Christmas comes but once a year as does the New Year.
These are important times for Romania and Romanians as well as for the Ministry of Finance.
Each year the Ministry passes an Ordinance whereby they change certain taxes and procedures in Romanian law and which will come into force on 1st January of the next year. They also change the minimum wage, so from 1st January 2014 the minimum wage in Romania has now been fixed at eight hundred and fifty RON per month.
This year is no exception to the changes and the Government duly passed Emergency Ordinance 102 on 14th November 2013 which comes into force on 1st January 2014. This Ordinance contains features intended to improve tax collection and the Government’s finances at the same time clarify the position for the tax payers. The contents of the Ordinance are such that I cannot highlight all changes but I will mention those which I think are interesting.
Next year (2014) we will have a new tax on constructions. It has been estimated that this will increase for example the costs of each wind farm turbine by forty thousand Euros. Developers in renewable energy will need to consider the new tax in their calculations.
For Romanian companies the law will now allow them to change their tax year from ending on 31st December to another date. This should help the accountants as they always have a rush at the end of the calendar year and the first period of the next year as they finalize the year end accounts.
There are now favorable measures from the fiscal perspective in relation to holding companies. Romanian companies may need to re-examine their corporate structures. Dividend income capital gains and income derived from the liquidation of another legal entity are non-taxable in the hands of a Romanian company subject to the qualifying requirements. In respect of the payment of dividends by a Romanian company to an entity residing in the EU the period of holding is reduced from two years to one year. However, the application of Directive 2011/96/EU and Directive 2003/49/EC is now reduced to entities of EU member states only.
In relation to the question of sponsorship it is now possible to carry forward any unused tax credits from sponsorship to future financial years.
The taxation of micro enterprises has been changed. A micro enterprise can now have up to twenty per cent of its income from consultancy and management services. There is also amendment to the treatment of commercial discounts and gains resulting from foreign exchange differences.
A number of amendments to Revenue tax have been made. These include incomes from independent activities as well as income from rental activities, employment income and agriculture rent. For foreigners there are new rules concerning the taxation of income from dependent activities for non-residential individuals.
Value added tax has not escape amendments this year and the new rules cover amounts cashed on behalf of or to the account of a third party which are now considered non-taxable from the VAT perspective. There are new rules concerning VAT reimbursement to non-residents of VAT paid in Romania; also new provisions dealing with inactive companies and how VAT is dealt with if you deal with them.
The above is I am afraid only a quick snap shot of some of the changes and I urge all of you to have the Ordinance reviewed in the context of your business.