The return to microcompanies

On 30^th of December 2010 the Romanian Government introduced through the O.U. no. 117/2010 the possibility to return to the status of microcompany.

In the understanding of this ordinance, the microcompany is a legal entity that at 31^st of December 2010 meets ALL the following conditions:

1. has incomes other than those obtained from banking, insurance, reinsurance, capital markets (except the intermediary in these areas), gambling, consultancy and management.
2. has minimum 1 and maximum 9 employees
3. achieved revenues that did not exceed the equivalent in lei of 100.000 EUR
4. the registered capital is held by persons, other than state and local authorities

On 30^th of December 2010 the Romanian Government introduced through the O.U. no. 117/2010 the possibility to return to the status of microcompany.

Starting with 1^st of January 2011 the minimum gross salary guaranteed payment is set at 670 lei per month according to H.G. 11931/2010, compared with 600 lei as it was at the end of 2010.

The amount of 670 lei is set for a full-time working schedule of 170 hours per month, representing 3.94 lei/hour. The staff compliance with a salary below the minimum gross salary is considered to be a contravention and is punishable by law with a fine of 1.000 lei up to 2.000 lei.

Therefore according with the new provisions, the minimum gross salary is 670 lei for an unqualified worker, a minimum gross salary of 804 lei for a qualified worker, and for the personnel employed in positions that require higher education will be of 1340 lei.

The H.G. 1193/2010 that enables the minimum gross salary guaranteed payment was published in the Official Gazette, Part I no. 824 from 9 December 2010.

During the last days of 2010, were published in the Official Gazette 891/30.12.2010 important changes of the Fiscal Code and of the Regulations for the application of the Fiscal Code, but also of the social insurance legislation and the Fiscal Procedure Code. The governmental decree that stipulates these changes is OUG 117 for the amendment and completition of Law no. 571/2003 regarding the Fiscal Code and reglementation of some financial and fiscal measures.

Amendments to the Fiscal Code relates primarily to: tax, income tax on small companies, VAT, income tax, excise duties, social contributions. Here are the main changes occurring in each of these areas:

Based on the Romanian Government’s representatives, starting with October 1st, the minimum tax will be eliminated. The minimum tax was introduced at 1^st of May 2009, together with other fiscal measures aimed to diminish the effects of the economic crisis, but finally, their effects were exactly the opposite.

As a result of the minimum tax’s elimination, the companies will pay between the 1st of October and the 31st of December 2010 the profit tax of 16%.

The last deadline for the minimum tax (the flat tax) will be the 25th of October, for the 3rd quarter of 2010. Starting with the 25th of February 2011, the companies will pay the profit tax for the 4th quarter of 2010, accordingly with the calculation norms existing before the introduction of the minimum tax.

Starting July 1^st 2010, new tax and fiscal regulations are applied in Romania, due to the Emergency Ordinance 58 from June 26^th 2010, that will affect all sectors of the national economy.

We briefly present the changes brought by this ordinance:

Profit Tax

Article 32 of the Fiscal Code is amended and has the following content:

“Art.32 Any loss realized by permanent headquarters situated in other states other than Member States of the European Union / European Association of Free Trade or which are located in a state with which Romania has concluded a double taxation convention is deductible only from the income earned by that permanent headquarters.

One year and a half ago the Romanian Government announced the first set of anti-crisis measures. I’ve considered them wrong and I estimated their effects will be opposite and will deepen the crisis, respectively I wrote several articles about it at that time.

Government’s Emergency Ordinance no. 54/23.06.2010 brings news also related to the acti vity of the Trade Registry. It amendes other regulations, among which the Law 31/1990 on copanies, republished in the Official Gazette, Part I, no. 1066 from November 17^th, 2004, which is modified and completed as it follows:

On June 23^rd 2010, the Emergency Ordinance no 54/2010 has been adopted, stipulating some measures to fight against tax evasion, ordinance that brings amendments to the Fiscal Code in force. The Ordinance was published in the Official Gazette no. 421 of June 23^rd, 2010.

The stated purpose for these changes is the registration and removal from the taxpayers records of those who are carrying out Intra Community trade particularly Intra Community acquisitions of goods, to reduce tax evasion on VAT.

Thus, beginning with August 1^st, 2010, the National Tax Administration Agency sets up and organizes the Register of Intra Community Operators that includes all taxable persons and non-taxable legal entities carrying out intra community operations, such as :

As by the application rules of the Romanian Tax Code, the companies founded in 2010 pay income tax but do not pay the minimum tax.

