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    Acca f6 Personal Income Tax 1 Romanian Taxation 2014

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    © All Rights Reserved
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    3 views24 pages

    Acca f6 Personal Income Tax 1 Romanian Taxation 2014

    Uploaded by

    georgetacaprarescu
    Acca f6 Personal Income Tax 1 Romanian Taxation 2014

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    © All Rights Reserved
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    3.Personal Income Tax (Title Ill) 1. General provisions 1.4 WHO are the taxpayers and for WHAT income (Art 39 & 40) 2 Individual Taxed income Romanian | Domicile in Romania Worl-wide income resident Not domiciled in Romania World-wide income starting with the frst full calendar year of esidence | Non-residents | Realising independent income | Net income attributable to their permanent establishment Realising dependent income | Salary Realising other income ‘That other income taxed as for residents, [ [ [Lecture example 4.4 Mrs Stoica fs @ Geman resident and we know that she received the following income: * 100,000 Eure for book published in Germany * 20,000 Eur for an atl published ina Romanian newspaper * 10,000 Euro representing dividends from shares nto Escu SA (@ Romanian Company) Required 2) What income is subject to Romanian PIT? 5) What i rs Stoica was @ Romanian resident domicled in Bein? 5 Solution SO nes otherwise soc, ll ferences nis course notes male ate from the Fiscal Code as at 30 ‘September 2012 4 4.2 Resident person ‘According to the article 7, paragraph 23 from Fiscal Code, a resident person is any person who find himself in at feast one of the folowing situation: ~ Has his domicile in Romania ~ His vital centre of interests in Romania ~ 's present in Romania for atleast 183 days in a 12 consecutive months period |s a Romanian ctizen working abroad as Romanian employes pion Is not considered resident @ person working in Romania in a diplomatic mission, embassies or in an ational organisation, nor a family member of such a person. ation 4 's consider when Mr. Keynes (UK resident) becomes liable to pay income tax in Romania knowing that he ides technical advice to “The Economist” and, in order to perform his job he visited Romania in the following ds: © 19" February 2008 - 31# March 2008 © 24% June 2008 - 5 July 2008 #3 September 2008 - 28" October 2008 © 158 November 2008 - 154 December 2008 © 2 February 2009 - 254 March 2009 +24 ne 2009. 59 July 2009 © 15M July 2009 22 August 2009 © 18 September 2009 - 2» October 2009 + 5 November 2009 - 10" November 2009 132108 until 31/3/08 he spent in Romania 48 days and stayed 48 days in the ast 12 consecutive months. 24/6/08 until §/7/08 he spent in Romania 12 days and stayed a total of 60 days in the last 12 consecutive 8. 3/9/08 until 28/10/08 he spent in Romania 56 days and stayed a total of 116 days in the last 12 cutive months. 15/11/08 until 15/12/08 he spent in Romania 31 days and stayed a total of 147 days in the last 12 cutive months. 2/2109 until 25/3/09 he spent in Romania 52 days and stayed a total of 158 day: the last 12 consecutive Unless otherwise specified, all references inthis course notes material are from the Fiscal Code as at 30 ber 2012, 95 ‘months (ended on 25/3/08) because we will lose the period from 13/2/08 until 24/3/08, From 24/6/09 until 05/7/09 he spent in Romania 12 days and stayed a total of 152 = 1+664314+52412 days: last 12 consecutive months. From 15/7/09 until 22/8/09 he spent in Romania 39 days and stayed a total of 190 = 56+31+52+12439 a the last 12 consecutive months. So starting with 15" August 2009, Mr Keynes becomes a Romanian resider NOTE: ‘The 183 days are computed using the method of days of presence: the arrival day is considered, the leaving 's considered and also any fraction of day in which the person was in Romania is considered Onoe the 183 days period accomplished, Mr Keynes will have to notify it to the Romanian fiscal authorities willbe liable to pay tax on his salary income obtained starting with his 1* day in Romania. He will have to: declare himself tothe fiscal authority in 15 days from 15® August 2009 ~ submit monthly declaration with his income obtained since his 1# business day in Romania in 15 days from 183° day (ie. by 30 August 2009) (fom Norms tothe art. 88) Observation During the year when an individual become resident, that individual is taxed only on hisher Romanian soure income. Starting withthe next year helshe wil be taxed on his/her world-wide income. ‘The Romanian resident person, domiciled in Romania, who changes his/her residence in a state which has DTT (Double Taxation Treaty - see Chapter 6) with Romania is sill able to pay tax on his/her workd-wid income obtained in the year when the residence is changed as well as in the 3 consecutive following yeers. 