. • Companies are not subject to land tax on land where buildings are sited. wine. other fermented drinks and intermediate products. other than beer. • Similar to building tax.000 » Pieces tobacco: EUR 13/kg. • A health tax is also due by producers and importers of tobacco products. Other taxes • Other taxes include health tax.Land tax • Owners of land are subject to land tax established at a fixed amount per square metre. The tax is applied to the value of cashed advertising revenues. • In the case of fiducia contracts concluded by individuals and legal persons. by 31 March and 30 September. as follows: » Cigarettes: EUR 10/1. are also liable to pay a health tax of EUR 200/hectolitre of alcohol or EUR 2/litre of pure alcohol. • Producers and importers of alcoholic drinks.000 pieces » Cigars: EUR 10/1. etc.
including the value of that particular transaction or during the previous calendar year. Intra-community trade • A delivery of goods which are transported from Romania to another EU member state represents an intra-community delivery which is VAT exempt under certain conditions. These will be subject to VAT taxation in the destination Member State if the total value of the distance sales made by the supplier exceeds a threshold established by the destination Member State (in Romania this threshold is EUR 35. meaning it has sufficient technical and human resources in Romania to perform taxable supplies of goods and services. • A taxable person is considered to be established from a VAT point of view where its centre of economic activity lies. intra-community acquisitions of goods and operations deemed as intra-community acquisitions of goods are also within the scope of VAT. • Special regimes apply for transactions with new means of transport. • The place of supply for goods and services (and therefore the place of VAT taxation) is determined based on the same territoriality rules as those presented in the EU 112/2006 and EU 2008/8 Directives.Chapter III: Indirect Taxes 1. excisable products and for distance sales. for non-residents the main criteria is the existence of a fixed establishment.000) during the year in which a particular distance transaction takes place. these are subject to VAT under the reverse charge mechanism. The Romanian Tax Pocket Book 2012 Edition 50 51 . Value Added Tax (VAT) General Principles • Operations fall within the scope of VAT if: » They represent a supply of goods / services in return for a consideration » The deemed place of supply is in Romania » They are performed by taxable persons » They result from economic activities. individuals. in the case ofintra-community acquisitions in Romania. meaning where essential managerial decisions are taken and where central administration functions are performed. • Persons not registered for VAT purposes in Romania (e. In addition. public institutions) and which perform an intra-community purchase of new transportation vehicles have to submit a special VAT return and pay the VAT before registering these vehicles in Romania. • The sale of goods delivered to non-taxable persons established in other EU Member States represents distance sales if the transport of the goods is supported by the seller.g. • The import of goods.
has a fixed establishment. 52 The Romanian Tax Pocket Book 2012 Edition . irrespective of its form) forming an independent autonomous business unit capable of carrying out an economic activity independently is not considered supply of goods if the beneficiary is a taxable person. transfer of a going concern. the beneficiary is regarded as the assignor’s successor for purposes of adjustment of the VAT deduction right. packing. the place of taxation is the place where the beneficiary has established its business place. Transfer of business does not fall within the scope of VAT • Any type of partial or total transfer of assets (i. pay the VAT due on imports of goods into Romania based on an import declaration for VAT and excise duties. no longer than six months after the date of first entry into service or has not travelled more than 6. In addition.e. as well as any non-taxable legal person registered for VAT purposes. • The taxable amount for VAT purposes for imported goods is the customs value. excise duties (if any) and ancillary expenses.e. for obtaining the VAT deferment certificate is RON 100 million in the last 12 consecutive months or in the previous calendar year. to which is added customs duties. transport and insurance costs occurring subsequent to the entry of goods into Romania until their first destination. any private individual who performs an intra-community supply of a new means of transport (i. The ceiling regarding the minimum value of imports. Services provided by offshore entities • For services provided by taxable persons to other taxable persons. For these. irrespective of the purpose or result of those activities. but shown in the VAT return as both input and output VAT. except for taxable persons registered for VAT purposes that obtain an import VAT deferment certificate from the customs authorities. • A taxable person with its main business place outside Romania has a fixed establishment in Romania if it has sufficient technical and human resources to perform taxable deliveries of goods and/or services on a regular basis. domicile or habitual residence. • A taxable person is considered to be established in Romania if it has established its main business place in Romania or has a fixed establishment in Romania. such as commissions. • Importers holding a single customs authorisation for simplified customs procedures issued in another Member State or importing goods into Romania for which they do not have the obligation to submit custom declarations. • VAT exemptions for imported goods can be applied to any goods which are VAT-exempt in the case of intra-community deliveries to Romania.Import of goods • VAT on imported goods continues to be paid in customs until 31 December 2012.000 kilometres) or a person who sells real-estate property (as a continuous economic activity) is also deemed a taxable person. Taxable person established in Romania • A taxable person is any person conducting economic activities anywhere in an independent manner. • In addition. the VAT is not paid in customs.
