On 30 October 2023, new regulations were introduced establishing fiscal-budgetary measures to ensure Romania’s long-term financial sustainability[1]. The new regulations introduce, amongst others, a number of changes in the tax field, as well as other measures for economic and financial discipline and for ensuring tax compliance.
Main tax changes
1. Corporate income tax
Minimum turnover tax (MTT)
From 2024:
▸Taxpayers liable for corporate income tax (with certain exceptions) owe corporate income tax at MTT level if (i) they have registered in the previous year a turnover higher than EUR 50,000,000 and (ii) in the calculation year they determine a corporate income tax (cumulated from the beginning of the fiscal year/ amended fiscal year until the end of the quarter/ calculation year) lower than the MTT.
▸MTT is determined by applying a rate of 1% on the turnover computed using the formula introduced by the new regulations. If the MTT result is negative, then the minimum tax will be zero.
▸The new regulations set out the computation methodology for making the comparison between the corporate income tax and the MTT, the amount of the corporate income tax used for the comparison being determined before subtracting certain amounts according to the law and after making certain adjustments.
▸Specific rules are introduced regarding the computation and comparison methodology, for the purpose of determining the MTT, for taxpayers applying the annual payment system with prepayments, as well as for tax groups.
▸MTT is due from fiscal year 2024. For taxpayers which have opted, in accordance with the accounting legislation in force, for a financial exercise different from the calendar year, the provisions regarding MTT will apply from the amended fiscal year starting in 2024.
Additional turnover tax (ATT) applicable to credit institutions
From 2024:
▸Romanian credit institutions and the Romanian branches of foreign credit institutions owe ATT computed by applying the following tax rates on the turnover (determined in accordance with the new regulations):
(i) 2%, for the period from 1 January 2024 to 31 December 2025 inclusive; respectively (ii) 1%, starting from 1 January, 2026.
▸ATT is a non-deductible expense for the purpose of calculating the tax result and is owed in addition to the corporate income tax. ATT is computed, declared and paid quarterly.
▸Taxpayers which owe ATT do not also owe MTT.
Additional turnover tax (ATT) applicable to companies in the oil and gas sectors
From 2024:
▸Legal entities operating in the oil and gas sectors, established by order of the minister of finance, (with certain exceptions) which register a turnover exceeding EUR 50,000,000 in the previous year, owe the specific ATT.
▸The ATT in case of these taxpayers is determined by applying a rate of 0.5% on the turnover computed according to the formula introduced by the new regulations.
▸This ATT is again a non-deductible expense for the purpose of calculating the tax result and is owed in addition to the corporate income tax. ATT is computed, declared and paid quarterly.
▸The provisions relating to ATT owed by companies in the oil and gas sectors apply only for the period from 1 January 2024 to 31 December 2025. For taxpayers which have opted, in accordance with the accounting legislation in force, for a financial exercise different from the calendar year, the provisions regarding ATT will apply for the period between the amended fiscal year starting in 2024 and the amended fiscal year ending in 2026.
▸Taxpayers which owe ATT do not also owe MTT. From 1 January 2026/ the amended fiscal year starting in 2026, taxpayers which are legal entities operating in the oil and gas sectors owe MTT.
2. Micro-enterprise income tax
As of 1 January 2024:
▸The differentiated tax rates applicable to micro-enterprises are reintroduced, as follows:
(i) 1%, for micro-enterprises that achieve revenues not exceeding EUR 60,000 inclusive and that do not carry out the economic activities corresponding to the NACE codes expressly provided by law, related to the IT, HoReCa industries, legal activities and medical/ dental assistance activities; (ii) 3%, for micro-enterprises that achieve revenues exceeding the threshold of EUR 60,000 or carry out economic activities corresponding to NACE codes expressly provided by law, related to IT, HoReCa industries, legal activities and medical/ dental assistance activities.
▸If the taxpayer meets either of the two conditions set out in (ii) above during the fiscal year, the 3% tax rate will apply starting with the quarter in which such situation occurs. If the two conditions are no longer met, the rate of 1% will apply starting with the quarter in which such situation occurs.
▸Revenues obtained by taxpayers from activities other than those corresponding to the NACE codes expressly provided by law, related to IT, HoReCa industries, legal activities and medical/ dental assistance activities, will also be subject to the 3% tax rate.
3. Income tax and compulsory social contributions
Tax relief in the IT, construction, agriculture and food industries
As of 1 November 2023, namely starting with the incomes for November 2023:
▸A threshold of RON 10,000 is introduced, up to which the income tax exemption will be applied, at the place where the base position is located, to gross revenues obtained from carrying out the activity of creating computer programs. The excess does not benefit from the tax relief. The applicability of this tax relief is limited until 31 December 2028.
