The payer of income Income from | Securities transfered on | 2 16% transecion | fhereaustedmariet, | 8 pemetey)) : each transaction an wares |r pone sty [cant te mx | epee al ce priceless purchase price | by the 5® of the | folowing month (Art 67, par 3) less any transaction | folowing quarter's frst reed ea OY Tf enn Fee | he eee Dae to Final fiscal loss may be | TNE lax Paver © oud | each taxpayer te tl gino carried forward starting | Sumit per quae | the end of February next year ( th 2620 11 rT eee ongeoutve years. (at | Computations by 25 of Ser Bh oy wach bares | Po iat (ream) otincame. | ©) 2nd 67) and ‘annual declaration by 25" May next year (At. 83), a F atest | to. acairer (at 67 | 16% (fina tx) companies: (3) letter b) eel eee (ct | Byte date when the documes Re we ed) cof ownership are submitted fom etee Register ori the Shareholders Losses are not recognised (ert 67,(4)) The payer of income c Income from] Sum of favourable! 46% anticipated tax term unfavourable dferences | Wo NaS fo cand ae transaction | recorded on the tax | the IBGE. | By 258 the mont folowing with foreign | payer account as at the | 2pmual Seton OY currencies ‘losing moment of each fa iF ai ‘aN. next yeat | and also 16% at final tax dectar such transaction en ale The final loss for the | Suomi samuel year (any) may not be | degen by BS” May taried forward (art 67, | extveat (Art. 83) (6) NOTE: In the case when shares of the same company are acquired at different moments and at different va cost of sold shares is considered using the weiahted average method. Note: Unless otherwise specified, al references in hs course notes material are from the Fiscal Code as a 90 ‘September 2012 128 (Norms to art 66)Lecture example 4.12 Mr Oliver Wind sold by Broke SA on 15.07.2012 the following securities: +» 2,000 shares in A SA acquired on 01.03. 1999 for 2,000 Lei and sold for 300,000 Lei ‘#100 shares in B SA for 40,000 Lei. These share were bought: 10 pieces on 20.01.2007 for 30 Lei/piece, 70 on 14.08.2008 for 120 Leilpiece and another 70 on 20.09.2008 for 90 Leiipiece (On 20" October 2012 Mr Oliver sold by Broke 100 shares in D SA with 150 Lei/piece, acquired 3 years ago with 130 Leipiece. He also sold 50 shares in C SRL with a par value of 200 Lei sold for 1,000 Lei each to Broke SA on 3% June 2012. Required a) Calculate the taxable investment income for each transaction of Mr Oliver Wind. bb} State what are the obligations of Broke S.A. ©) State how and when the above calculated tax should be declared and paid by Mr Oliver. Unless othemise specie, all references in this course notes material are from the Fiscal Code as at 30 ber 2012, 129Solution 4.12 8) Transaction Taxable income Tax @ 16% Aon 15.07.2012 = 300,000 - 2,000 = 298,000 Lei 47,680 Bon 15.07.2012 = 40,000 - 100°100 (wt) = 30,000 Lei 4,800 Don 20.10.2012 = 100 * (150 - 130) = 2,000 Lei 320 | Con 3.06.2012 = 50 * (1,000 - 200) = 40,000 Lei 6,400 Working 4: cost of B shares No of shares | Cost per unit | Total cost 10 30 300 ‘So the cost of one share of B for Mr Wind = 15,000/150 = 70 120 8,400 | 100 Lei m 90 6,300 150 na| 15.000 | b) . For the quarter 3 (when Mr Olver Wind sold the shares of A and B), Broke SA has to compute the taxable income and to send the computation to Mr Wind by 5* October 2012. For the quarter 4 (when Mr Oliver Wind sold the shares of D), Broke SA has to compute the taxable income ‘and to send the computation to Mr Wind by 5® January 2012. Broke has also to submit by the end of February 2012 a declaration with all incomesilosses from transactions with securities (other than social parts or shares in closed companies) for each of its client. So the total taxable income realised by Mr Wind through Broke SA = 298,000 + 30,000 + 2,000 = 330,000 Lei In respect of transaction with C shares (C is SRL), Broke SA, 2s buyer, has to compute, withhold, declare ‘and submit the tax due to the State Budget by the date of submiting to the documents for transfer of ‘ownership tothe Trade Register. Note: Unless otherwise specified, all references inthis course notes malerial are from the Fiscal Code as at 30 September 2012, 187°) For the taxable income realised by selling the shares of A SA, B SA and D SA, Mr Wind has to: a. Submit quarterly declaration wit |. the realised taxable income as from the beginning of year tothe end of the quarter ji, the total related tax forthe above income ii, the total tax due for the quarter (total tax due less tax already assessed for the pr quarters) b. Pay the tax due forthe quarter Both declaration and payment have to be done by 25° of the month folowing the reporting quarter. So by 25" October 2012, Mr Wind has to declare the followings: . Lei Taxable incomes (298,000 + 30,000) 328,000 Tax@ 16% 52,480 Less tax previously declared aus Tax to be dectared and paid by 25" October 2012 52.480 ‘And by 25° January 2013, Mr Wind has to declare the followings: Lei Taxable incomes (298,000 + 30,000 + 2,000) 330,000 Tax @ 16% 52,800 Less tax previously declared 52.480 Tax to be declared and paid by 25° January 2012 aay Observation: Mr Wind will stil have to submit the Annual Income declaration with the same information as the one ‘completed for quarter 4 by 25! May 2013 (art 83). Note: Unless otherwise specified, al references in hs course noes material re fom the Fiscal Code as at 30 September 2012. 