and the owner from the other Member State will not have the obligation to register for VAT purposes in Romania. VAT Consolidation • Under specific conditions. public institutions. • There are also some exceptions from the basic rules. » Special VAT registration of Romanian companies for intra-community acquisitions (e. • For certain services such as: ancillary transport services. when provided to a beneficiary taxable person outside the EU. if after the processing: » Waste is generated (recoverable or not) which does not leave the territory of Romania / the other Member State. » Direct VAT registration of taxable persons resident in the EU. local transport of goods. the place of taxation will be determined according to specific rules (eg. VAT Registration • Taxable persons wanting to register for VAT purposes can opt for one of the following: » Standard VAT registration of companies established in Romania. it is possible for certain companies to form a fiscal group for VAT purposes. • Taxable persons established in Romania which receive / send tangible goods to be processed from / to another Member State do not have the obligation to report the transactions. the place of effective use and enjoyment of services will be taken into account in determining the place where the VAT is due. as well as for sales or rentals of immovable property (if they opt for taxation).• For services provided by taxable persons to non-taxable persons. » The goods are destroyed or if the resulted products are qualitatively degraded or do not meet quality standards imposed by the beneficiary are destroyed on the territory of Romania / the other Member State by the owner’s request. • Taxable persons not established nor VAT registered in Romania will be able to apply for VAT registration for import of goods. However. For these services. intra-community acquisition of goods. • A Romanian company may be required to register for VAT purposes in a number of other EU Member States where it performs certain operations (e. the place of the effective provision of services in the case of catering services).g. the place of taxation will be the place where the provider has established its business place. the place where the means of transport is put at the client’s disposal for short-term renting. has a fixed establishment. transactions between company group members will continue to be subject to VAT. domicile or the habitual residence from where the services are provided. the place where the immoveable assets are located in the case of services related to immovable assets. work / valuations of movable tangible goods. holding a stock of goods). insurance companies). » VAT registration of taxable persons established / non-established in the EU through appointment of a VAT Fiscal Representative.g. The Romanian Tax Pocket Book 2012 Edition 53 52 .
• The chargeability for ICS occurs on the date when the supply of goods is made or when the invoice is issued. to which taxes and other incidental expenses are added. Such expenses could be: commissions. insurance costs. » it did not report acquisitions or deliveries of goods / services in the VAT returns submitted during a semester. draws. requested by the suppliers. » administrators / shareholders have certain offences listed in the tax offence record. but no later than the fifteenth of the month following that when the ICS is performed. discounts and other price reductions. packaging costs. VAT registration threshold for taxable persons established in Romania • The annual turnover threshold for VAT registration is the RON equivalent of EUR 35. 54 The Romanian Tax Pocket Book 2012 Edition . revenues derived from VAT exempt without deductions right operations are also taken into consideration. VAT chargeability • VAT chargeability occurs on the date of the supply of goods / services. the amounts of damages determined by a court of law. transportation costs. • Not included in the VAT tax base: rebates. Taxable amount • The VAT tax base includes every amount that represents trade-offs obtained from the supplier.• The tax authorities may cancel ex officio a taxpayer’s VAT registration.000. » it did not submit any VAT returns during a semester.000 threshold can request to be removed from the VAT registered persons record between the first an 10th day of each month following the fiscal period used (month or quarter). or interests for late payments. • When calculating the turnover. if the taxpayer is in one of the following situations: » it is declared inactive or it has entered into a temporary inactivity. • A taxable person registered for VAT purposes which during the course of 2011 calendar year does not exceed the EUR 35.
if performed by licensed entities. orphanages. accommodation in hotels or in areas with a similar function. admission fees at museums. rehabilitation centres for children with disabilities. • The ulterior delivery of vehicles for which the right to deduct the tax afferent to the acquisition The Romanian Tax Pocket Book 2012 Edition 54 55 . including imports. Reduced rates • The reduced VAT rate of 9% and is levied on medicines for human and veterinarian use.g. newspapers and periodicals. The rate is levied for all supplies of goods and services. a VAT warehouse and related services » Supply of goods. which are placed under suspensive customs regimes » Supply of services in connection with goods placed under customs suspensive regimes » Supply of goods and services to diplomatic missions. deduction right) for input VAT: » The supply of goods shipped or transported outside the EU transport and related services » Intra-community supply of goods » International transport of passengers » Goods placed in free trade zones and free warehouses » Supply of goods to a bonded warehouse. as provisioned before. finance and insurance. supply of school manuals. managing and depositing certain equity papers). books. zoos and botanical gardens. subject to certain conditions. • The reduced VAT rate of 5% applies to housing delivered as part of welfare policy. the reduced VAT rates (5% and 9%) remain unchanged and apply for deliveries of goods or services. supply of prostheses and orthopaedic products. welfare and educational activities. retirement homes.e. Exemption without credit • VAT exemption without credit applies to a range of activities including banking. international organisations and » NATO forces. • The VAT exemption without credit also applies for medical. therefore. At the same time. However. historical monuments. factoring. Homes with no more than 120 square metres and a value of maximum RON 380. which do not qualify for an exemption (with or without credit) or for VAT reduced rate. cinema tickets. some financial services are also subject to 24% VAT (e. fairs and exhibitions. VAT exemptions Exemption with credit • There are also operations that are exempt with credit (i. including buildings and parts thereof supplied as housing.Tax rates Standard rate • As from 1 July 2010 the standard VAT rate is 24%.000 also qualify for the reduced 5% VAT rate. including: old people’s homes. debt collection.