1.3 Categories of incomes that are subject to income tax (WHAT?) ‘The following types of income are taxable under personal income tax (art 41): a) _ Independent income (the income obtained from independent activities) b) Salaries (also called dependent income) ¢) Rental income (the income obtained from granting use of goods) 4) Investment income (rom investments) @) Pensions ) Agricultural income (from agricultural activities) (exempt for exam) 9) Prizes and from gambling Note: Uniess otherwise specified al references inthis course notes material are from the Fiscal Code as at 30 ‘September 2012. 96 hh) Income from real estate transactions i) Other incomes as (see also art 78 and 791): insurance premiums, deemed incomes realised from ciscounts, commissions from arbitrage, etc. Non-taxable incomes (Art 42) ver, the following types of income are not taxable: ) Assistance, allowances and other forms of suppor for special purpose, granted from the state budget, the state social insurance budget, the budgets of special funds, the local budgets and from other public funds, as well 2s similar forms of support received from other persons, with the exception of allowances for temporary work incapacity. But allowances for matemal risk, matemty, child raising and child care during sickness are considered non-taxable incomes. 'b) Incomes from recycling activites subject of national programs ©)__ Amounts collected from insurance of any kind as compensation, insured amaunis, as well as any other rights, withthe exception of gains received from the insurance companies as a result of insurance contracts ‘concluded between the parties on the occasion of redeemable prize-drawn bonds (trageri de amorizare). ‘Compensation in money or in kind thats received by an individual as a result of a material damage suffered ‘By such a person, including compensation for moral damages, isnot taxable income. 6) Amounts received as a result of an expropriation for public ulliy reason ) Amounts received as compensation for damages incurred as a result of natural disasters, 2s well as for cases of disability or death f) Pensions for invalids of war, orphans, widowstwidowers of war, fixed amounts for the care of pensioners who have been categorized as 1* degree invalids, as well as pensions, other than pensions that ‘are paid from funds established from mandatory contributions to a social insurance system, including those ‘rom optional pension funds, and those financed from the state budget 'g) Amounts oF goods received inthe form of sponsorship or patronage (‘mecenat’) fh) _ Income from sale of immovable and movable tangible goods from personal patrimony, other than gains ‘fom the transfer of secures, incomes from real estate transactions and income from recycling, ‘D,__ Rights in cash and in kind received by military recruits on term or on reduced term, students and pupils ‘of educational units from the national defence sector, public order and national and civil security, as well as ‘those of officers and soldiers on duty or mobilised J) _ Scholarships received by persons who follow any form of education or professional training within an ‘nsiituionalised framework 'K) Amounts or goods received as inheritance or donations (except fr eal estates) 1D _ Incomes from agriculture or forestry, with the exceptions provided in the chapter referring to agricultural revenues 'm) Income received by members of diplomatic missions or consular offices for activities carried out in Romania in their official capacity, under conditions of reciprocity, by vitue of the general rules of Intemational law or the provisions of special agreements to which Romania is a party Unless otherwise specied, al references in his course notes material are from the Fiscal Code as at 30, ber 2012, 7 rn) _ Net incomes denominated in foreign currency received by members of diplomatic missior offices and cultura institutions of Romania located abroad, in accordance with legislation in force ©) Incomes received by officials of intemational bodies and organisations from activites cat Romania in their official capacity, on the condition thatthe postion ofthe official is confirmed by of Foreign Affairs P) Incomes received by foreign citizens for consulting activities carried out in Romania in acco non-reimbursable financing agreements entered into by Romania with other states, with internat and non-governmental organisations 4) _ Incomes received by foreign citizens from actives carried out in Romania in the capacity correspondents, on the condition that reciprocal treatment is granted to Romanian citizens for in such activites and on the condition that the positon of such persons is confirmed by the Ministry At 1) Amounts in the form of subsidised interest for credits received in accordance with legislation in 8) Subsidies received for the acquisition of goods if the subsidies are granted in accor legislation in force . 