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The main changes of the Fiscal Code in 2016

The new Fiscal Code, adopted in September 2015, brings various of changes, applicable from different data. We will briefly describe below the changes that will be effetive starting with 2016.

Changes in the VAT 

Standard rate of VAT for all goods and services will be reduced from 24% to 19% in two steps: starting from 2016 from 24% to 20% and starting with the 1st of January 2017 will be reduced to 19%.

For the delivery of school textbooks, books, newspapers and magazines, except those intended exclusively or mainly for advertising as well as for the service consisting in allowing acces to the castles, museums, memorial houses, historical monuments, monuments of architecture and monuments of archeology, zoological and botanical gardens, fairs and exhibitions and cultural events, sporting events, cinemas, other than those without the right to deduction it will be applied the reduced rate of VAT to 5%.

Also about the VAT, the new regulations introduce reverse charge mechanism for the delivery of buildings and parts of buildings and land of any kind, for the supply of which shall apply the fee.

Amedments to the tax on small size enterprises

Starting with 2016 the taxation of the microcompanies is still 3% on the revenue, but for the romanian legal entities new - established which have at least one employee and are constitute for more than 48 months, and the shareholders/their associations have not held titles of participation in other legal entities, the rate of taxation will be 1% for the first 24 months from the date of registration of the Romaninan legal entity, according to the law. Tha taxation shall apply until the end of the quarter of 24 months.

These provisions shall apply if within a period of 48 months from the date of the registration, the micro-company is not in the following situations:

  • voluntary winding up by the decision of the general meeting;
  • dissolution without going into liquidation;
  • temporary inactivity;
  • the declaration on his own responsibility at the registered office for inactivity;
  • the social capital increase by contribution carried out by new shareholders/associated, according to the law;
  • the social shareholders/his associates sell/transfer/change titles of participation held.

The condition relating to the employed person shall be deemed to be satisfied if the commitment shall be made within 60 days including the date of registration of the legal entity concerned. If  the legal entity newly set up no longer has any employee in the first 24 months, the 3% quota will be applied starting with the quarter in which it has been the changing. For a legal entity  with a single employee whose employment cease, the condition regarding the employees shall be deemed to be fulfilled if in the course of the quarter in question they will hire a new employee.

Changes in the tax on profit

Tax on dividends decreases from 16% to 5%, with the effect starting with 1st of  January 2017.

The calculation of the protocol expenditures deductible will change, the legal reserve by reference to the accounting result will no longer adjust with non-taxable income and expenditure in respect of this incomes.

The limit of 3 per thousand of sales figure will change in the case of expenditure sponsoship for 5 per thousand from the sales figure.

Social expenditures are deductible within the limit of the A quota of up to 5% applied on the amount of expenditure with the staff wages compared to 2% as it is at present.

The determination of the degree of equity ratio calculated in order to deduction of expenditures with interest and of exchange differences relating to certain loans will change.

Dividends received from a legal entity are non-taxable, eliminating in this way the condition entered at 1st of January 2014 according to which the entity who receives dividends must hold on the date of their recording for an uninterrupted period of 1 year, at least 10% of the capital of the legal entity which distributes dividends.

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