subject to pro-rata. excluding the tax. as numerator. • The VAT wrongly stated on an invoice cannot be deducted by the beneficiary if the transaction for which the invoice was issued is exempt from VAT without credit. if these are destined to be used for generating taxable revenues. Included are also amounts received from the state or local budgets. excluding the value of the land.has been subject to total limitation is performed under the VAT exemption regime. exclusive of VAT. • However. the option to tax these operations is available. ulterior to transformation. in cases when the cost of the transformation.fully deductible directly » Attributable to exempt transactions . • Companies with a single customs authorisation for simplified customs procedures issued in another Member State or that import goods into Romania for which they do not have the obligation to submit custom declarations. VAT payers with mixed regime • If a taxable person registered for VAT purposes performs both taxable and exempt operations without deduction right. the ‘input VAT’ can be recovered according to the following criteria: » Directly attributable to VAT-able transactions . and » The total amount. • The delivery of non-constructible land plots are also VAT exempt without credit. exclusive of VAT. can deduct the VAT due on imports of goods based on an import declaration for VAT and excise duties. • The VAT deduction right can also be based on electronically issued invoices. VAT deduction • Any taxable person has the right to deduct the VAT related to acquisitions. is up to at least 50% of the market value of the construction or part of the construction. as well as the supply of old buildings are VAT exempt without credit. of the operations included under point a) and supplies of goods and services which do not qualify for the right to deduct. The option is exercised by submitting a written notification to the relevant tax office. A new building includes any transformed construction or transformed part of a construction. of the goods and services supplied which qualify for the right to deduct. within a maximum period of five years. • Rental and leasing operations involving immovable goods. as denominator. • Input VAT related to expenses incurred from set-up transactions can be retroactively deducted when all requirements for VAT deductibility are fulfilled.fully non-deductible related to both » VAT-able and exempt transactions . 56 The Romanian Tax Pocket Book 2012 Edition . • The delivery of a building refers to a delivery made by 31 December of the year following that in which the first occupation or use of the building took place. as it is set by an expert’s report. including subventions directly related to price. • The pro-rata is determined as a ratio between: » The total amount.
granted for the financing of exempt operations without deductibility rights or operations outside the scope of VAT. or if the case. weighing under 3. input VAT incurred on their acquisition will no longer need to be adjusted. for the same capital goods. The Romanian Tax Pocket Book 2012 Edition 56 57 . as is VAT related to the purchase of alcoholic beverages and cigarettes. will not be subject to adjustment. • The deductibility of VAT related to expenses incurred in the purchasing of vehicles exclusively used for passenger transport. • Assets whose normal useful life is less than five years will no longer be considered capital goods and. in proportion to the remaining period of the depreciation. financial or operational leasing. • The pro-rata does not include the value of sales of capital goods. Goods / services acquired before 30 September 2011 by taxable persons who require. each time such events take place. Non-deductible input VAT • VAT related to goods and services that are not purchased for business purposes is nondeductible.1% to 5%). or the value of other operations performed on an occasional basis (e. and vehicles used for commercial purposes or meant to be re-sold.g. VAT deduction for capital goods • Changing the original destination of capital goods (e. as well as the purchased fuel: vehicles used for rendering paid services. • Excepted are some categories of vehicles. rental of immovable goods). The adjustments will be carried out on a continuous basis during the adjustment period. to be removed from the VAT registered persons record. except for the purchases of goods performed during enforcement proceedings. from 4.500 kg and with fewer than 9 passenger seats (including the driver’s seat) and fuel is limited to 50%. therefore. a fixed asset or movable goods).g. Adjusting of the deductible VAT for services and goods (other than capital goods) • Taxpayers whose registration for VAT purposes has been cancelled will adjust the VAT related to tangible fixed assets for the value which remained un-depreciated. during 2012. • Beneficiaries who purchase goods and/or services from taxpayers declared inactive by the tax authorities (while they are inactive) will not have the right to deduct the input VAT on those purchases. delivered from 1 January 2012. • The limitation to deduct only 50% of the VAT also applies to down-payments made before 1 January 2012 for the partial counter value of road vehicles. leasing. by using this asset for operations entitled to deduction in a different proportion than that originally established entails the adjustment of the deductible right during the fiscal period in which it occurs. including renting activities.g. The pro-rata is rounded up to the next unit in favour of the tax able person (e.
VAT compliance Fiscal period • As a general rule. 58 The Romanian Tax Pocket Book 2012 Edition . the beneficiaries will have the obligation to pay the VAT by applying the reverse-charge mechanism. • Simplification measures also apply for the transfer of greenhouse gas emission certificates. • For those taxpayers whose fiscal period is the calendar quarter. The supply-related VAT must be reported in the month in which the delivery takes place. which have a deemed place of supply in Romania. corn. sunflower and sugar beet. barley. the signing and stamping of invoices is no longer mandatory. rapeseed. Operations record • Taxable persons must keep complete and detailed records for calculation of VAT liabilities. VAT is not actually paid. • The invoice must contain the minimum amount of information required by the law and EU Directive 112/2006. soybeans. Invoicing • Invoices for the internal supply of goods and services must be issued no later that the fifteenth of the month following that in which the supply of goods or services occurs. for transactions with such certificates between taxable persons registered for VAT in Romania. • The reverse charge mechanism applies for the following specific categories of products: wheat. rye.000 the fiscal period is the calendar quarter. spelt. the VAT is due by the same date. • VAT returns should be submitted to the tax authorities by the twenty-fifth of the month following the end of the fiscal period. The VAT return should be submitted using an electronic carrier (CD). and to issue and store invoices electronically. • Taxable persons not registered for VAT purposes are required to pay VAT and to submit a special VAT return on services rendered by non-residents.Simplification measures • For sale-purchase transactions between taxable persons registered for VAT purposes in Romania that involve waste materials or wood materials. These obligations must be fulfilled by the twenty-fifth of the month following that when the services are supplied. the fiscal period becomes the calendar month if they perform during the previous calendar year a taxable intracommunity acquisition in Romania. Consequently. the fiscal period is the calendar month. From a VAT perspective. For taxable persons registered for VAT purposes whose previous year-end turnover did not exceed EUR 100. The measure applies until 31 May 2013. but only shown by the purchaser in the VAT return as both output and input tax. • Taxable persons are also allowed to issue summary invoices or invoices on behalf of the supplier.