158Lecture example 4.13 ig incomes: MrEconomu Cezarescu obtained inthe yeat 2012 the flowin interest on curent account received evenly throughout athe year) «300 Lel, representing sit forthe period 30.09.2011 - 01.08.2012 4,000 Lei representing interest on term depos «500 Le representing interest fom treasury bonds aoquied on 01.08.2012 Required te the tax on interest income in year 2012 for Mr Econom Cezerescu’s investment. Caloul Solution nt: Unis otherwise spctiod ll references in his course noes male are from the Fiscal Code as at 30 September 2012. 130Taxable income nt 300 iuded on 30.09.2009 1,000 bonds a 1,300 Tax amount @ 16% 48 160 208 =i references inthis course notes material are from the Fiscal Code es at 30 159Lecture example 4.14 Mr Siver, a Romanian resident, obtained in 2012 the folowing investment income: * Dividend income of 18,000 Lei cashed on 20" May * Profit of 1,100 Lei on sales of secures acquired on 15M June 2007 and sold on 31 August 2012 on the Fegulated market through a register brokerage company. * Profi of 32,400 Lel on sales of shares ofa closed company acquired on 31% May 2006 and sold on 313 January 2012 to Gold SRL Required @) Calculate Mr Sivers income tax lablity for 2012. 5) Slate what are the declarative obfgations ofthe income payer related to the above transactions ©) State what are the declarative ‘obligation of the tax payer related to the ‘above transactions. Solution Unles oterwise specified alleferences in his couse noes mater ae rom the Fiscal Code as 30 miber 2012 131Solution 4.14 (1) Dividend income (a) Taxable income = the value of gross dividend = 18,0000 * 100/84 = 21,429 Lei Income tax labiity = 16% * 21,429 = 3,429 Lei (b) The income payer has the obligation to compute, withhold and submit the tax to the Budget ‘and declare it tothe fiscal authorities by 25% June 2012 and by the end of Fet (c) No declarative obligations for Mr Silver. (2) Income from seling securities onthe regulated market (2) Income tax abiity = 16% * 1,100 = 176 Lei (b) The income payer has the obligation to compute the taxable income and to send ‘computation to Mr Silver by 5* October 2012 ’ The income payer has also to declare all taxable income realised by Mr Silver to the fs autranties by the end af Febuary 2013 (©) Mr Siver has to declare the taxable income realised in quarter 3 and the related income tax' the fiscal authorities and to pay the tax to the State Budget by 25% October 2012. (Mr Silver will have to submit the realised income declaration for quarter 4 as well, even thou he had no transaction in this quarter, by 25® January 2013. He wil have to include this income in his annual income decaration (as investment incor {rom transactions with securities on the open market) due by 25" May 2013. (8) Income from seling shares of closed companies (a) Income tax liability = 16% * 32,400 = 5,184 Lei (&) The income payer (Gold SRL) has the obligation to compute, withhold and pay the tax to the state budget before submitting the documents for the transfer of ownership to the Trade Register. (¢) No declarative obligations for Mr Silver. Note: Unless otherwise specified, al rferences in this course notes material are rom the Fiscal Code as at 0 September 2012. 1606. Income from pensions (Title Ill Chapter VI) Income from pensions constitutes the amounts received as pensions from funds established from mand social contributions made to a social insurance system, including those from voluntary pension funds and th financed by the state budget (Art. 68). ‘There is not considered taxable pension income the pension received by persons with severe disabiltes. ‘The monthly taxable income from pensions is to be determined by deduction from the pension income of ‘mandatory contributions and of a monthly non-taxable amount of up to 1,000 Lei (but not above the amount pension) in this order. The tax should be calculated, withheld and paid by the payer of income (art, 69). ‘Any payer of income from pensions is required to compute the tax related to such income on a monthly basis \ithhold tax and to remit the withheld tax to the state budget (Art. 70). ‘The taxis to be calculated by applying the 16% tax rate, to the monthly taxable income from pensions. . Lecture example 4.15 Mr Barbu has a monthly gross pension of 7,800 Lei. The