This provision is included in art.11^6 of the Implementing Rules of the Tax Code for Article 18:

“11^6. Taxpayers established during the year are not entering under the provisions of Art. 18 para. (2) for the year wehen they are registered at the Trade Registry, but they are required to determine the income tax as by the provisions of Title II “Tax profits” of the Tax Code.”

Starting this month you can also follow un on Twitter! Ascent Group‘s Twitter account is @ascent_eu.

Connect with us and you will receive updated information about legal, fiscal and business environment news, but also information related to the events organised by us or our partners.

In the current European context, the evolution of unemployment rate is particularly important for major investments as well as for small and medium sized enterprises. Forecasts are bleak as possible : “I think unemployment rate did not reach yet its highest rate, but this will happen in 2010, in the first or second quarter. I do not think we will reach a rate of 10% but this is my opinion, “said the economist of the World Bank, Catalin Pauna.

Here we are in the second quarter of 2010 and taking into consideration the overview of the first quarter of this year we can say that the forecasts are not far from being fulfilled. If the unemployment rate in Romania for the last quarter of 2009 was 7.5%, in the first quarter of 2010 it reached 8.3% in comparison to 5.6% in the same period of last year.

This applies not only to Romania, the same upward trend being valid for Bulgaria too, another country in the region.

Romanian Senate approved in March 2010 the Law stipulating that corporate taxpayers will have the possibility to pay VAT resulting from the issuing of the invoice to customers within 30 days from receipt of the amounts and not until the 25th of the month following the month in which the invoice was issued.

This amendment is contrary to the European Directive 112/2006, which states as a general rule that the payment liability appears at the time of the delivery of goods, at the date of services provisioning and on the date of receipt of advance payments before delivery or performance.

However, notwithstanding the general rule regarding the generator event and VAT payment, at art. 66 from the European Directive 112, there is stated that EU Member States may stipulate that VAT becomes chargeable for certain transactions or certain categories of taxable persons, the latest at the payment date.

Romania was fully hit by the global crisis, and construction field was by far one of the most affected areas. However, there is a company that not only survived the crisis but had significant increases in 2009. It’s Algeco.

What was Algeco’s success in Romania? The increase of turnover with 35% in 2009 compared to 2008 and a doubling of operational profit.

We wonder how it was possible, especially in a year that most companies in this area have dropped dramatically?

And here it is the story of Algeco …

Algeco Romania is part of Algeco Scotsman, a leading global provider of services, expert in modular space and storage solutions. In other words, Algeco invests in solutions for space, which provides beneficiaries solving an immediate need at the best quality.

The European Union was born from a dream. Those who founded it were people with vision and high ideals, such as Robert Schumman, Kondrad Adenauer, Alcide de Gasperi or Jean Monnet. Their dream was continued by other visionaries: Edward Heath, Francois Mitterrand, Jacques Delors and Helmut Kohl.

The Europe they wanted was a Union of values, a strong area, united in diversity.

Is the Europe today the one they have dreamed to?

Last days news reveals us shocking information. Greece has publicly admitted that they provided false information to the European Union. Bulgaria succeeded in this series of disclosures, recognizing that they also provided false information to the Union regarding the actual level of its budgetary deficit. Certainly, in the coming weeks or months, other countries will be added to this list.

Trust between the Union states began to shake, and availability to offer support between the member states decreased substantially.

articol published in the Consulting Review magazine

One of the latest concepts in business is the “corporate entrepreneurship”, i.e. implementing entrepreneurial business practices in the management of major corporations.

What does that mean? Shell we understand that the corporate management model, so much praised in the past 20 years is not really the key to success? Or that all the MBA’s and management, leadership, strategic planning courses, etc… involving managers of corporations do not hold the key to success and do not provide all the answers to the challenges these managers should face?

A year ago I was fortunate to know personally Larry Farrell, the American specialist who created the concept of Corporate Entrepreneurship and the No. 1 worldwide specialist in research and development of entrepreneurial practices.

Ascent Group became partner of the NGO Mişcarea Arădeană in the project “Arad, my love!“

“Arad, my love!” is an educational project which aims to reach the children from Arad on city’s values and beauty.

Because we think for long term, we joined Mişcarea Arădeana’s wish to determine future generations to think differently and to love Arad with the same passion as those who built the city. Therefore we want to offer children the chance to know Arad from another perspective, to provide them information about its values and spirit.

The Romanian Government decided to offer starting with 1st of February 2010, another period of three months of technical unemployment during which the social charges for the employees will not be paid, but the employers have to certify the difficult period of their company by giving a statutory declarations. These companies will be periodically checked by ANAF.