have the obligation to electronically submit the VAT statement and recapitulative statement. The Romanian Tax Pocket Book 2012 Edition 58 59 . medium risk situations by a document analysis and high-risk situations by an anticipated fiscal inspection. taxable persons and legal non-taxable persons. by the twenty-fifth of the month following the period for which the reporting is made (i. The signing is realised by using a qualified certificate issued by a certification service provider.e. • If the VAT is not reimbursed within the legal term (i. Correcting documents • If a taxable person erroneously issued an invoice. without mentioning the VAT amount. must register in the „Registry of Intra-Community Operators”. Thus. month. otherwise their VAT registration number will not be considered valid for intra-community operations. VAT refund • If a company is in a VAT refundable position. while the beneficiaries may exercise their right to deduct in accordance with legal provisions. and subsequent to a fiscal inspection the authorities have set additional VAT payment obligations. based on the existence of invoices. • For the intra-community trade of goods.• The recapitulative statement is submitted monthly. allows for the electronic submission of the forms. • Taxable persons are required to file statements for taxable acquisitions / supplies of goods and services performed on Romanian territory. • Large and medium size taxpayers. Other obligations • Starting with 1 August 2010. who undertake intra-community goods and services trading activities. The statements have to be submitted together with the VAT return.04% per day of delay. quarter or year). The refund claims must be processed by the tax office within 45 days of being submitted. medium. • Refundable VAT returns with negative amounts will be settled only after the tax authorities classify the taxpayer in one of the fiscal risk categories (low. as well as their secondary headquarters. with some exceptions. the balance can be carried forward against VAT liabilities reported in future returns. for all intra-community taxable operations made with taxable persons established in other Member States. high). The forms will be submitted via the electronic portal set up by the National Agency for Fiscal Administration and will be signed using a certified digital certificate issued by an accredited certification service provider. it must tick the VAT refund box on the VAT return to claim the refund. VAT returns with a small fiscal risk will be settled by issuing a refund decision. Alternatively. taxable persons also submit the Intrastat form. 45 days). not later than the fifteenth day of the month following that in which the intra-community supply / acquisition of goods or services has occurred. the taxable person can recover the VAT from the beneficiaries by issuing a corrective invoice. taxable persons are entitled to claim interest currently set at 0.e. • The new VAT refund procedure for VAT paid in other Member States by taxable persons established in Romania for imports and acquisitions of goods or services. for the supply of goods or services.
• The customs authorities may inspect the customs value either during the customs clearance or during a post-import audit (the customs authorities are entitled to perform such an audit during a five-year period following the date of import). based on the price in any of the transactions in the chain (“first sale principle”). 60 The Romanian Tax Pocket Book 2012 Edition . the customs value may be determined. royalties) or are missing. 2. determining customs value upon import is possible. based on the price of the first transaction in the chain). • The settlement period is four months starting from the date when the request is received by the Romanian authorities. • The requests will be transmitted to the Member State in which the solicitor is registered. • It is also possible to amend or invalidate the customs declaration. in specific cases (e.g. » Amendment after the customs clearance is obtained can be performed at the request of the traders within five years of the customs clearance date. this is currently the case for Switzerland and Turkey. the customs value can be determined based on a price lower than that paid / payable by the importer (e. • The customs value can be modified within 12 months of the acceptance of the customs declaration for the release of the goods for free circulation. This way. Customs and International Trade Customs value • The customs value is determined and declared by importers in accordance with the provisions of the WTO Customs Valuation Agreement (i. • For chain transactions with goods intended for import. as follows: » Amendment of the customs declaration before the customs clearance is obtained. » Invalidation of the customs declaration within 90 days of the customs clearance being obtained.e.g. • Taxable persons established outside the EU also have the right to claim a VAT refund from Romania. with an option to be extended if the fiscal authorities request further information. • Under specific conditions. based on the reciprocity agreements signed by Romania.g. no later than 30 September of the year following the reimbursement period. licence fees. in the case of defective goods). under certain conditions. even if certain elements that need to be added to the customs value are not quantifiable on the importation date (e. the Agreement pertaining to the implementation of Article VII of the GATT Agreement).VAT refund to taxable persons established in the EU / outside the EU • Taxable persons not registered and which do not have the obligation to register for VAT purposes in Romania may request a VAT refund from Romania based on the refund request transmitted electronically to the authorities from the Member State where they are registered.