▸In the case of activities in the construction field, as well as those in the agriculture field and in the food industry, the exemption will be applied, at the place where the base position is located, to the gross monthly salaries and salaries-assimilated incomes up to RON 10,000 inclusive, calculated at a gross employment salary for 8 hours of work/ day by reference to the national gross minimum basic salary provided by law for the relevant sector/ field. The surplus does not benefit from the tax relief.
▸The social security contribution rate for employees benefiting from the aforementioned tax facilities is reduced by the percentage points corresponding to the contribution rate to the privately managed pension fund provided by Law no. 411/2004 on privately managed pension funds. By exception, employees may choose to pay the contribution owed to the privately managed pension fund.
▸The obligation to pay social health insurance contribution (HIC) is reintroduced for the employees in the construction sector, in the agricultural sector and in the food industry, categories previously exempt from paying HIC.
▸The standard rate of 2.25% of the labour insurance contribution is reintroduced for employees in the construction sector and those in the agricultural sector and food industry.
Taxation of incomes from sports activity contracts
Starting with incomes for 2024, the tax on incomes from independent activities achieved under sports activity contracts will be calculated by applying the 10% rate on the gross income from which the HIC due and withheld at source will be deducted.
Taxation of the value of tourist and/or treatment services, meal vouchers and holiday vouchers
Starting with the incomes for January 2024:
▸The value of tourist and/or treatment services provided by the employer for its own employees and their family members cannot be exempted from income tax and social contributions in the case of employees who benefit from holiday vouchers.
▸The amounts representing the nominal value of meal vouchers and holiday vouchers, granted in accordance with the law, shall be included in the monthly basis for calculating HIC, in the case of individuals who obtain salaries and salaries-assimilated incomes, in Romania and abroad.
Taxation of incomes whose source has not been identified
From 1 July 2024, the income tax rate applicable to incomes the source of which has not been identified is increased to 70%.
Taxation of incomes from independent activities
Starting with incomes for January 2024:
▸The base for calculating HIC is amended in the sense that individuals who obtain income from independent activities will owe HIC to an annual calculation base equal to the annual net/ gross income achieved or the annual income norm which cannot be higher than that corresponding to an annual calculation base equal to the level of 60 gross national minimum wages in force on the deadline for submitting the statement on income tax and social contributions due by individuals. When determining the annual HIC calculation base, annual tax losses shall not be taken into account.
▸A minimum calculation base of six gross national minimum wages is set for incomes obtained from independent activities. Thus, if the calculation base is lower than the minimum limit of six gross national minimum wages, individuals will owe a difference in HIC up to the level corresponding to the calculation base equal to six gross national minimum wages.
▸The difference in HIC for incomes from independent activities will not be due when, in the previous fiscal year, the taxpayer achieved (i) salaries and salaries-assimilated incomes at a level at least equal to six gross national minimum wages, or (ii) other incomes (e.g. incomes from intellectual property rights, investment incomes) for which the taxpayer owes HIC at a level at least equal to six gross national minimum wages.
Starting with the incomes for January 2024, the possibility of deducting HIC when calculating the income tax is introduced for incomes from independent activities and intellectual property rights (determined under the real system), under certain conditions.
4. Value added tax (VAT)
From 1 January 2024:
▸The definition of “dwellings which at the time of supply are habitable as such”, for the purpose of applying the reduced VAT quota (which is increased from 5% to 9%), is amended. Thus, in order to qualify as dwellings which at the time of supply are habitable as such, they must meet the following conditions:
(i) free individual access to the living space, without disturbing the possession and exclusive use of the space owned by another person or family; (ii) access to electricity and drinking water, controlled discharge of wastewater and household waste; (iii) to consist of at least a resting area, a place for preparing food and a toilet; (iv) exterior finishes include at least: roof if, depending on the type of construction, this constructive element is provided, windows, entrance door; (v) interior finishes include at least: walls finished with paint, wallpaper, tiles or other elements used for finishing, floors finished with tiles, parquet or other elements used for finishing, interior doors, depending on the project; (vi) sanitary installations and sanitary ware, respectively toilet bowl, washbasin and bowl washer, with associated batteries; (vii) electrical installations, including switchboards, plugs, switches and sockets.
▸The VAT rate of 19% will be applied for the supply of all non-alcoholic beverages falling under CN code 2202 and foods with added sugar with a total sugar content of 10g/100g product or more, other than sweetbread and biscuits, instead of the reduced VAT rate of 9% which applied to some of these products.