mandatory social contrioutions withhold from Barbu monthiy are 429 Lei. Mrs Barbu has a monthly gross pension of 700 Lei and there are no mandatory contributions withhold fr her pension income, Required a) Calculate the income tax to be withheld by the Pension House from Mrs and Mr Barbu’s pensions. ') State their obligations with regards to their annual pension income. Solution Note: Unless otherwise specified, all references im this;course nates material are from the September 2012.Mr Barbu Mrs Barbu (Lei) (Le) 7,800 700 (429) : int exempt = min(,000; GP-MSC} 4,000 700) 6371 - 4,019 ‘no declarative obligations. The income payer (ie. The Pension House) has the obligation to hold and remit the tax tothe state budged by 25 ofthe month folowing payment (ar.70 end 3 latter) Taxable income (Lei) Rate Tax amount (%) (Le) ‘Olympic contest in Rome. exempt ee ics Championship in Sofia exempt - =38,000-600= 37,400 16 5,984 = 80,000-600= 79,400 25 19,850 168,000 26,938 2, al eferences inthis course notes material are from the Fiscal Code as at 30 1647. Income from prizes and gambling (Title Ill Chapter VII) 7.1 Definitions (Art. 75) ‘Income from prizes includes income from any contests, inclusive those organised in promotional campaigns for iproducts/services, according to the law, but does not include except income as per article 42 (orizes at ‘European, World or Olympic championships - for sportsmen, trainers and all supporting staff and prizes obtains ‘students in scientific contests or by foreign students in scientific contests organised in Romania, etc) me from gambling includes gains realised as a result of participating in gambling, including jack-pot or te games and any other income obtained through mechanical or electronic gaming machines. PLES OF PRIZES in the form of prizes of any kind granted to people of culture, science and art on the occasion of galas, ums, festivals, national or international contests, or competitions based on jobs or professions in the form of prizes in money and/or in kind granted to sportsmen, coaches, technicians and other is stipulated by the relevant legisiation as a result of participation in domestic and intemational sporting paid by the entity with which they have relations generating salary income, in the form of prizes acquired as a resuit of commercial practices regarding the promotion of vices through advertising, according tothe law. derived from gambling, including jackpot income, according to the law. PRIZES (examples) by sportsmen atthe European and World championships and Olympic Games by Romanian students'at the academic compettions (worldwide) and by foreign students at tions organised in Romania. from prizes and gambling (Art. 76) ‘rom prizes represents the value of one prize received from one contest ‘rom gambling represents the vale of income gain in one day from one income payer. the citference between the gross income and the emount ofthe non-taxable income. es is limited to 600 Lei, but may not exceed the value of the income per prize/gambling sone day from one gambling company (Art. 77, par 4) specified, al references in this course notes material are from the Fiscal Code es at 30 13317.3 Withholding of tax on income from prizes and gambling (Art. 77) Income in the form of prizes is to be withheld at source at tax rate of 16% applied to the net income from e prize Income from gambling isto be withheld at source at a tax rate of 25% on the net income. “The payers of income are required to compute, withhold and remit the tex tothe state budget. “The tax computed and withheld atthe moment ofthe payment is the final tx. ‘The tax on income thus computed and withheld is to be remitted to the state budget on or before the 25% of t ‘month that follows the month in which the income was withheld. Lecture example 4.16 loana gained in 2012: ‘© 445,000 Lei prize at The Olympic Championship in Rome —in sim est # A.5,000 Lei prize at The European Mathematics Championship in Sofia © A38,000 Lei prize at a marketing event + 480,000 Lei at the national lottery Required Caloulate the tax on prizes and gambling income for loana in 2012, Solution Note: Unless otherwise speciid, el references inthis course notes material are om the Fiscal Code as at 30 September 2012. 