legal entities established in non-EU states can occasionally declare goods on their own through direct representation provided that the customs authorities consider this to be justified. for a sole person. • A similar type of ruling can also be obtained regarding the origin of goods. using the simplified customs clearance procedures.e. specific taxes).e. Amendments regarding simplified customs clearance procedures • Customs brokers can be authorised to use the local customs clearance procedure or to submit simplified customs declarations for the companies they represent (either directly or indirectly). • Moreover.24) are subject to specific taxation. meat) where the customs duty rate is established with regard to the CIF or the entry price of the products. There are cases (e.Customs duties • The customs duties are those specified in the EU Common Customs Tariff. Customs representation • Legal entities established in non-EU states can declare goods by indirect representation. products from chapters 1 .g. Any legal person established in the EU can act as an indirect representative. In other cases.e. • Moreover. • Legal entities established in the EU may declare goods on their own as well as by assigning a direct or indirect representative. giving comfort as regards observance of the safety and security standards. for sugar (AD S/Z) and for flour (AD F/M). or as a fixed amount applied to a specific quantity (i. Customs duties are expressed as a percentage applied to the customs value (i. The BOI is valid for a three-year period. ad valorem taxes). the customs duty rate is established by adding to the ad valorem tax additional duties such as agricultural components (EA). whenever goods identical to those described in the BTI are imported. The Romanian Tax Pocket Book 2012 Edition 60 61 . Authorised Economic Operator • Operators that obtain Authorised Economic Operator status benefit from simplifications regarding customs inspection. • Agricultural products (i. Binding Tariff Information (BTI) / Binding Origin Information (BOI) • Companies can obtain rulings from the Romanian customs authorities on the tariff classification of imported goods that are binding for the customs authorities for a six-year period. through the AEO certificate the holder is recognised by the customs authorities as a reliable person. obtaining customs authorisations and performing customs formalities.
Free warehouse (FWH) • Non-EU goods may be stored for an unlimited period of time in a FWH. Outward Processing Relief (OPR) • The OPR customs regime allows the exported raw materials to be processed outside the EU and the resulting end products re-imported with partial or full customs duty relief. • EU agricultural products intended for export can also be stored in a BWH before leaving Community territory. If the goods are subsequently released for free circulation in the EU. Total relief means no payment is requested by the customs authorities in connection with the customs import duties. Processing covers the full assemblage and manufacturing process. importers can opt either for a duty suspension system (no payment is due for the import duties) or for a duty drawback system (the import duties are to be paid upon the import of raw materials. Partial relief means the customs authorities levy a monthly portion of 3% of the customs duty and the importer should provide a bond for the balance. However. a guarantee is required to secure payment of the import debt. Moreover. no guarantee is required to secure payment of the import debt and the customs formalities have been simplified. components or accessories are imported into the EU (including Romania) for processing and the end products are subsequently re-exported out of the EU. This regime also applies for goods or equipment sent for repair and/or modernisation. 62 The Romanian Tax Pocket Book 2012 Edition . Goods owned by foreign entities and goods initially purchased by the Romanian titleholder of the BWH authorisation can be placed under BWH customs regime. • Under this regime. Bonded Warehouse (BWH) • The BWH customs regime allows the temporary suspension of payment of import duties on non-EU goods stored in warehouses until they are taken out of the warehouse. customs duty relief is available through IPR. if applicable. Temporary Admission (TA) • Goods that are introduced into Romania for temporary use and subsequently returned to the non-EU owner are granted total or partial relief from customs import duties. there are a few cases where exoneration from guaranteeing the import debt can be granted by the customs authorities. If the compensatory products are released for free circulation in the EU. compensatory interest is due.Temporary import duty relief Inward Processing Relief (IPR) • If raw materials. VAT and excise duties. such as for goods placed under the IPR regime. However. but they can be reimbursed upon export of the end products). compensatory interest is dvue. Security required for suspensive / economic customs regimes • Suspensive / economic customs regimes require a guarantee to be lodged for the import debt that might arise. with payment of the customs duties being suspended.
diesel oil. taken out of an excise duty suspension regime). Excise duty suspension arrangements • Excisable products can be produced. imported into Romania. Chargeability • Excise duties are due when excise goods are released for consumption (e. import / export licences from relevant authorities are also required for commodities regarded as potentially hazardous to human health or to the environment (such as some chemical products. transformed. unleaded petrol. Excise Duties 3. • Moreover. » Tax warehouses of warehouse keepers authorised for the production of cigarettes which hold a market share greater than 5% and their affiliates.g. which should have prior approval from the tax authorities. within a limit of two storage tax warehouses. destined exclusively for fuelling airplanes. but only in: » Tax warehouses of authorised warehouse keepers for the production of energetic products and by their affiliated parties. coal) » electricity. The Romanian Tax Pocket Book 2012 Edition 63 62 . 3. gas. • Excisable products can be held under excise duty suspension arrangement. based on certificates issued by the competent authority. held and received under a duty suspension arrangement only in a tax warehouse.Trade measures • For some agricultural products. both civil and military) products.1 Harmonised Excisable Products • The following products are subject to harmonised excise duties: » ethyl alcohol and alcoholic beverages » tobacco products » energy products (e. It is mandatory to obtain an import licence before importing such products. within a limit of eight storage tax warehouses. • Excisable products can also be dispatched under duty suspension arrangements after being released for free circulation by the registered consignor (this also applies for the holder of a single authorisation for a simplified customs clearance procedure). for commodities the end-use of which is controlled (such as explosives) or for dual use (i. » Tax warehouses situated near airports. certain types of waste and scrap). • Romanian tax warehouse keepers are deemed authorised for the intra-community movement of excisable products under excise duty suspension arrangements. for instance values or quantitative quotas on imports from other countries.e.g. • Such excisable products can also be received from suppliers within the EU under excise duty suspension arrangements by registered consignees. the EU generally imposes specific measures.
