The Romanian Fiscal Code has recently suffered major modifications by Law no. 296/2023 from October 27, 2023, regarding some fiscal-budgetary measures to ensure Romania’s long-term financial sustainability.
In the following article, we will present you some of the most important fiscal changes that this law has brought to the Romanian fiscal system.
1. From the point of view of the income tax of micro-enterprises, the tax rate will change starting with January 1, 2024, as follows:
- 1% for micro-enterprises with revenues below 60,000 EUR;
- 3% for micro-enterprises with revenues over 60,000 EUR;
- 3% for micro-enterprises that carry out activities regarding software and IT, hotels, other accommodation services, restaurants, and coffee shops – HORECA activities, some legal assistance activities, food activities as catering for events, general healthcare activities, specialized healthcare activities, dental assistance activities and other activities related to human health.
The 3% tax rate applies to all income of the company carrying out the above activities, not only to the income related to these activities.
2. Amendments are made also to the Law no. 70/2015 of strengthening the financial discipline, regarding cash receipts and payments operations. Starting with November 11, 2023, new limits are introduced for cash collection and payment operations, as follows:
a) cash receipts from companies, legal entities, within the limit of a daily cash receiving of 1,000 lei from a legal entity, and for cash and carry stores a maximum of 2,000 lei from a legal entity, or company;
b) cash payments to companies, legal entities, within a daily limit of 1,000 lei/person, but not more than a total limit of 2,000 lei/ day;
c) payments to cash and carry stores within a total daily limit of 2,000 lei;
d) cash receipts and payments from a natural person within a daily limit of 5,000 lei to/from a person, until December 31, 2024, and 2,500 lei/person, starting from January 1, 2025.
The law has also prohibited the fragmented cash receipts/payments, so for invoices with a value greater than 1,000 lei or 2,000 lei it is not allowed to be fragmented, a maximum of 1,000 lei/2,000 lei (depending on the case that applies) can be collected/paid in cash, and the amount exceeding these limits can only be paid through non-cash payment instruments, as bank transfers or payments by card.
Also, fragmented receipts and payments from or to a natural person, for cash receipts/payments operations with a value higher than the limit above are prohibited, as any other financing, dividends, or fragmentation of a delivery of goods or a provision of services.
These provisions do not apply if sales-purchase contracts are concluded with natural persons and with payment in installments.
3. Romanian companies or legal entities have the obligations to transmit the invoices issued in the national RO E-Invoice electronic invoice system.
Starting from January 1, 2024, all economic operators – taxable persons established in Romania, regardless of whether they are registered for VAT purposes or not, and economic operators – taxable persons not established in Romania, but registered for VAT purposes, have the obligation to submit invoices, issued for supplies of goods and services, taxable in Romania, carried out in the B2B relationship, in the national RO E-Invoice system, regardless of whether or not the recipients are registered in the RO E-Invoice.
Invoices are sent to the RO E-Invoice system within five working days from the date of issuance or from the deadline provided in the Fiscal Code for issuing the invoice.
In the period of January 1, 2024 – March 31, 2024, no sanctions are applied for non-compliance with the obligations to submit invoices in the RO E-Invoice system.
4. Changes to the corporate income tax and turnover tax regarding specific taxpayers that are having specific activities or are making specific turnover income.
The minimum turnover tax is introduced for taxpayers, other than credit institutions and legal entities carrying out activities in the oil and natural gas sectors, for which special rules have been introduced, but for those who register in the previous year a turnover income of over 50,000,000 EUR and whose corporate income tax is lower than the minimum turnover tax. These taxpayers that meet these conditions, will be obliged to pay a corporate income tax at the level of the minimum turnover tax.
Additional tax for credit institutions, applicable to Romanian legal entities and Romanian branches of credit institutions regarding the foreign legal entities. In addition to the corporate income tax, credit institutions will owe a turnover tax calculated by applying the following tax rates to the turnover: 2% for the period of January 1, 2024 to, including, December 31, 2025, and 1% starting on January 1, 2026.