1348. Income from the sale of private real estate (Title Ill Chapter Vill) {8.1 Definition and tax rate (Art. 77") When transfering the ownership right over a construction orfand pars of a constructions of any kind and their related land, as well as land of any kind without constructions, through legal acts concluded between the ling, taxpayers are liable to pay tax which is calculated as follows: 2) for constructions of any kind wit its related land, as well as for land of any kind without constructions, ‘acquired within a maximum term of 3 years: 4, 39% upto the amount of 200,000 Lei inclusive 2 Over 200,000 Lei, 6,000 Lei + 2% calculated for the amount ‘which exceeds 200,000 Lei inclusive. ) _forreal estate sold efter a period of more than 3 years from aoquiston: 4, 2% up to the amount of 200,000 Let inclusive, 2, Over 200,000 Lei, 4,000 Lei +1% calculated for the amount which exceeds 200,000 Let inclusive. Exemptions (art 77" (2) ‘© When transmiting the ownership of land end constructions of any Kind, by acts of restitution of ‘ownership according to the special laws «When transmitting the ownership by donation between relatives and spouse's relatives up to the thi degree inclusively, 2s well as between spouses When the property right i transfered by succession if the succession is falised in 2 years, otherwise there is a tx of 1% computed on the value of heritage. Definitions Taxpayer shall be understood asthe individual who is Fable to pay tax. Where the ownership right oF the aaaevemments thereof are transferred under legal documents between the ling, the taxpayer isthe person “on whose petrmony the ownership right or the dismemberments thereof are transfered: the seller, the ‘Corcmiter in case of a maintenance contract, @ putting in payment document, a transaction contract, et, ‘cep for transfer tough donation In rel esate exchange contracts al co-exchangers have the status of aye, exdept forthe exchange ofan immovable property with a movable property, in which case oly the er ofthe immovable property has the quality of taxpayer. «© When the ownership right is transferred through donation, the grantee has the quality of taxpayer. e When the ownership rights transferred due to death, by way of legal inheritance or by wil the status of taxpayer reverts to the heirs by law or by wills well as tothe hers of certain assets, date of the beginning of the term isthe date of aoquston, and the calculation of the term is made under condition of common right. he date of final reception «+ Inthe case of new buildings and their related land, the aoquiring dat LUniess otherwise specied, al references inthis course notes material are from the Fiscal Code as at 30 ber 2012, 135‘+ Forthe unfinished buildings and their related land the acquiing date is given by the ownership landidismemberments «Inthe case of joined pieces of land that were subsequently dismembered, respectively detached estranged, the acquiring date is considered to be the date at which the lot withthe largest surface acquired «In the case of buildings created by the joining of bullings acquired at different dates that estranged, the tax shall be calculated based on the acguting date of the bulding with the la surface ‘+ Inthe case where the joining lots have equal surfaces, the acquiring date is considered to be the at which the last lot was obtained In the case of an exchange, the acquiring date ofthe buildings that are subject to the exchange will the date at which each co-exchanger has acquired the property. 8.3 Taxed amount ’ ‘Tax s calculated for the amount dectared by the parties in the document through which the ownership or its pa ‘are transferred, If the declared value is lower than the approximate value set by the expertise drafted by thes Chamber of Public Notaries, tax shall be calculated for this value, except for transactions between relatives oF spouse's relatives up to second degree inclusively, as well as between spouses, in which case the lax is Calculated at the value declared by parties in the document through which the ownership right is being transferred. “The minimum amount fora part of a construction cannot be below 20% ofthe value set by the Chamber of Public: Notaries ‘The minimum amount for @ naked property cannot be below 80% of the value set by the Chamber of Public Notaries ‘The tax shall be calculated and collected by the public notary, before the authentication of the documents, or as the case may be the rating of the succession finalisation completion. Tax calculated and collected shell be remitted on or before the 25 of the month following the one when the tax was withheld. 8.4 Declarative obligations of notaries public regarding the sale of real estate (Art. 77°) Public Notaries must, on a half-year basis, submit to the local tax authorities an informative statement regarding the sale of realestate, containing the following elements for each transaction = Contracting parties © Thevvalue recorded in the sale document © The tax on the income from the sale of private real estate © Notary fees related to the sale. Note: Unless otherwise specie, al references in this course notes material are from the Fiscal Code as at 0 ‘September 2012. 