traders can claim a refund of the excise duties paid (e. reprocessing or destruction. Exemptions • Ethyl alcohol and other alcoholic products are exempt from the payment of excise duties if they are denatured. excise duties paid for goods acquired from the EU or imported and then returned to the suppliers). • For cigarettes. excise duty paid for goods released for consumption in Romania. pharmaceuticals or cosmetics industry. the excise duty owed is equal to the sum of the specific excise duty and the ad-valorem excise duty. based on the ponderate medium retail price. by the owner of excise goods or by the consignee. • Manufactured tobacco is also exempt from excise duties when exclusively destined for scientific and quality testing. or jointly by two or more persons involved in the movement of the excise goods (e. the legal percentage related to the ad-valorem excise duty and the total excise duty. • The production. • Some energy products subject to movement control can be purchased to be used for the purposes excepted from excise duty. Special legal requirements • Before being released for consumption in Romania. The specific excise duty expressed in EUR/1.g. alcohol and tobacco products have to be marked with duty stamps. except for the cases provided by law. There are also exemptions for ethyl alcohol and other alcoholic beverages when used in a manufacturing process provided that the final product does not contain alcohol or when used as samples for analysis. for necessary production tests. the consignor and the transporter of the goods).000 cigarettes is annually determined. • The guarantee required for movement under duty suspension arrangements may be lodged by the transporter or carrier. excise duties paid for goods released for consumption and then returned to the production tax warehouse for recycling. or for scientific purposes. but intended for consumption in other Member States. registered consignees and importers releasing such goods for consumption.• The movement of these excisable products under a duty suspension arrangement has to be made based on the electronic accompanying administrative document (e-AD). The value of the guarantee cannot be lower that the minimum provided by the legislation in force. holding and movement of excisable products under duty suspension arrangements are subject to a guarantee. provided that an end-user authorisation is obtained and the payment of excise duties is secured. intermediary products. used in nutritional. Excise duty reimbursement • In some cases. The responsibility for such marking lies with the tax warehouse keepers. • Companies selling fuel in gas stations have to register with the tax authorities. • The excise duty exemption for alcohol products and energy products can in some cases be granted directly based on an end-user licence or indirectly through reimbursement / compensation.g. 64 The Romanian Tax Pocket Book 2012 Edition . by the 1 March.
supplied to another EU Member State or returned unchanged to the supplier. for packaging waste. persistent organic pollutants. • For imports of coffee. Chargeability • Excise duties are due when the actual receipt takes place. releasing packaging materials / tyres on the market) companies have to pay contributions and taxes to the Environmental Fund. for which the authorisation is expired and has not been renewed. if the products are exported. such as lead. • Companies performing exports or intra-community supplies of coffee may benefit from the refund of the excise duty paid for the coffee used as raw materials.activities which generate polluting emissions. heavy metal emissions. • In certain cases (e. 3. • Traders purchasing coffee are entitled to a refund of the excise duties paid. Environmental Taxes Environmental fund contribution • For certain activities (eg. • Companies conducting activities that result in the discharge of air-pollutant emissions from fixed sources (e. The Romanian Tax Pocket Book 2012 Edition 64 65 . nitrogen oxides.g. Exemptions • Excise duty exemption applies in this case. 4.2 Other Excisable Products (Coffee) • Other excisable products include green coffee. provided the coffee is exported or placed under a suspensive customs regime.g. Excise duties will be due on the date the import declaration is registered.0046) and RON 20 / kg (about EUR 4. sulphur oxides. packaging waste) the contribution to the Environmental Fund depends on the degree to which companies achieve the recovery / recycling targets stipulated by the relevant legislation on waste management. the importers holding single European authorisations for simplified customs clearance procedures issued by another EU Member State have to file a VAT and Excise Duties declaration with the customs authorities. for the coffee received from EU. dangerous substances. is considered release for consumption and triggers the payment of excise duties.65).• Depositing excisable goods within a tax warehouse. selling ferrous and non-ferrous waste. the contribution to the Environmental Fund is currently RON 2 per kilo of packaging introduced onto the market and is owed for the difference between the recovery target stipulated by law and the percentage actually achieved by companies.02 / kg (about EUR 0. cadmium. mercury) have to pay contributions to the Environmental Fund of between RON 0. roasted coffee (including coffee with substitutes) and soluble coffee (including blends with soluble coffee). Thus.
the tax applies to the difference between the annual administration obligations and the administrated quantities of used oil. Registration. Exemptions apply for hybrid or electrical vehicles. Car registration tax • The specific pollution tax is paid for certain categories of vehicles registered for the first time in Romania. Evaluation and Authorisation of Chemicals (REACH) • Chemical substances and preparations traded on the market must be registered with the European Agency for Chemical Products. 66 The Romanian Tax Pocket Book 2012 Edition . The tax is calculated based on the emission standard. the cylindric capacity and the age of the vehicle. • As of 1 January 2011 a guarantee shall be placed with the Environmental Fund by producers of electrical and electronical equipment. • Producers / importers / exporters (“producers”) of electrical and electronic equipment (“EEE”) batteries and accumulators (“B/A”) have to register with the National Agency for Environmental Protection. and also by collective organisations. for the EEE placed on the market.• Starting 1 January 2011 a RON 2/litre tax has been introduced for industrial oils and lubricants placed on the market. • Registration is the only way for producers and importers of chemical substances to be allowed to continue production and import of chemical substances and preparations.