4) Incomes in the form of benefits in money andlor in kind received by persons with disabiltes, of war, invalids and widows of war, persons injured by war outside military service, persons per Political reasons by the dictatorship beginning March 6, 1945, those deported abroad or declared heirs of hero-martyrs, persons who were injured, and persons who fought forthe victory ofthe Rei December 1989, as well as persons persecuted for ethnic reasons by the ruling regimes of between 6° of September 1940, and 6M of March 1945 u) Prizes as well as any other allowancessindemnities obtained by sports men, medalists, in European championships and the Olympic games and their staff (coaches, physicians, etc) v) _Non-taxable incomes are also prizes, bonuses and sports allowances granted to sports men, technicians and other specialists as provided in legistation on such matters, in order to achieve obj superior performance w) Prizes and other rights in the form of accommodations, meals, transport and other similar, obtained by pupils and students in domestic and intermational compettons, including non-resident pu students in competitions carried out in Romania x) State premiums granted for saving and crediting in a collective system for real estate according to the provisions of the Government's Emergency Ordinance no, $9206 regarding institutions and capital adequacy, as amended by Law no, 227/2007 ¥) Other incomes that are not taxable as provided in each category of income. Note: Unless othenvise specified, al references in this course notes material are fom the Fiscal Code as at 30 September 2012, 8 2 life insurance policy concluded in 2002 fora period of 10 years. In the year 2012, Mr Popescu income related to ths insurance policy /premium of 100 Lei paid by his employer (on behalf of Mr Popescu) monthly 12, he received the insured amount of 100,000 Lei as compensation for a temporary work 2, Mr Popescu was the lucky winner of a redeemable prize bonds and received 25,000 Lei from nt Is subject PIT in 20127 ‘othernise specified, all references inthis course notes material are from the Fiscal Code as et 0 2012. 9 Mrs Stoica , being German resident, pays PIT in Romania jst forthe income derived from Romaria Incomes from the article published in Romania i, Dividend incomes from a Romanian company ‘As @ Romanian resident, Mrs Stoica pays PIT on all her incomes. ion 4.2 pescu has to pay PIT on the following income: insurance premium received from his employer «ain rom redeemable prize bonds (wich is exempt from the exemption) ion 4.3 Description Taxable income Rate Tax amount (Lei) (cei) keting services 44,000 16% 2,240 iolarship (20012) Exempt : - mmission income 2,000 16% 320 TAL > 16,000 x 2,560 5 othernse specified all references inthis course notes material are from the Fiscal Code a 2 30 2012. 147 EXAMPLES OF NON-TAXABLE INCOME (as provided by the Norms for application of the Fiscal ‘State allowances for children Support allowances foreach child given or under family placement Monthly allowances received by persons with sever or very severe disabilities ‘Social allowances received by bind persons with severe disabilities Monthly allowances granted to blind persons with severe disabilities, according to the law Counter value of hotel services granted, according to the law, to family members accompanying to hos disable children up to the age of 3 Assistance for house heating ‘Allowances for new-boms, received for each ofthe fist alive 4 new-borns Meterty allowances Child home care allowance up to the age of 2 or 3 for children with disabilities, 2s well a the allowances by law to families for bringing up a child Social benefit received by the spouses ofthe persons on mandatory military service ‘Social benefit granted according tothe law Emergency assistance granted by the Government and mayors in cases of necessity due to natural ca fire, accidents, as well as other special ccumstanoes set by law, within the limits of existing funds Assistance for the procurement of medical devices ‘Monthly aid or support allowance received by military forces on reserve, without the right to pension, apt to that cannot be employed due tothe lack of available positions corresponding to their professional training Maternal risk allowance ‘Unemployment benefit and other non-taxable rights granted according to the relevant legislation ‘Amounts paid from the unemployment insurance budget for the completion of income for persons that employed before the unemployment period expires Employment bonus and installation bonus granted from the budget of unemployment insurance Material support granted, according to the law, to family members of a deceased magistrate or family mer of other persons related to the deceased court authority ‘Salary equivalent received by a public cler's family members in the case of his death Monthly compensatory allowances received by persons suffering from permanent or temporary work inca the mutilated and the survivors of the persons who died due to participation to the 1989 December Revolution Monthly compensatory allowances received by the parents of the persons who died due to participation to 1989 December Revolution Note: Unless othemnise specified, el references in this course notes material ae from the Fiscal Code as at 30 September 2012. 