136Lecture example 4.17 Mr Goldberg sold in 2012: | & Arhouse for which he obtained 380,000 Lei and which was acquired in 1998 ‘© A piece of land for 14,000 Lei purchased in June 2008. Mr Brauer sold in June 2012 for 4,000,000 Lei a building acquired by him via two transactions one on 12% ‘March 2004 when he acquired the first two floors ofthe building and another one in August 2009, when he ‘acquired the atic, becoming the sole owner of the building. (On July 202, Mrs Kim exchanges a piece of land in Bucharest acquited by her in November 2006 with an unfinished construction for a holiday cottage with a plot of land of 1,000 sqm in Sinaia of Mr Brauer. Mr Brauer bought the land in Sinala in 1990 and finished the cottage in March 2011. The value of property exchanged was established to 500,000 Lei Required Calculate the tax on real estate transactions made by Mr Goldberg, Mr Brauer and Mrs Kim in 2012 Solution Unless otnenvise specied, all references in this course notes material are from the Fiscal Code as at 30 301 2012. 137Solution 4.17 Mr Goldberg ‘© Income from selling a house owned for more than 3 years = 380,000 Lei Income tax = 294*200,000 + 12%"(380,000 ~ 200,000) = 5,800 Lei © Income from seling land owned for less than 3 years = 14,000 Lei Income tax = 3% * 14,000 = 420 Lel Mr. Brauer: ‘© Income from selling a building owned for more than 3 years* = 4,000,000 Lei {* the ownership period of the greater part ofthe building is giving the ownership period for al the building) Income tax = 234*200,000 + 1%*(4,000,000 ~ 200,000) = 42,000 La} ‘© Income from seling the holiday cottage in Sinaia owned for less than 3 years"* = 500,000 Lei (* the date of reception of building is giving the ownership period) Income tax = 3% * 200,000 + 2% * (500,000 ~ 200,000) = 12,000 Lei Mrs Kim ‘= Income from selling a land with unfinished building owned for more than 3 years"** = 500,000 Lei (** the ownership ofthe land is giving the ownership period forall the property ifthe building is unfinished) Income tax = 29%*200,000 + 1%"(500,000 ~ 200,000) = 7,000 Lei Note: Unless otherwise specifi, al references inthis course notes material are from te Fiscal Code as at 30 Sepiember 2012. 1629. Income from other sources (Title Ill Chapter IX) ‘9.1 Definition of income from other sources (Art. 78) This category includes, but is not limited to the following types of income: ‘* Insurance premiums bore by an independent individual or any other entity, within an activity for an individual in connection with which the bearer does not have a relationship that generates income from. ‘salaries according to chapter Ill of the present title '* Gains received from insurance companies as a result of the insurance contract concluded between the parties on the occasion of redeemable prize-drawn bonds (rageri de amortizare = payments made by the insurance companies before the ensured event takes place, based on a special payment mechanism) * Income received by pensioners in the form of differences of price for certain goods, services and other Tights, and former employees, according to clauses of labour contracts or on the basis of special laws * Income received by individuals that are fees from activites related to commercial arbitration 4 ‘+ Income from recycling activity (but not the income from recycling activity stated in national programs). EXAMPLES OF OTHER INCOME Remuneration for the work performed in favour of units of the General Directorate of State Penitentiaries, as well «a in workshops of prisons, granted according to the law tothe persons serving a period of imprisonment + Income received by students in the form of allowances forthe participation in university senate meetings = SpRUM Aehve py eis HN es HoH cents eT eng me, GER, owe se similar = Amounts paid by organisers to the persons who accompany students to contests and other a Te ere mes epties be fom wes, a local elections + Income derived by extras in flms, shows, TV shows or similar = Gift vouchers granted to individuals outside of a relationship which generates salary income = Income, other than that under art. 42 letter k) distributed by legal entities set up according to of land claimed ai regarding the restitution of rights over agricultural and forest pieces preven ‘of Ownership Law no. 18/1991 and of law no. 1869/1997, as amended. Note: Unless otherwise specified, al rferences inthis course notes material ae from the Fiscal Code as a 1 September 2012 ‘eg9.2 Computation of tax and payment deadline (Art. 79) income tax isto be computed by withholding at source at the moment of payment of such income by the income payers, by applying a rate of 16% to the gross income. ‘The tax computed and withheld represents the final tax. Exception The tax on income from recycling activities, which is taxed at source with 16% of gross income, is considered anticipated tax. The tax thus withheld is to be remitted to the state budget on or before the 25% day of the month following the month when it was withheld. 