The new period of technical unemployment will be applied from February 2010 but not later than December 31, 2010. During the suspension of the individual employment contract the employees and the employers (of those employees) are exempt from paying social security contributions for no more than 90 days.

Personnel layoffs, in both private and public system, are one of the most common topics in the mass-media our days.

Regarding this issue, for most of us 2009 meant fear. It seems that even the new state regulations have formed premises to personnel reduction.

But, we come to ask now if dismissal is really the only alternative to reducing the personnel cost?
The answer is far to be a simple yes or no. Many factors are involved in this decision such as:

• the business of the company;
• suppliers and customers;
• number of competitors in the market;
• substitution rate of products and services
• the future strategy of the company

Taking into account all these factors, when the management concludes that a company needs to reduce costs, a careful analyze regarding the following issues is request:

Until few years ago, Romania was still full of tourists spending their holidays in Mamaia, Eforie, 1 Mai, and was welcoming them, in the specifically hospitality spirit with inflated prices, lowest quality service and forced smiles. We were enjoying it or, better, we had to enjoy it because we had no choice.

Today, the situation is different. Our Bulgarian neighbors saw that we have a problem and found a very suitable solution to our needs: they learn Romanian language or employed Romanian-speaking Bulgarians, they nicely smiled to foreign investors and now, the majority of Romanian tourists but not only, already changed the itinerary of their holiday to Bulgaria. Who has not heard of Golden Sands, Albena and Balchik? 1-0 for Bulgaria.

In January 28, 2006 was published the Law 441/2006, which amended the Law. 31/1990 on trading companies introducing new measures on the submission of annual financial statements. Although initially the measures should have been applied from January 1st, 2007, its implementation was delayed until January 1, 2010. Thus, since 2010, the annual financial statements and related addendums in Romania will be submitted only to the Trade Register Office.

According to the existing notification on Trade Register’s website “annual financial statements for 2009 are submitted only in the county offices of the Trade Register respectively in the Trade Register Office of Bucharest. “

We are în the crisis: crisis of trained people, resource people, talented people.

And we are also in the crisis of people able to identify, develop and keep the resource people in the companies.

Ascent Group is your partner in the process of personal and professional development of your employees, because the continuous personnel development is a need felt by any company especially during the curent economical context.

Ascent Group brings a modern vision into the learning process, by emphasizing the benefits of “learning by doing” through exercises, role-plays and behavioral modeling. Our training programs have an interactive approach, are personalized and addressed to each client’s unique demands, to their visions and organizational objectives.

In 2010, in addition to the minimum tax that has got no economical logic, the tax system for micro-enterprises in Romania was adjusted as well, from an income tax based on applying a rate of 3% on revenue, to the implementation of an income tax with a rate of 16%, even further burdening these enterprises that have been already affected by the global economic crisis.

I believe that eliminating the income taxation of micro-enterprises and keeping the minimum tax which, I repeat, has no economical logic, will substantially contribute to the suspension or closure of many companies and certainly the growth of tax evasion in 2010.

At the end of last year, the European Commission approved a program proposed by Romania which is valid until December 31, 2010 and is expected to offer support to the companies that have financial problems due to the worst conditions of the economic crisis.

The financial support may be granted by the Romanian authorities only to companies that were not în difficulty on July 1, 2008. The companies will receive grants, concessional loans, interest subsidies, guarantees or phasing the claims hold by the state without charging interest.

Training was one of the most affected sectors uring the crisis. We all know that training market dramatically decreased last year, due to the “education cost freeze” process in most of the companies.

However, even during the crisis period, some of the topics were highly requested by companies, especially because they respond tu curent needs.

One of the most popular training modules during the crisis, was certainly the one related to entrepreneurship and the ways to use the basics of entrepreneurship in the work activities, dedicated to managers and employees who want to develop their entrepreneurial spirit in their jobs. The difference that this new module is bringing on the Romanian market is encouraging the employees of the companies to build and grow a business and not just to manage it.

Under current legislation, employers in Romania are required to register the individual employment contracts at Labor Inspectorates within 20 calendar days from their closing and to transmit them to the General Registry of Evidence of Employees within 5 days.

Due to some new regulations, as a measure against tax evasion, the Labor Ministry published the GD. 37/2010 on January 20th, 2010 which states that employers must register in the General Registry of Evidence of Employees the employment contracts and the identification data of employees – name, surname, personal identification number, date of employment, position, type of contract – not later than the previous day of the beginning of work by the employee. The employment contract must be submitted online or presented at the Labor Inspectorate on the same date, the term of 5 days given to employers to communicate this information at the Labor Inspectorates being eliminated.