100 Joy the surviving spouse ofthe person who died due to participation to ‘2s dependants one or several children of such person “evalids and the wounded, the mutilated and the ones falling under the for political and ethnic reasons that during 1945 - 1952 were removed from the jucicial system , granted according tothe kaw to the law J and thermal energy, granted to war veterans and widows, as ing tothe law spouses as well as by minor children who are heirs, of titular members at the Romanian Academy who are Romanian citizens, (ecteral support granted for surviving spouses and heirs of Romanian to the legislation in force Jessiation regarding the public system of pensions and other social ‘& the procurement of prostheses, or theses and other orthopaedic jSltion ‘spouse, granted according to the law referring to material support budgets and from other public funds, according tothe law seth law 118/2002 on the establishment of the merit allowance, with ‘and with Government Decision no, 859/2008 for the approval ofthe ‘establishment ofthe mer allowance and of the Operation Regulation fhe mert allowance, as amended transport, granted, according tothe law, to adults with severe and ‘personal nurses and companions legal norms in force. inthis course notes material ara from the Fiscal Code as 2t 30 101 — 4.5 Tax rates (art 43) ‘Te tax rates of 16% and applies to taxable income corresponding to each source in each category Exemptions ions ‘© Income from realestate transact «© Income from gambling son of an aroun of up to 2% ofthe tax de for sustaining Taxpayers may decide upon the designe rarpey shih are setup and operate under the conduons ofthe law 4.6 Taxable period (art 44) The fiscal year that corresponds tote calendar year Exemption: «Tra taxpayer dies during the course f te yar, he fiscal period will be assessed in 0 Lecture example 43 ent (and domiciled in Past), obtained i ic Fieresou, a 22 year old student at ASE, Remanien resid income from: «Marketing senices rendered under a -month employment contract of 14,000 Lei Ascholarship of 200 Let per month «Commission for a sale contract (2.000 Lei) Required possible deduction. Caleuate the income tax ue by Mr Fierescu for 2012 ignoring any Solution ences in his course notes mati re from re Fea Code as at 30 Sepenber 2012 102 from independent activities {Title i, Chapter 11) income from independent activities (Art. 46) independent activity can be: il income (refers to income associated with trade acts, production and services other than provided as free profession) from free professions (physician, lawyer, notary, fnancial auditor, tax consultant, certified nt, financial investment consultant or architect) and from intellectual tights realised individually andior in the form of an association, income from related activites, The intellectual property income is defined as income from the 5 any manner of intelectual propery rights that are derived from patents, érawings and models Production marks and trademars, echnical procedures, know-how, copyrights and rights -d with copyrights and other similar rights. sidered fo eam income from an independent actviy if helshe is carying on this acy in an nner, ON a reqular base and with an ecanaric: espaRe, Used to establish the character ofan independent activity are: free choice of activity free choice of working hours and of working place ‘assume the associated risk the existence of several clients {fom independent acess to be determined as the difference between the gross income and "elated to the realisation of the income, allowed for deduction nd expenses are to be considered on a cash basis includes: Collected and the equivalent in Lei ofthe in-kind income from caning out the activity in the form of interest from trade recei vables or from other receivables used in connection with the lent activity from the transfer of assets from the business pe atrimony used within the independent activity, 19 the value of goods that remain after the final te termination of the activity fom the commitment to nt to camry out an independent acvty or not to compete with ancther pernise speced all references in this course notes material are from the Fiscal Code as at 30 12, 103 @) Income from the cancellation or exemption of certain payment obigations incurred in conn independent activity. f) Recorded income as per cash machines (with tax memory) installed on taxis or other sit used to transport persons or goods The following should not be included in gross income: 2) Contributions in cash or the equivalent in Lei of in kind contributions made at the inception of in the course of camying out such activity b) Amounts received inthe form of bank credits or loans from individuals or legal entities ©) Amounts received as compensation d) Amounts or goods received in the form of sponsorship, patronage or donations. Expenses related to income must satisfy the following general conditions in order to be alowed as d a) They are to be incurred within the framework of actives carried out forthe purpose of reali as justified by documents b} They are to be included in the expenses of the financial exercise for the year in