EMPLOYMENT AS A MICRO-ENTERPRISE – 1% micro tax

The classification as a micro-enterprise as defined in OMFP 1802/2014 (local accounting standard strongly harmonised with IFRS)  has not been modified, instead the access of micro-enterprises system tax for the 1 and 3% income tax has been limited by new conditions.  In order to still have access to this type of taxation, companies must not exceed 500,000 euros in yearly turnover  and must employ at least 1 person with the minimum national wage and 8 hours /day schedule.

The employed person cannot have the contract suspended for more than 30 days to fulfill the condition. The possibility of suspending this contract several times for periods shorter than 30 days is not debated in the current text. Also, the important shareholders (those who own at least 25% of the companies) can only create a maximum of 3 micro taxed companies. In other words, if the first conditions are met, but the partners own more than 3 companies included in micro taxation, one or all of the companies will lose the type of turnover tax.

Another condition refers to the consultancy and management sector, where if a company has 80% of its Turnover, needs to pass from micro tax to profit tax.

We clarify below what this activity entails, Consulting / Management is found as the main and / or secondary activity related to CAEN code 7022:

• This class includes consulting, coaching and operational assistance for companies and other organizations on management issues, such as such as: strategic and organizational planning, refurbishment processes, change management, cost reduction and other financial issues; marketing objectives and strategiesplanning and human resource policiescompensation and retirement strategiesproduction planning and control planning
• These business services may include consultancy, guidance or assistance for companies and public services regarding: design of accounting methods or procedures, cost accounting programs, budget control procedures, consulting and assistance to companies and public services for planning, efficient organization and control, information management etc. CAEN

Code 7022 excludes:

• software design (programs), see CAEN 6201consultancy and legal representation, see CAEN 6910
• accounting and financial audit activities, tax consultancy, see CAEN 6920
• consultancy activities related to architecture and engineering, see CAEN 7111, see CAEN 7112
• consultancy activities related to the environment, agronomy, security and the like, see CAEN 7490
• consultancy activities regarding the selection and placement of the workforce, see CAEN 7810
• consultancy activities in education, see CAEN 8560

THE DIVIDENS TAX BECOMES 8%

The tax on dividend income, but also on income from securities obtained by individuals or legal entities becomes 8% starting with 2023. The conditions for tax exemption for both individuals and legal entities (including expat structures) have remained the same. At #greenbooks we recommend the distribution of available and undiscounted dividends during 2022.

PROFIT-EXEMPTED REINVESTMENT TAX

Profit invested in technological equipment, assets used in production and processing, assets representing refurbishment, electronic computers and peripherals, machines and household appliances, in computer programs, as well as for the right to use computer programs, produced and / or purchased, including on the basis of financial leases used for the purpose of carrying out economic activity is exempt from tax.Remember that these exemptions do not operate automatically and that you will have to communicate with the accountant to organise the request for exemption. We attach here an informative material on this topic: https://static.anaf.ro/static/10/Iasi/material_informativ-1_22-12-2021.pdf

CONSTRUCTIONS- SEVERAL MODIFICATIONS 

Starting with 1.01.2023 a series of modifications regarding the field of Constructions will have its effects. If you have an construction investment on going or planing to buy a new construction in Romania, check this modifications:

• The reference date of June 2022 is clarified for the verification of the ceiling of 80% of the Turnover obtained from constructions, based on which field-specific exemptions can be applied. The information is that the tax reduction refers only for companies with construction companies which must be carried out exclusively in Romania. It also specifies the list of products and services that are included in the calculation of Turnover and limits the exemption ceiling from 30,000 to 10,000 lei.
• A new condition is imposed  in the sense of lowering the ceiling from 700,000 lei to 600,000 lei for purchases with a reduced share of VAT at 5%. The acquisition must not exceed the amount of 600,000 lei, excluding VAT, has to be purchased by individuals or jointly with another individual or co. The reduced rate applies only to homes that at the time of delivery can be inhabited as such. If the values ​​are expressed in euro, the exchange rate of the euro will be used on 31 December 2022 to verify the ceiling. It is not specified in the GO whether or not this measure applies to ongoing projects.
• The creation of the Register for purchased  homes with a reduced VAT rate of 5%, based on information from legal acts that have as object the transfer of ownership for homes sold at a reduced VAT rate through authenticated transactions.
• The register will be administered by the Union of Notaries, and notaries will have the obligation both to verify the transactions in terms of compliance with the reduced VAT conditions and to report the transactions performed.
• The minimum value of the residential tax increases from 0.08 to 0.1%. The quota is applied on the values ​​included in the market studies regarding the indicative values ​​regarding the real estate properties in Romania, administered by the National Union of Notaries Public in Romania.
• The minimum value for the tax on non-residential buildings will increase from the minimum threshold of 0.2 to 0.5 %, while for mixed buildings the taxation will be applied according to the majority percentage of its use. (either residential or non-residential)
• The order contains a whole series of measures regarding the impact of different taxation on certain components of the salary specific to the field.

CHANGE OF EXCISE DUTIES AND GAMBLING

Gambling and the insurance field of activities (we find quite deghlitfull the association of terms) that was included in the income tax of the micro-enterprise will be transferred to the profit tax. The amount of excise duties on tobacco, alcohol and petroleum products will change by a progressive calculation over the next 4 years. Starting with January 1, the specific tax is eliminated, and the companies in the field will apply either tax the micro or the income tax from salaries.

CHANGE OF THE P.O.S. CEILING

The turnover ceiling from which traders are obliged to equip themselves with P.O.S devices decreases from 50,000 euros to 10,000 euros.

CHANGE OF PFA CEILING

PFA can continue to apply the income norm system, with the ceiling  decreased from 100,000 euros to 25,000 euros. There will be  3 value thresholds that will be used to determine the contributions. These 3 thresholds refer to the possibility of declaring the income according to the average income per country for 6, 12 or 24 months. We are waiting for the rules to clarify this type of taxation but we assume that it will be possible to make a single declaration for several types of periods or a differentiated tax will be collected according to the 3 thresholds.

INCOME FROM INDEPENDENT SOURCES AS AN INDIVIDUAL

The OG 16/2022 actually has a lot to say referring to the taxation of dependent or independent income obtained by individuals:

• The personal deduction (ie the non-taxable amount of salary) which has a maximum current value of 815 lei for a salary of 3000 will increase to 1137 lei, and the salary threshold to 4550. (respectively 2000 lei + minimum gross salary per economy).
• The social tax for limited working hours contracts will be collected at least at the level of tax for full time contracts registered with a minimum wage. (1083 lei, the equivalent of 218 euro)
• It clarifies certain conditions for granting food to employees (with reference to the value of meal vouchers) and accommodation (with reference to 20% of the value of the minimum wage).
• The notions of deductibility of mobility allowances, per diems and transnational allowances as redefined during 2022.
• The obligation to declare the lease contracts at the ANAF Registry is introduced, the contracts in progress on 01.01.2023 will be declared within 90 days. It also eliminates the tax payment facility and 60% of the declared amount. Thus, the rent income tax will be paid at the level of independent income, respectively 10% of the rent value. The deductibility of a pro rata of 400 lei / month granted for employees working in telework is clarified. payment of insurance and private pensions borne by the employer.