▸New provisions are introduced regarding the transition from the 5% to the 9% VAT rate for (i) the supply of dwellings as part of the social policy, (ii) the supply and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency heating systems, as well as components for their repair and/ or extension, (iii) services consisting of providing access to fairgrounds, amusement parks and recreational parks whose activities fall under NACE codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events, other than those exempt from tax; and (iv) services consisting of providing access to sporting events.
▸Certain provisions regarding the supply of certain types of services are eliminated from the application of the reduced rate of 5%, to which the standard VAT rate will apply, namely (i) the right to use sports facilities, (ii) the transport of passengers by trains or historic steam-powered vehicles on narrow gauge lines for tourism or leisure purposes, (iii) the transport of passengers using cableway transport installations - cable cars, gondola, chairlift, ski lift - for tourism or leisure purposes, (iv) the transport of passengers by animal traction vehicles, used for tourism or leisure purposes, (v) the transport of passengers by boats used for tourism or leisure purposes, (vi) the delivery of high quality food, respectively mountain, eco, traditional products.
▸The “Register of dwellings acquisitions with reduced VAT rate” is organized, in electronic format, based on the information from legal acts between living persons that have as scope the transfer of ownership of dwellings with a usable area of maximum 120 sqm, the supply of which benefits of the 9% reduced VAT rate, authenticated starting with 1 January 2024, as well as on the information from the “Register of dwellings acquisitions with reduced VAT rate of 5%, from 1 January 2023”.
▸The VAT exemption with right of deduction for certain transactions carried out towards hospital units is removed.
As of 1 July 2024, for transactions carried out between taxable persons established in Romania, only invoices that meet the conditions provided by Government Emergency Ordinance No 120/2021 regarding the administration, operation and implementation of the national system for electronic invoice RO e-Invoice and electronic invoice in Romania, are considered invoices.
5. Excise duty
As of 1 January 2024:
▸The following categories of products shall be subject to non-harmonised excise duties:
(i) tobacco products intended for inhalation without combustion falling within CN code 2404 11 00, including those contained in refills supplied with electronic cigarettes and similar electric personal vaping devices falling within CN code 8543 40 00; (ii) nicotine or nicotine-free liquids, intended for inhalation without combustion, falling within CN code 2404 12 00, 2404 19 90, including those contained in refills supplied with electronic cigarettes and similar electric personal vaping devices falling within CN code 8543 40 00; (iii) products intended for inhalation without combustion containing tobacco substitutes, with or without nicotine falling within CN code 2404 12 00, 2404 19 10, including those contained in refills supplied with electronic cigarettes and similar electric personal vaporising devices falling within CN code 8543 40 00; (iv) non-alcoholic beverages with added sugar for which the total sugar level is between 5 g - 8 g/100 ml; (v) non-alcoholic beverages with added sugar for which the total sugar level is above 8 g/100 ml.
▸New administrative offences are introduced in the field of excise goods.
6. Special tax on high-value immovable and movable properties
As of 1 January 2024:
▸A new tax is introduced targeting persons who own high-value immovable and movable property, as follows:
(i) individuals who, on 31 December of the previous fiscal year, own/ jointly own residential buildings, located in Romania, the calculated taxable value of which, individually or cumulatively, exceeds RON 2,500,000. (ii) natural and legal persons that own cars registered in Romania the individual purchase value of which exceeds RON 375,000. The tax is due for a period of five years starting with the fiscal year in which the delivery-receipt of the car takes place or for the fraction of years remaining until the end of the period of five years from this date for those for which the delivery-receipt took place before.
▸ The tax will be determined by applying a tax rate of 0.3% on (i) the difference between the taxable value of the building communicated by the local tax authority through the tax decision and the threshold of RON 2,500,000, respectively (ii) the difference between the purchase value of the cars and the RON 375,000 threshold.
Measures for ensuring tax compliance
1. Preventing and combating illegal economic activities
As of 11 November 2023, new regulations apply in the field of preventing and combating illegal economic activities:
▸Illicit economic activity is defined as the economic activity carried out by persons that are not organised in accordance with the legal provisions in force, as well as the economic activity carried out with goods that are not accompanied by documents of origin.
▸The new regulations prohibit the carrying out of economic activities by persons not organised in accordance with the legal provisions and the carrying out of economic activities during the period in which such are suspended in accordance with the new regulations.
▸Failure to comply with the above-mentioned prohibitions constitutes administrative offence, if the act has not been committed in such conditions that it is considered, according to the criminal law, a criminal offence, and is punishable by a fine from RON 2,000 to RON 15,000 in the case of natural persons, respectively a fine from RON 5,000 to RON 35,000 in the case of legal persons. The goods intended for, used or resulting from the offence, as well as the money and goods acquired by committing the offence are confiscated.