Other rules • Any request by the taxpayer must be processed and answered by the tax authorities within 45 days. managers and others may be held liable for the tax obligations of the taxpayer under certain circumstances (e.g. or depending on the case. unifies previous legislation regulating tax returns. advance rulings must be issued within 45 days of the application being submitted. In practice. Fiscal domicile • The concept of fiscal domicile is defined. collection of budgetary receivables. General Principles • The Tax Procedure Code.Chapter IV: Tax Procedure Code 1. anyone acquiring in bad faith the debtor’s assets within three years of the debtor’s insolvency). The Romanian Tax Pocket Book 2012 Edition 66 67 . directors. as well as tax jurisdiction. while for advance pricing agreements the term is 12 or 18 months. A similar application may be filed for an advance pricing agreement setting out the transfer pricing rules applicable between affiliates. The main rules and principles of the tax procedure are presented below. This concept is essential in defining both the tax jurisdiction and tax registration obligations. Interpretation of the law • The interpretation of the law is done through the Fiscal Central Commission whose interpretations of the law are mandatory for tax payers and tax authorities as well. in which case the period is extended by the amount of time necessary for the taxpayer to provide the requested documents. tax audits. » Under the law. in force since 1 January 2004. tax registration. from the date of closing the proceedings on the project. Liability of others • Shareholders. Fiscal administrative acts • Specific rules apply to the preparation and serving of acts issued by the tax authorities the taxpayers: » The taxpayer may apply for an advance ruling. as the case may be. however. with application to both individuals and legal persons. tax assessments. tax authorities process these applications very slowly. which will be mandatory for the tax authorities to the extent that (i) the legal provisions based on which the ruling was issued are not amended / repealed and (ii) the taxpayer complies with the ruling. unless they require additional documents to be provided. anyone causing the insolvency of the debtor by disposing of the debtor’s assets or hiding such assets.
any persons or entities that are subject to a fiscal legal relationship. the tax inspections may not exceed six months. The offset is allowed for certain. Tax assessment • The limitation period within which the tax authorities are entitled to assess additional tax liabilities is five years as of 1 January of the year following that in which the taxable event occurred. withhold and pay taxes. Specific Tax Procedures Tax registration • The groups required to perform tax registration are. while respecting specific rules and offset orders set by the Tax Procedure Code. save for the cases explicitly laid down in the Tax Procedure Code. duties. based on which the tax assessment is made. the authorities conclude a tax inspection report. liquid. Tax inspection • Tax inspections can be carried out in respect of all legal persons. Upon finalisation of the tax inspection. contributions and other amounts owed to the general consolidated budget. payment deadlines. • Before finalisation of the tax inspection. Collection of budgetary receivables • Detailed rules apply to payment methods. according to the Code. • The tax authorities may not inspect the same taxes for a period previously inspected. by sending a tax inspection notice.2. within three days from the ending of the tax inspection. as well as treatment of partial payments. outstanding receivables related to amounts due to the taxpayer from a certain budget and receivables related to amounts owed by the taxpayer to the same budget. 68 The Romanian Tax Pocket Book 2012 Edition . of which the tax inspectors were unaware when carrying the first inspection. or computation errors were made. • The offset between the taxpayer’s receivables against the budget and the budgetary receivables prevails over reimbursement. For taxpayers that have secondary offices. The tax authorities may suspend the tax inspection if they deem it necessary for the clarification of the taxpayer’s tax status. the tax authorities are bound to inform the taxpayer of their findings and the tax consequences and allow the taxpayer to express its point of view. which in turn is to be communicated to the tax payer within 30 days from the ending of the tax inspection. the tax authorities must notify the taxpayer in writing. unless additional data is obtained. Registration with the tax authorities must be made within 30 days of the date the circumstances which gave rise to the obligation occurred. • Tax inspections are generally carried out at the taxpayer’s business premises and may not exceed a six-month period in the case of large tax payers or three months for other taxpayers. irrespective of their organisation form that are bound to determine. • Prior to the beginning of a tax inspection.