9.3 Incomes from undeclared sources (Art. 79") Any kind of incomes discovered by the Fiscal Authorities, which source was not identified shall be taxed with 16% of the taxable amount 410. Annual taxable income (Title Ill, Chapter X) 10.1 Determination of taxable net annual income (Art. 80) beneficiaries of the following types of income has to compute and declare their annual taxable income for ch type of income separately: Independent income Rental income ‘ ‘Agricultural income (excepted for exam purposes) annual fiscal loss recorded for each type ofthe above income and ftom each source shall be caried forward ‘offset against the same type of income from the same source over the folowing § fiscal years. ‘annual fiscal loss posted by a taxpayer from a Romanian source cannot be set off against income derived by taxpayer from abroad. regarding the carry forward of losses are as follows: The carry forward is tobe made chronologically, the earliest first, during the following § consecutive years The right to carry forward is personal and non-transferable The loss carried forward that isnot used as offsetting before the 5-year period represents the final loss of the taxpayer 288 otherwise specified, all references in this course notes material are from the Fiscal Code as at 30 2012, 13840.2Declarations of estimated income (Art. 81) Taxpayers (both individuals as well as associations) that begin an activity are requited to submit a declaration to the competent fiscal authorty regarding the income and expenses estimated for that fiscal year, within 15 days after the activity is begun. Exemption: taxpayers that eam income for which the tax is to be withheld at source. (e.g. for dividend income, prizes and gambling, independent income from civ conventions, copyright or accounting or technical expertise with the option to be fully taxed at source, etc) ‘The estimated income deciaration should be submitted also by taxpayers taxed by income norms system. “The estimated income declaration must be submitted also inthe folowing years of activity by 25% May it + A fiscal loss has been determined forthe previous year ‘© The prior year of activity was not a ful calendar year «Activity in the curent year willbe at least 20% diferent in size than the activity in the previous year 7 ‘©The taxpayer switches the tax system 410.3Anticipated tax payments (Art. 82) ‘Anticipated tax payments are due by taxoayers who obtain independent income, rental income or agricultural income. ‘Taxpayers for whom the anticipated taxis withheld at source are exempt. Based on the declaration of estimated taxable income, on the income norm or on the net taxable income of the prior year, the fiscal inspectors shall determine the anticipated tax payments for each income source, by issuing a tax decision that is to be communicated in wrting tothe taxpayer. Ifthe assessment of tax is received after the payment deadline, the taxpayer should pay the anticipated tax payments as at the previous term and the balance resutted should be split over the anticipated tax payments remained in the current year. For the activites started in the last quarter for which the estimated income declaration is to be submitted in December, there is no anticipated tax. The realised taxable income wil be taxed as final tax. “The anticipated tax payments are to be made in 4 equal instalments, on or before the 25% day ofthe last month of each quarter (March, June, September and December) with the exception of rental income for which the anticipated tax s paid in'2 equel instalments due by 25" July and 25" November. For the estimated income declaration submitted in December there are no prepayments, the realised taxable income up to the end of the year wil be taxed at the annual tax declaration deadline, ‘Tax prepayments for rental income, with the exception of income from the rental of pieces of land, are to be determined by the fiscal organ as follows: a) Based on the contract concluded between the parties; or b) Based on the income determined according to the data in the simple entry accounting system, according to the election. If, according to a contract's provisions, income derived from the grant of the use of goods represents the equivalent in Lei of en amount denominated in foreign currency, the determination of Note: Unless othernise specified, al references in his course nates meteral ae from the Fiscal Code as at 30 September 2012. 