which they were: They are to follow the rules regarding depreciation as provided in Tite Il of the Fiscal Code, ast may be ) d) Expenses for insurance premiums are to be incurred for 41. Tangible or intangible assets from the business patrimony 2. Personal assets that serve as bank guarantees for credits used in carrying out the acti hich the taxpayer is authorised 3. Insurance premiums for professional liilty insurance 4, Employees, on the condition that the amount ofthe insurance premium is taxed to the ber (the employee) at the moment ofthe payment by the employer. e) Expenses related to the maintenance and usage of immovable property where the actvity is cari ‘even ithe related invoices are notin the “business” name The computation base (CB) used to assess the deductibiliy of expenses with limited deductibility, here cal “computation base” is determined as the difference between grass taxable income and deductible expen: ‘ther than sponsorship, patronage, granting of private scholarships, protocol and membership fees paid professional bodies (art 48, par 6): ‘The following expenses have limited deducti 4) ity: Expenses of sponsorship and patronage, as well as for granting private scholarships incurred accord to the law, within the limit of 8% of the computation base b) Protocol expenses, within the limit of 2% of the computation base Note: Unless othemise specified, al references inthis course notes material ae fom the Fiscal Code as at 30 September 2012. 108 ‘expenses for allowance received for the period of delegation and temporary assignment in . in Romania and abroad, for job purposes, within the limit of 25 times the legal level public institutions (13 Leidayperson) within the limit of the amount obtained by applying a rate of up to 2% to the salary fund Those expenses includes funeral aids, workhouse transport, presents given to children on the oocasion of Easter, 1* June, Christmas (and similar celebrations for other well as presents given to women employed on the occasion of 8" March, but the amount is liited to 150 Lei per person per occasion to perishable goods, within the limits provided for normative acts on this matter or meal and holiday tickets granted by employers, as provided by law paid on behalf of employees to voluntary pensions funds in accordance with legislation in Sn the limit ofthe equivalent in Lei of 400 Euro annually per person ‘premium for voluntary private health insurance, according to the law within the limit of the in Lei of 250 Euro annually per person incurred for both independent activity and personal purposes ofthe taxpayer or associates are ‘only forthe portion ofthe expense that is related to the independent activity for mandatory social contributions for employees and taxpayers, including insurance against ts and occupational diseases as provided by law {elated to loans from individuals and other legal entities then the ‘agreed institutions” (as defined 3 of this course) used in carrying out the activity, based on the contract concluded between the Syitin the limit of the reference interest level of the National Bank of Romania (5.25% - for exam ) incurred by the user, which consist of rent - leasing instalments in the case of operational contracts, respectively expenses of depreciation and interest for finance leasing contracts, to the provisions regarding leasing operations and leasing companies ip fees paid to professional associations within the limit of 2% ofthe computation base professional contrbutios to be paid, according tothe law, o the professional organisations to ers belong, equal to up to 5% of the gross realized income. ‘maintenance and usage expenses in connection with any small vehicles (up to 9 seats and up to ) which are not in one ofthe following categories: used as intervention cars, for repairs, quard, , mall delivery, transport of employees, salesman's cars. The tax depreciation should not be inthis category. expenses are not deductible: or goods that are used by the taxpayer for personal or family use that correspond to non-taxable income tax owed as provided by the present ttle, including the tax on income realised abroad; es for insurance premiums other than those specified above ctheruse specified, al references in tis course notes material are from the Fiscal Code as at 30 12. 105 °) 9) hy a ® ) Note: Uniossothennise specie, al references in his course notes material are rom the Fiscal Code as at 30 September 2012. Donations of any type (donation received = non-taxable income => donation given = n expense) Fines, confiscations, interest, late-payment penalties and penalties payable to Romanian ar authorities, according to legal provisions, other than those paid according to clauses of contracts Loans’ instalments paid/due Expenses withthe acquisition or production of depreciable goods and depreciable rights register-inventory (but those goods may be tax depreciated as in Chapter 2 ofthis course) Expenses relating to goods discovered as missing from the inventory or that are damaged chargeable, if these are not covered by an insurance