A specific turnover tax is introduced in addition to the corporate income tax, for legal entities that carry out activities in the oil and natural gas sectors and that register a turnover of over 50,000,000 EUR in the previous year.
5. Changes are being made to the Value Added Tax (VAT) starting with January 1, 2024.
Increase the VAT rate from 9% to 19% for:
- delivery of non-alcoholic beer;
- foods with added sugar (over 10g/100g product), with the exception of cookies and biscuits.
Increase the VAT rate from 5% to 9% for:
- the delivery of high-quality food, eco, traditional products;
- delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems, including installation kits, as well as all necessary components purchased separately for housing/central public administration buildings or local with the exception of commercial companies;
- the delivery and installation of components for the repair and/or expansion of systems as a component part of construction deliveries, or as extra options when delivering a construction;
- access to pubs, amusement parks and recreational parks whose activities are included in fairs, exhibitions, cinemas and cultural events, other than tax-exempt ones;
- access to sporting events.
Increase the VAT rate from 5% to 19% for:
- the right to use sports facilities whose activities are included in CAEN codes 9311 and 9313, other than the exempt ones;
- the transport of people by trains or historic vehicles with steam traction on narrow lines for touristic or leisure purposes;
- the transport of people using the cable transport facilities – cable car, cable car, chair lift, ski lift – for tourist or leisure purposes;
- the transport of people with animal-drawn vehicles, used for tourist or leisure purposes;
- the transport of people with boats used for tourist or leisure purposes.
6. Other changes that are a major shift in the fiscal legislation
The National Health Insurance CASS tax will change its calculation methods, starting with January 1, 2024.
Starting with the same date, a new special tax on immovable and movable goods of high value (luxury tax) of 0.3% is introduced and will be due for:
- natural persons who own or jointly own residential buildings worth more than 2,500,000 lei (500,000 EUR);
- natural persons and legal persons who own cars registered in Romania with a value that exceeds 375,000 lei (75,000 EUR).
Reduction of the limits for cash transactions – the daily limits for receipts or payments, as well as that for advances for settlement become 1,000 lei (compared to currently 5,000 lei), and for cash & carry stores, 2,000 lei.
Starting from July 1, 2024, the income from unidentified sources, identified by the fiscal authorities, under the conditions of the Fiscal Procedure Code, the source of which was not unidentified will be subject to income tax at a rate of 70% (in the previous regulation the rate was 16%) applied to adjusted taxable base.
The possibility of half payment of accounting, fiscal and similar fines disappear. Therefore, the fines will no longer be available to be paid in half of the minimum fine provided by the law, within 15 days.
The law introduces fines and confiscation of assets for those with unregistered activities or without documents of origin of the goods, fines and confiscation of assets are provided for natural and legal persons who carry out economic activities without being organized according to the law, or without documents of provenance for the goods owned or transported.
RO E-Seal system for customs regarding the transportation of goods. A new system will be introduced for customs borders, RO E-Seal, that will be implemented in order to monitor the transport of goods. Electronic devices will be used, namely smart seals that record data and transmit status and position information to the computer application, to track the movement of the goods by road.
As you may notice, Romanian is going through a period of major changes in the fiscal system and the authorities are more involved in changing the budgetary measures to ensure Romania’s long-term financial sustainability.
Even so, Romania has still one of the best taxation rates in comparison with other European countries and being able to keep this taxation rates, and additionally have national financial sustainability, this grands value to the fiscal system that is about to become more secure for investments and business development in Romania.
This article was made in collaboration with our partners www.artcont.ro, that we trust and recommend as very good professionals. They can handle any taxation issue and offer you trustworthy advice regarding any fiscal resolution that you might need.
As we know that no major legal change is easy to understand in the beginning, or is not easy to apply directly, for any questions that you might have we are here to help you, so don’t hesitate to contact us today.