▸The regulations also prohibit the carrying out of economic activities with goods that are not accompanied by documents of origin, regardless of their location, during transport, storage or trading.
▸Failure to comply with the above-mentioned prohibition constitutes an administrative offence, if it has not been committed under such conditions as to be considered, according to criminal law, a criminal offence, and is punishable by a fine, within the same limits as above, or increased limits (together with the complementary sanction of suspension of activity) if a new offence is committed within 12 months of the last sanction. Goods intended for, used or resulting from the offence, as well as money and goods acquired by committing the offence, shall be seized, in view of being confiscated, subject to certain conditions.
▸The ascertaining of the administrative offences and the application of the sanctions shall be carried out by the authorised persons of the National Agency for Tax Administration and the Romanian Customs Authority, as well as by the authorised persons of the National Authority for Consumer Protection.
2. Strengthening the financial and fiscal discipline, increasing voluntary compliance in the road transportation of goods and certain measures on electronic invoice
National RO e-Seal system
As of 11 November 2023, the RO e-Seal national system is established in order to ensure compliance with the traceability of the road transportation of goods on the Romanian territory:
▸The system is based on the use of electronic devices and a software application allowing competent authorities to determine potential diversion points for the road transportation of goods, regardless of whether they are in transit or have as their final destination an economic operator on the national territory.
▸ The application of smart seals and the monitoring of the road transportation of goods on the national territory is carried out by the National Agency for Tax Administration and the Romanian Customs Authority based on a risk analysis.
▸The national RO e-Seal system is used and managed by the Ministry of Finance through the National Agency for Tax Administration, the Romanian Customs Authority and the National Center for Financial Information.
▸ In case of affixing smart seals on the means of transport, the driver has the obligation to ensure their integrity. Failure by the driver to comply with this obligation constitutes an administrative offence, if it was not committed under such conditions as to be considered, according to the criminal law, a criminal offense, and is sanctioned with a fine between RON 20,000 and RON 50,000.
National system regarding electronic invoice RO e-Invoice
▸The new regulations impose an obligation to send, during 1 January 2024 – 30 June 2024, the invoices issued in the national system regarding electronic invoice RO e-Invoice, regardless of whether or not the recipients are registered in the RO e-Invoice Register; such obligation to be complied with by taxable persons established in Romania for the transactions having the place of delivery/ supply in Romania, carried out in B2B relations or in relation to public institutions defined according to the specific legislation in the field. The obligation applies from 1 January 2024 also to taxable persons not established but registered for VAT purposes in Romania, for transactions having the place of delivery/ supply in Romania, carried out in B2B relations
▸The aforementioned obligations on sending invoices do not apply to certain transactions which are VAT exempt (i.e. certain exports of goods made by the supplier or by another person on his behalf, certain intra-Community supplies of goods with the place of departure in Romania).
▸The deadline for sending the invoices to the national system regarding the electronic invoice RO e-Invoice is 5 working days from the invoice’s issuance date, but not later than 5 working days from the 15th day of the month following that in which the chargeable event for the tax arises or from the date of receipt of advances.
▸Non-compliance with the aforementioned obligation on sending invoices constitutes an administrative offence and is sanctioned with a fine between (i) RON 5,000 and RON 10,000 for legal entities classified as large taxpayers, (ii) RON 2,500 and RON 5,000 for legal entities classified as medium taxpayers, respectively (iii) RON 1,000 and RON 2,500 for the other legal entities, as well as for individuals. Until 31 March 2024 no sanctions will be applied for non-compliance.
3. Other measures to ensure tax compliance
As of 11 November 2023:
▸New administrative offences are introduced, and fines are increased in case of not complying with the regulations on the use of electronic fiscal cash registers.
▸The limits on cash receipts and payments from or to legal persons, authorised natural persons, sole proprietorships, family businesses, self-employed persons, individuals carrying out activities independently, partnerships and other entities with or without legal personality, are substantially reduced. The limits on cash receipts and payments that can be made between natural persons are also reduced and the limits of fines for non-compliance with the relevant legal provisions are increased.
▸The list of companies to be dissolved or de-registered will be published in the Electronic Bulletin of the Trade Registry at least 60 days in advance and sent to the National Agency for Tax Administration. Companies that have outstanding budgetary obligations and/or are undergoing a tax audit or have other outstanding debts may not be dissolved before they are extinguished, respectively before the tax audit is completed.
[1] Law No 296/2023 regarding certain fiscal-budgetary measures to ensure Romania’s long-term financial sustainability, published in the Official Gazette of Romania, Part I, No 977 of 27 October 2023.