policy ‘Amounts or value of goods confiscated as a result of violating legal provision in force Income tax tome by the payer ofthe income on behalf of the beneficiaries of income Other amounts as provided by legislation in force. * 106 ame from an accountng activity and opts to pay is income tax using the rel system. He 22 heb him in caring its accountng activity. During the year 2012 he recorded the following Lei fom clens from accounting activity 115,300 received from teaching 3,600 income 320 loan from a fiend 10,000 for 6 months (@5%- lower then NBR rate) 250 the annual party with clients 3,500 from his mother in lw 200 aid (including social contributions) 30,000 4500 800 5,000 10,000 6,000 ‘ax due by Mr Popa in respect of his income realised in 2012 exchange rate = 4.5 Lei/ Euro ‘Specified, all references in this course notes material are from the Fiscal Code as at 30 107 Solution 4.4 Taxable income Lei Lei receipts from clients from accounting activity 415,300 receipts from teaching 3,600 interest income 320 Total gross incomes 119,220 Less deductibles expenses interest paid 250 salaries paid 30,000 fiscal depreciation of scooters (4,500"10/24) 41,875 ‘mandatory contribution (up to 5% "119,220) 5,000 ther sundry expenses 10,000 contribution to voluntary pension scheme (up to 27400%4.5 = 5,040 Le’) 3,600, Subtotal 150,725) Computation base (CB) 68,495 Less other limited deductibility expenses protocol expense (up to 2% * CB = 1,370 Lei) 1370 membership fee to CECCAR (up to 2% * CB) 800 ‘Total deductible expenses Taxable income Income tax @ 16% Note: Uniess otherise specified, all references in tis course notes material are from the Fiscal Code as at 30 September 2012. 148 2.3 Determination of net income from independent activities based on income norms (Art. 49) The system of income norms (or income quotas) means thatthe taxable income is established based norms issued by the Ministry of Public Finances (MPF) in the case of special activities (but professions) per type of acity and per geographic region. ‘The option fortis system is possible if - The activity sin the range of activities for which the MPF issues income norms - The taxpayer has no employees = The taxpayer does not carry out another activity which should be taxed using the real system ‘The taxable income in system norms is = Theiincome nor given by MPF ifthe taxpayer has just one activity caried out throughout al the = The net income established through the income norms cannot be less than 12 times the minimum monthly gross salary. : = The sum ofthe income norms given by the MPF for each activity carried on or for each place of the taxpayer has just these activites carried out throughout all the year ~ Ifthe tax payer carries out the specific actity for periods less than one calendar year, the i ‘should be time apportioned by the days of activity over 365 days, - In cases of interruption of actity due to medical issues (or other factors which can be pi income norms may be reduced in accordance withthe number of days of interuption following an demand of the tax payer. = Ifa tax payer switches from the actual system to the income norms system having depreciable which the fiscal depreciation expense was deductible in the actual system), the deprecation e no longer affect the income norm but the value ofthe receivables on that assets when sold (or of the assets passed from business use into the private use) will increase the income accordance withthe tax depreciated amount of that assets The income norms system should cease to be applied if = the gross income realised in one calendar year exceed 100,000 Euro, the taxpayer should cease the income norms system and should apply the eal system starting with next year. The option declared by 31* January next year together withthe estimated income declaration. - Ifa taxpayer carries out an activity for which real system is required, @s well as another act taxed based on income norms, then the net income from the independent activites cried taxpayers tobe determined besed on the actualresl system stating withthe day when the act with real system is started - _Ifatax payers does no longer fulflled the conittons tobe taxed with the income norms system, het ‘witch tothe actual system starting with the day in which the conditions were no longer fulfilled Other: = Inthis case the taxpayer has no obligation o apply and organise simple entry accounting system, should record their incomes. Note: Unless othenwise specified, al references in this course notes material are from the Fiscal Code as at 30 September 2012, 108 cease of activity as well as the temporary interuption should be announced to the tax ar) days system and the system based on income norms 2s to switch from the income norms system to the actual system, his annual net income ‘ofthe income norms for the number of days in which income norms system applies plus Jncome determined using the actual system for the remaining number of days inthe year. the 2 system should be declared by 31% January (inthe year of switch) real system became