18 January 2019 Romania publishes Government Emergency Ordinance introducing new tax measures for 2019 On 29 December 2018, the Romanian Government published Government Emergency Ordinance no. 114 / 29 December 2018 in the Official Gazette no. 1116. The Government Emergency Ordinance no. 114 (OUG 114) implements measures in the field of public investments and fiscal budgetary measures, as well as amending normative acts and extending certain deadlines. The tax on financial assets is due by banking institutions defined as credit institutions, Romanian legal entities and Romanian branches of nonresident credit institutions. Other financial institutions (i.e. non-banking) are not liable to pay the tax on financial assets. The tax on financial assets is computed by applying a tax rate on the value of the taxpayer's financial assets, existing at the end of the computation quarter, recorded as per the applicable accounting regulations. The tax rate on assets is differentiated according to the extent to which the 2% reference threshold is exceeded by the ROBOR quarterly average. ROBOR represents an average interest rate of the interest to which the Romanian banks borrow each other in Romanian national currency (RON). This indicator is set by the National Bank of Romania based on the information provided by the top ten most active banks on the market. The ROBOR quarterly average is based on ROBOR rates at three months and six months, computed and published by the National Bank of Romania for the last quarter/semester prior to the quarter of computation. The computation and publication of the quarterly average is performed by the National Commission for Strategy and Prognosis.
The tax on financial assets shall be computed, declared and paid on a quarterly basis, by the 25th of the month following the quarter for which the tax is due. The expense recorded with the tax on financial assets is deductible for corporate income tax purposes. The provisions shall apply starting 1 January 2019. Therefore, the first reporting and payment deadline is 25 April 2019 for the first quarter tax in 2019. The OUG 114 does not provide more details on the classes of financial assets to be included in the taxable base. OUG 114 introduces a new category of individuals exempted from paying tax on income from salaries and assimilated to salaries performing activities in the construction industry. The exemption applies between 1 January 2019 and 31 December 2028 if the following conditions are met:
Furthermore, certain incentives with respect to social charges for such income from salaries and assimilated to salaries, between 1 January 2019 and 31 December 2028, shall apply as follows:
Individuals remain insured under the health system to cover work accidents, professional diseases, unemployment and medical leave related rights during the period 1 January 2019 – 31 December 2028, without the payment of the health fund and work insurance contributions. The return on the obligations for payment of social charges, income tax and the nominal records of insured parties (Form 112) submitted by the employers applying the tax incentives mentioned above is represented by a sworn statement for the fulfillment the tax incentives eligibility conditions. The minimum gross base salary at the national level for certain activities from the construction industry, as provided by the Tax Code, during the period 1 January 2019 – 31 December 2019, has been set to RON3,000 per month. This amount is established as a cash payment and it does not include allowances or other incentives. This level is for a normal working schedule on an average of 167.333 hours per month, representing RON17.928/hour. OUG 114 establishes the tax treatment applicable to cultural tickets granted according to Law no. 165/2018. The vouchers are subject to income tax and are exempted from social charges. OUG 114 also establishes the tax treatment applicable to food and holiday allowances granted according to the provisions of the Framework Law no. 153/2017 on the remuneration of staff paid out of public funds. The allowances are subject to income tax and social charges. Clarifications are made regarding the income from interest and dividends taken into account to determine the annual gross threshold of at least 12 national gross salaries calculated from several categories of income for which the health fund contribution is due. Thus, the income from interest cashed and from dividends distributed and cashed starting with 2018 will be considered. OUG 114 provides for a new income category for which there is no obligation to submit the annual tax and social security return for the income obtained, i.e., income from the rental of goods for which the rent is expressed in RON if:
The taxation of the above-mentioned income will be done through the annual tax and social security return for estimated income. OUG 114 clarifies that the incentive for the electronic submission of the annual tax return within the timeframe provided by the law is granted by the tax office for the individuals who had the obligation to file the annual tax return for estimated income for 2018. The above mentioned incentive represents 5% of the following tax obligations for 2018 tax year, fully paid by 15 March 2019, inclusively: income tax, pension and health fund contribution. The provisions for the construction industry and regarding the cultural tickets apply as of 1 January 2019, whereas the others apply as of 29 December 2018. Through OUG 114, the application of simplification measures is extended through 30 June 2022 for supplies of cereals and technical plants, transfer of greenhouse gas certificates, the supply of electric energy to dealers who are taxable persons, transfer of green certificates, supplies of mobile phones, integrated circuit devices, gaming consoles, PC tablets and laptops.
Also, OUG 114 abolishes the provisions of art. 367 – 375 of Law no. 95/2006 concerning the health reform, republished, by which the contributions for financing certain health expenditure were provided for, as well as the provisions of art. 70, par. (1) let. c) of the Law of physical education and sport no. 69/2000 by which the 1% contribution for financing sports activities was provided for. OUG 114 extends the applicability of the tax on the natural monopoly in the electricity and natural gas sector provided by Government Ordinance no. 5/2013 until 31 December 2021. OUG 114 also extends the applicability of the tax on income from the exploitation of natural resources, other than natural gas, provided by Government Ordinance no. 6/2013, until 31 December 2021.
Government Emergency Ordinance no. 33/2007 regarding the organization and functioning of the National Regulatory Authority for Energy (NRAE) OUG 114 amends the Government Emergency Ordinance regarding the organization and functioning of the NRAE. The monetary contribution imposed on the license holders in the field of electricity, electricity and heat in co-generation for the electricity and natural gas component equals 2% of the turnover obtained by them from the activities covered by the licenses granted by NRAE, turnover calculated according to NRAE regulations. Starting 1 January 2019, the online gambling organizers stipulated in the Government Emergency Ordinance no. 77/2009, as subsequently amended and supplemented, have the obligation to pay a monthly tax representing 2% of the total participation fees charged monthly. The tax is computed, declared and paid to the Romanian State Budget until the 25th of the month following the one in which the participation fees were collected. Certain economic operators to which the state or administrative units are single or majority shareholders or in which they hold directly or indirectly a majority holding, shall distribute and transfer within 60 days from the date of approval of the financial statements for 2018 in the form of dividends or payments to the state budget, of 35% of the amounts allocated to other reserves. Starting 1 January 2019, the value of the pension index remains at RON1,100 and, starting with 1 September 2019, will be increased by 15%, i.e., RON1,265. Starting 1 January 2019, the value of the minimum social allowance for pensioners remains at RON640 and, starting with 1 September 2019, will be increased by 10%, i.e., RON704. The participants may opt to transfer, through an individual request, to the public social system. The option applies only to the individuals who have contributed to the private pension fund for at least five years. The contributions made until the transfer date remain in the individual's account, managed by the private pension fund, until the date when the individual is entitled to receive the private pension. Among other amendments/supplements, there are provisions regarding the minimum social capital requirements for the private pension fund, in relation to the value of the participants' contributions and regarding the administration fee. Document ID: 2019-0179 |
