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New taxes and less deductibilities – the latest amendments of the Romanian Fiscal Code

Starting with 1st of May 2009 a few important changes of the Romanian Fiscal Code became effective, through the Emergency Ordinance 34/2009. We present below the most important elements that have been changed.

Introduction of the lump tax rate

One of the main news brought by the Emergency Ordinance 34/2009 is reffering to the introduction of a new type of taxing, the lump tax rate.

In this respect, was introduced for the Romanian legal entities, payers of the taxable profit, the compulsoriness to determine the quarterly tax by comparing the quarterly income tax with the minimum quarterly lump tax rate and the income payment at the higher amount.

To apply the lump tax rate, the amounts corresponding to the minimum tax, determined according to total income registered on December 31st 2008, are:

Total annual revenues (RON) Minimum annual tax (RON)
0-52.000 2.200
52.001-215.000 4.300
215.001-430.000 6.500
430.001-4.300.000 8.600
4.300.001-21.500.000 11.000
21.500.001-129.000.000 22.000
over 129.000.001 43.000

The tax that must be payed for the second quarter of 2009 is determined by comparing the income tax due at the end of second quarter 2009 with annual minimum lump tax rate recalculated accordingly for the period 1st of May-30th of June 2009.

To determine the tax due for the quarters III and IV it is necessary to compare the tax revenue due at the end of each quarter with the minimum annual tax recalculated for the respectively quarter.

In case of the lump tax rate is higher than the revenue tax, the taxpayer is required to pay the minimum lump tax rate.

The tax on the revenue of the microcompanies

The microcompanies are also subject to lump tax rate. This tax is applicable also in case of the income tax resulted after applying a 3% share on total revenue of which it is subtract the exempt income is less than the minimum annual tax as table above. In this case microcompanies are required to pay minimum annual tax.

Income taxes of companies new established

Newly established companies for the current fiscal year are not entered under these provisions and are obliged to calculate the taxes based on the provisions of the Fiscal Code.

Tax deductibility on road vehicles

By Emergency Ordinance 34/ 2009 were also introduced limits on deductibility of operation, maintenance and repairs related to cars used by people with positions of leadership and management within the companies. The expenses from this category are considered deductible only for one car for each person associated with management responsibilities, for other cars such expenses being considered non-deductible.

The Emergency Ordinance 34 / 2009 is also introducing limits on deductibility of motor fuels for the period May 2009 - December 2010, being considered non-deductible expenses for fuel when it is used for road vehicles which are used exclusively for road transport of persons, with a maximum authorized the not exceeding 3500 kilograms and not more than 9 passenger seats, including driver's seat.

But are still considered deductible expenses on fuel or the VAT on acquisition for road motor vehicles falling within the following categories:

  • vehicles used exclusively for intervention, repair, safety and security, courier services, transport staff to and from the place of business, and vehicles specifically adapted for television, vehicles used by sales agents and personnel recruitment agents;
  • vehicles used to transport persons for remuneration, including the taxi;
  • vehicles used for rent a car services, including training activities in schools drivers.

VAT regulations

For vehicles listed in the previous paragraph is not possible to deduct the VAT related to acquisition or fuel.

The VAT can be deducted in case of payment the leasing rates or residual value for cars purchased through financial leasing. Also, the VAT can be deduct in case of rents payed thourgh operational leasing.

Tax non-recognition of revaluation reserve

By OUG 34/2009 reserves from revaluation of fixed assets, including lands, revaluated after 1 January 2004, which are deducted in calculating taxable profits through taxation or depreciation expenses on assets sold or scrapped will be subject of taxation with tax depreciation deduction and at the time of fall management revalued fixed assets.

Companies in temporary inactivity reported to the Trade Registry

Companies that were in temporary inactivity reported to the Trade Registry before May 1, 2009 are not subject to the flat rate tax.

If the companies get in idle time during the year will be flat-rate tax for the period between the beginning of time and registered at the Trade Registry Office application form for mentions.

In case the period of inactivity temporary stop during the year, the companies apply a flat rate tax regulations from the date of termination of temporary inactivity, corresponding period of the year remaining until December 31st.

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