The Romanian Tax Pocket Book 2012 Edition 68 69 . This rate may be adjusted by annual budget laws. Creditors with guarantees (rights “in rem”) over the assets subject to enforcement are preferred to the tax authorities. • Any interested parties (including the taxpayer) may challenge an irregular act of enforcement (including the enforcement itself) or the tax executor’s refusal to execute an act of enforcement within 15 days of the date the taxpayer received notice: » The execution or enforcement act of communication notice or notice act received. » If the payment is made after 90 days from the due date. provided that they registered their rights in the relevant public registrars before the tax authorities registered their receivable. • For amounts refundable from local budgets to taxpayers. in the absence of these. • For failing to comply with tax obligations to the State Budget in due time. the tax authorities may proceed to enforcement actions to recover the outstanding receivable. late-payment penalties are established at 15% of the remaining unpaid fiscal liabilities. » Release or distribution of the amounts challenged. » Refusal of the enforcement body to perform the enforcement act. • Any of the following enforcement procedures may be used: » Enforcement by garnishment. • Proceeds of the enforcement procedures are subject to distribution between creditors in accordance with a predetermined order set out in the Tax Procedure Code.• The taxpayer’s right to request a reimbursement is subject to a limitation period of five years starting with 1 January of the year following that in which the right to compensation or restitution arose.04% for each day of delay. • Late-payment penalties are established as follows: » If the payment is made within 30 days following the due date. » Seizure of the taxpayer’s movable assets. Enforcement of budgetary receivables • If the debtor fails to discharge its tax obligations. no late-payment penalties apply. » If the payment is made after 30 days but before 90 days from the due date. using their own enforcement apparatus. the later are entitled to receive interest (i. • Late-payment penalties for local taxes are 2% of the amount past due. late payment interest and penalties are due. 2% per month or part thereof). • As of 1 October 2010 the late payment interest rate is 0. » Seizure of the taxpayer’s immovable assets.e. late-payment penalties are established at 5% of the fiscal liabilities. » The late-payment penalty does not remove the obligation to pay late-payment interest. when conducting enforcement or in another manner. calculated for each month or part thereof. or.
If the tax administrative act challenged does not contain certain mandatory elements (for example. • The challenge has to be submitted within 30 days of the date of communication of the administrative fiscal act. deadline for filing the appeal). under the sanction of nullity. • If the taxpayer is not satisfied with the solution of the tax authorities. Suspension of enforcement • There are several legal means for taxpayers to file a court claim aimed at suspending the enforcement of tax liabilities. 70 The Romanian Tax Pocket Book 2012 Edition . the taxpayer may be ordered to provide a cash guarantee of up to 20% of the contested amount. Depending on the case. The deadline may be extended on serious grounds up to one year from the day the solution was issued. it may file a claim with the court within six months of the solution to the administrative complaint being delivered to it. • The Code regulates the form and content of the challenges to be filed by taxpayers.• The tax authorities’ right to request the enforcement of fiscal claims is limited to five years as of 1 January of the year following that in which the right arose. Administrative complaints • Taxpayers are entitled to challenge before the relevant bodies within the tax authorities either a fiscal administrative act or the tax authorities’ failure to issue such an act. an appeal may be filed within three months of the date of the tax administrative act.
The Romanian Tax Pocket Book 2012 Edition 70 71 .
Appendices 72 The Romanian Tax Pocket Book 2012 Edition .
Appendix 1 List of Double Tax Treaties Double Taxation Treaties in force to which Romania is a party: Albania Algeria Armenia Australia Austria Azerbaijan Bangladesh Belarus Belgium Bosnia-Herzegovina* Bulgaria Canada China Croatia Cyprus Czech Republic Denmark Ecuador Egypt Estonia Ethyopia Finland France Georgia Germany Greece Hungary Iceland India Indonesia Iran Ireland Israel Italy Japan Jordan Kazakhstan Kuwait Latvia Lebanon Lithuania Luxembourg Macedonia Malaysia Malta Mexico Moldova Montenegro* Morocco Namibia Netherlands Nigeria North Korea Norway Pakistan Philippines Poland Portugal Qatar Russian Federation San Marino Serbia* Singapore Slovakia Slovenia South Korea South Africa Spain Sri Lanka Sweden Switzerland Sudan Syria Thailand Tunisia Turkey Turkmenistan Ukraine United Arab Emirates United Kingdome United States Uzbekistan Vietnam Zambia * . and the treaty concluded with F. Yugoslavia. in force since 1998.R. in force since 1989.S. applies to Serbia and Montenegro.R. Yugoslavia. applies to Bosnia-Herzegovina. The Romanian Tax Pocket Book 2012 Edition 72 73 .Treaty concluded with F.
5 X 16 0* X 5/15 0/5 5/15 10/15 5/15 10 10 10/15 10 5 10 5/15 25/45 5/15 3 15 10 10 7/10 5/15 5/30 10 0/5/15 10 5/15 10/15 15 5 10 15 10/15 10 10 15 10/15 10/15 10 Interest (%) 16 X 0* 10 0**/3 10 15 10 10 7 10 10 5 10 0**/3 10 15 0/3 5/10 10 10 0/10 0/10 5 10 0**/3 10 10 10 15 5 10 15 10 10 10 10 10 10 10 Royalties (%) 16 X 0* 10 3 5 15 5/10 5 10 10 10 2.Parent-Subsidiary Directive Withholding tax rates for companies in some representative Double Tax Treaties Commissions (%) Dividends (%) 16 X X X X 5 X X 5 X 4 2 X X X 5 5 X X 5 X 10 5 10 X X 4 0**/10 X X X X X 5 10 X X X 12.based on the Protocol to the Double Tax Treaty The Romanian Tax Pocket Book 2012 Edition .5/5 10 3 5/7 10 3 10 10 10/15 7/10 10 5 10/15 0**/3 10 10 10 10 5 10/15 15 10 10 0 10 10/15 10/15 10/15 EU .Interest and Royalties Directive Australia Austria Belgium Bulgaria Canada Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Israel Italy Japan Korea Luxembourg Malta Moldova Netherlands Norway Poland Portugal Russia Singapore Slovakia South Africa Spain Sweden Switzerland Turkey Ukraine United Kingdom United States X .Appendix 2 Country Non Treaty EU .not stipulated 74 * .if certain conditions are met ** .
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