140Ba estimated income shall be made based onthe exchange rate onthe currency market, notified by the National Bank of Romania, the day before the taxation is mde The total amount of tax prepayments is 3) 16% ofthe total estimated taxable income upto the end ofthe year or 5) 16% of te income nom ifthe taxation system use is based on income norms Ite taxpayer has incomes from which antcpated tax was withhold, that income should be excluded from the estimated income used to compute tax prepayments ‘Tax prepayments for rental income in te ¥ case were the rents denominated in Lei as well a for the independent ‘income taxed based on the income nor ms system are fina ax there ate no changes in the actly. Ifthe activity ofthe taxpayer ceases during the year orf the activ ‘ask for a new tax decision in 15 days (5 days for rental inc declaration and all justifying documents, iy is temporary suspended, the taxpayer should ome) by submitting a new estimated income 10.4Declaration of realised taxable income (Art. 63) Texpayers shall submit an ennual declaration by 25 May * Independent income ‘next year, forthe following type of income: Rental income Agricultural income determined in real system Seperate declaration of income must also be filed in for flowing net annual investment incomes: ? Income from transactions with secures, ther than social pats and securities in the case of closed companies (even though these incomes are dectared quartet too) Income ffom tem tensactions with foreign currency, based on a contrat, and ‘any other operations of this kind me for which declarations are not required NNet income determined based on incomes norms (with the exception of those who submitted the estimated income declaration in December and for whi ich there have been no tax prepayments) Copyright income, income from accounting or technical expertise or fom income rom ch conventions if the taxpayer choose to be tax with 16% at source (final tx) Rental income related to agreements in which the rent was denominated in ROL and in the fiscal year there were no changes (Le. the realised annual income is equal tothe estivatea income), except for ‘hose individuals who submit the estimated income declaration in December Income in the form of salaries and income assimilated to fiscal records which have the regime of declarations pe ches specie, al references inthis course notes mate ar tom te Fiscal Code asa 20 ber 2012, 144 Salaries for which the information is included in) Income from investment (other than these specified above), prizes and gambling, which taxation is final ) Income from pensions @) Income from the transfer of real estates h) Income from other sources. ’) Income from other countries OBSERVATION: ‘The realised income declaration is NOT required for those incomes from which the anticipated tax withhold is the Whole tax due and itis considered final 10.5Calculation and payment of tax on annual income (Art. 84) Rate: 16% From the taxable income computed and dectared according tothe rules for each type of actvty and declared in the annual realised income dectaration. The fiscal authorities have to compute any outstanding income tax due and they have to communicate i to the taxpayer through a so called Final Tax Decision. ‘The tax payer should pay any outstanding tax as established by the tax decision in 60 days from the ‘communication of tax decision The tax payer has the option to allocate 2% of his due tax as sponsorship to a non-profit organisation or as private scholarship. Note: Unies otherwise specified, all references inthis course notes material are ftom the Fiscal Code as at 30, September 2012. 142Lecture example 4.18 Mr Adam obtained during last years the following income: Income 2006 =| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 (Lei) (Lei) | (Lei) | (Lei) | (Lei) | (Let) | (Leip Independent activities (taxable profi) 2000__| 6,800_| 7,300 | 9.600 | 11,260 | 17,000 | 10,000 Rent (gross. income, no actual system applied ‘Agrcutural activity (profit calculated per actual) 4,500 | 4500 | 4,500 | 4500 | 4,500 | 4,500 | 4,500 (12,000) | (4,200) | 4,000 | (100) | (25) 14,000 | 10,000 Required Calculate the total income tax paid by Mr Adam in respect of his realised income in each of the above years. Solution Income tax 2006 2007 | 2008 | 2009 | 2010 2011 | 2012 (lel) | (le) | (Le) | (Le) | Le) | (Le) | (Le) Independent activites: Taxable proft Tax @16% Rent: Taxable income Tax @16% ‘Agricultural activity Taxable income Tax @16% Total income tax paid Unless otherwise specified, al references inthis course notes material are from the Fiscal Code as at 30 ber 2012, 143,2006 2007 2008 2009 2010 2011 2012 (Le))| (Let) | (Lot) | (Let) ) (Lei) | (Let) | (Lei) Independent activities Taxable profit 2,000 6,800 7300) 9,600] 11,260 | 17,000 | 10,000 ‘axable profi Tax @16% 320| 1,088 1i68| 1,536 1,800] 2,720 | _ 1,600 Rent: Taxable income (net of 25%) 3,375 3,375 3.375 3,375 Tax @16% i 3,375 3,375 3,375 540 540 540 540 540 540 540. Agricultural ‘activity Taxable proft 1675 | 10,000 268 1,600 aso} 1628| 1.708) 2078| 2240) 3528) 3740 End of chapter 2012. otherwise specie, all references inthis oou 163 rse notes material are from the Fiscal Code as at 30