1st of February brings changes to the Tax Code

the Emergency Government Ordinance No. 3/2017 as of 06.01.2017 comes along with major changes of the Tax Code in terms of the following tax categories:
  • a) profit tax;
  • b) micro-enterprise income tax;
  • c) salary income tax;
  • d) tax on the transfer of ownership - personal real estate;
  • e) social security contributions - pensions;
  • f) health insurance contributions.
Main amendments:
  1. As of February 01, 2017, the legal entity the 2016 turnover of which did not exceed EUR 500,000 (RON 2,270,550) shall be considered a micro-enterprise, with the preservation of the other classification criteria.
    The tax is mandatory, and, as a transitory measure, the ordinance provides that the companies subject to profit tax, existing as at December 31, 2016, shall be subject to profit tax for the month of January 2017, whereby they shall submit the profit tax declaration Form 101 for the period January 01-31, 2017 by February 25, 2017.
    Such entities shall be subject to micro-enterprise income tax as of February 01, 2017. The micro-enterprise income tax is 1% for the micro-enterprises with one or several employees and 3% for the ones with no employees.
    Exceeding the EUR 500,000 limit or 20% income from consultancy and management activities shall trigger the payment of the profit tax related to the quarter in which the limits are exceeded.
  2. The employees employed for a period of 12 months by employers with seasonal activities according to the NACE classification in Article 1 of the Specific Tax Law are exempted from the payment of the salary income tax.
    The NACE codes related to the seasonal activities exempted from salary income tax are listed in Article 1 of Law 170/2016 on specific tax, as follows: 5510 - “Hotels and similar accommodation””, 5520 - “Holiday and other short-stay accommodation”, 5530 - “Camping grounds, recreational vehicle parks and trailer parks”, 5590 - “Other accommodation”, 5610 - “Restaurants and mobile food service activities”, 5621 - “ Event catering activities”, 5629 - “Other food service activities”, 5630 - “Beverage serving activities”.
  3. The taxpayers that carry out exclusively innovation, research and development activities are exempted from profit tax for the first 10 years of activity.
  4. The health care subscriptions borne by the employees are deductible from the computation of the income tax in amount of Euro 400 per year.
  5. The sales of personal property (constructions, land) are exempted from tax for the amount of RON 450,000. For the amount in excess of such value, a 3% tax is due and payable.

    Important amendments regarding the health insurance contribution:
  6. The individuals that receive income from independent activities or from intellectual property rights must pay a health insurance contribution calculated for a monthly basis that cannot exceed 5x the average gross salary. Similarly, the individuals that receive income from agricultural activities or from rental and leasing activities must pay the contribution for the received income. The maximum limit of the health insurance contribution is determined on a monthly basis of 5x the average gross salary. For income from lease and rental activities the 40% flat-rate expense is preserved.
    The much-awaited amendment regarding the income from investments (dividends, interest, share transfer, etc.):  NO health insurance contribution is due if the individual receives income that is already subject to the health insurance contribution (income from salaries, pensions, independent activities, etc.). If the income from investments represents the only income of the person, the individual health insurance contribution is due and payable, however without any upper limit for the calculation basis.

    Important amendments regarding the pension fund contribution:
  7. The 5x the average gross salary limit as maximum amount underlying the computation of the pension fund contribution is abrogated for persons that receive income from salaries or other similar income. This abrogation applies both to the individual contribution borne by the person and the contribution owed by the employer.
  8. For individuals performing independent activities or individuals that receive income from intellectual property rights, the 5x the average gross salary limit for which pension fund contributions are payable is preserved.