compuisory for 2 consecutive years {taxi driver and pays income tax based on income norms for an estimated income of 100,000 ‘2012 Mr Boby eamed income of 130,000 Lei and spent on fuel 12,540 Lei and on car 124,000 Lei tax due by Mr Boby for 2012, specified, al references inthis course notes material are from the Fiscal Code as at 30 109 2.4 Determination of annual taxable income from intellectual property rights (Art 50) ‘The net income from intellectual property rightsithe net copyright income should be determined by subt the following expenses from the gross income: 2) deductible expense equal to 25% (for menumental at) oF 20% (for other) ofthe gross income b) The mandatory social contributions paid. in the case ofthe exploitation by an heir of intelectual property rights, as well as inthe case of remuneration is “resale right” (rept de suita’) and compensatory remuneration for private copy, the net income is determined by subtracting from the gross income the amounts that ere payable to the collective admin bodies or other payers of such income, according tothe law, without applying the lump sums provided abo ‘The lump-sum expenses are not applicable if the taxpayer is using the beneficiary materials in order to pr his work. In this case the taxpayer has no obligation to apply and organise simple entry accounting system, but should record/prove their incomes. “The copyright income obtained from abroad is taxed as income from abroad (i. taxed with 16% but fiscal rmay be allowed for tx paid abroad) Note: Unless otherise specified, al references in this course nates material ae from the Fiscal Code 2s at 30 September 2012. 110 85% During the year 2012 he recorded the folowing 2207 for 40,000 Leto John Potter (US resident) © may not quelfy as monumental art) to loan Popa (Romanian resident) for 100,000 ‘Vicoria Pace to Bucharest Municipality for 1,000,000 Lei for Constanta Municipality for which he received an advance payment of £0,000 Le ed in March 2012 and its total agreed value is 150,000 Lei “Muse d'art modeme — 4p pay tax under the incomes norms system and if his norm is 100,000 Le, then he 16,000 Lei independently ofhis actual net income. monumental ar Lei from statue sold to BM (1,000,000 ~150,000) 850,000 from statue for CM 50,000 from monumental at: iseduction (25%) from pictures: loan Popa 400,000 Mega Vision 300,000 from pictures: ideduction (20%) social contributions htincome ht income from abroad se specified, al references inthis course notes material are ftom the Fiscal Code as at 30 149 Lei 900,000 (225,000) 440,000 (88,000) 109.450) 917,550 490,000 4,017,550 2.5. Election to determine the annual taxable income in the actual system (Art. 51) Taxpayers who obtain independent income taxed based on income norms, as well as those who ob ‘income, may elect to determine the net income under the actual system, The option should be done by submiting @ demand for switch to the actual system together with the: of estimated taxable income by 31+ January (the year of switch) orin 15 days from the star of ctvty The option to compute and pay income tax under the actual (also called real) system becomes mar consecutive years and it is considered renewed ifthe taxpayer does not ask formally to change system formally by 31% January (orin 15 days from the start of activity). Alter the 2 years compulsory period, the taxpayers may switch from the actual system by asking it ‘34 January (inthe year of switch). Lecture example 4.7 Considering thatthe expenses recorded by Mr loan Olaru (the same artistas in Lecture example 6) activity in 2012 where: ~ Purchase of stationery (colours, paper, et.) 10,000 Lei ~ Purchase of cement 300,000 Lei ~ Payment of 2 workers under civil agreements (gross amounts, including al due social contbut 30,000 Lei + Sponsorship ofa class from Tonitza High school 30,000 Lei = Protocol expenses 25,000 Lei Required Compute Mr loan Ovaru’s net taxable income in respect of his 2012 income considering that he opis actual system, Solution Note: Unless otherwise specified, al references inthis course notes material ae from the Fiscal Code as at 30 ‘September 2012, 112 Solution 4.7 Gross income Lei ~ from monumental at (see solution 4.6) 900,000 = from pictures (see solution 4.6) Less deductible expenses + stationery 10,000 = cement 300,000 + salaries 30,000 computation base (CB) 1 Less other limited deductibility expenses ~ sponsorship (up to 5% of CB) 30,000 protocol (up to 2% of CB) 20,000 Net taxable income ‘Taxable copyright income from abroad tt Total taxable income 1 {ot Unless alters specie al references i tis course notes material are om the Fiscal Cade as at 30) ‘Septomber 2012 150 Source of tax representing anticipated tax payments for certain incomes from ities (Art. 52) for this type of incomes is 16%, but: Or registered individuals) ofthe following incomes are required to compute, withhold and id at source, representing 10% of gross income less withhold mandatory social pated tax payments: intellectual property rights

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