It was approved and published in Official Gazette 1228/20.12.2022 – Law no. 370 for the approval of Government Ordinance no. 16/2022 for the amendment and completion of Law no. 227/2015 on the Fiscal Code, the repeal of some normative acts and other fiscal measures

This Ordinance introduces the most important changes to the Fiscal Code in recent years.
Below, you will find just a few of the most important changes made, applicable from January 1, 2023:

📌 Law 170/2016 on the specific tax for certain activities is repealed;

📌 Micro-enterprises

• Exclusion from the category of micro-enterprises of companies that achieve more than 20% of revenues from consulting and management activities, with the exception of revenues from fiscal consulting, corresponding to CAEN code: 6920-«Accounting and financial audit activities; tax consultancy»
• The imposition of a minimum number of 1 employee for micro-enterprises (the condition is also considered fulfilled if there are several part-time employees who add up to a full-time or management contracts or mandate if their remuneration is at least at the level of a minimum gross basic salary per country guaranteed in payment);
• Reduction of the income threshold to a maximum of 500,000 euros, starting with the incomes made in 2023, respectively the micro-enterprises that in 2023 achieve incomes higher than this ceiling, will become payers of profit tax starting from January 1, 2024;
• The possibility of having at most three participations of at least 25% in micro-enterprises (if the number of holdings is exceeded, the associations/shareholders decide which of those that exceed the number of 3 become profit tax payers);
• The following restriction is introduced: a company paying profit tax can opt to switch to the micro-enterprise regime if it meets the conditions only if it was no longer a micro-enterprise income tax payer after January 1, 2023.
• Single quota for micro-enterprises, of 1%.

📌 Dividends (distributed as of January 1, 2023)

• Dividend tax increases from 5% to 8%. In the case of dividends distributed based on the interim financial statements prepared during 2022, the dividend tax rate is 5%, without recalculation of the tax on the respective dividends, after their regularization based on the annual financial statements related to the financial year 2022, approved according to the law

📌 Income from the transfer of real estate from personal patrimony

• There is no more exempted amount;
• For buildings owned for a period of up to 3 years inclusive, the tax rate will be 3%;
• For real estate owned for more than 3 years, the tax rate is 1%.

📌 Income from independent activities

• Lowers the ceiling for the obligation to switch from taxation based on income rules to taxation in the real system, from 100,000 euros to 25,000 euros. The ceiling reduction applies starting with the revenues recorded by the PFA in 2023.

📌 VAT

• Classification of beverages from NC codes 2202 10 00 and 2202 99 at the VAT rate of 9%;
• Changing the quota from 5% to 9% for restaurant and catering services and for hotel accommodation activities;
• 5% for the delivery of homes only in the conditions of a single home, with a useful surface of a maximum of 120 sq.m., the value of which does not exceed 600,000 lei. By way of exception, in 2023, the reduced VAT rate of 5% also applies to:

– The delivery of homes with a useful area of ​​maximum 120 square meters, the value of which, including the land on which they are built, does not exceed 450,000 lei, purchased by individuals, if the advance payment documents for the purchase are completed by January 1, 2023 ;
– The delivery of homes with a useful area of ​​maximum 120 square meters, the value of which, including the land on which they are built, exceeds 600,000 lei, but does not exceed 700,000 lei, purchased by natural persons, individually or jointly with other natural persons if the payment documents in advance for the purchase are concluded by January 1, 2023;

📌 Tax on income from wages and wages

• The following incomes lose their non-taxable income status:

– contributions to a voluntary pension fund according to Law no. 204/2006, within the limit of 400 euros per year for each person;
– voluntary health insurance premiums, as well as medical services provided in the form of a subscription, borne by the employer for its own employees, within the limit of 400 euros, for each person;
– the counter value of the expenses borne by the employer/payer for the performance of medical tests for the diagnosis of the COVID-19 infection, at his initiative;
– the sums granted to employees carrying out telework activities to support utility expenses at the place where the employees carry out their activity.

• New non-taxable incomes are introduced, which, cumulatively, must not exceed 33% of the basic salary:

– Additional benefits based on the mobility clause, within the limit of 2.5 times the legal per diem level;
– The value of the food, if meal vouchers are not granted;
– Accommodation and the value of the rent, within the limit of a non-taxable ceiling of 20% of the gross minimum basic salary per country guaranteed in payment, if:

▪ The employee or his/her spouse does not own a home within the locality where the activity is carried out;
▪ The accommodation is in own or rented units;
▪ The rental contract concluded by the employer is concluded in accordance with the law;
▪ The non-taxable ceiling is granted only to one of the spouses, based on the self-responsibility declaration.

– The consideration for tourist and/or treatment services, including transport, during the leave period, for the employee and family members, according to the contract, internal regulation or specific law, based on a ceiling representing an average gross salary used to base the state social insurance budget for that year;
– Contributions to a voluntary pension fund according to Law no. 204/2006, within the limit of 400 euros per year for each person;
– Voluntary health insurance premiums, as well as medical services provided in the form of a subscription, borne by the employer for its own employees, within the limit of 400 euros, for each person;
– Amounts granted to employees who carry out telework activities to support utility expenses at the place where the employees work, within the limit of a monthly ceiling of 400 lei corresponding to the number of days worked in this regime.

• The system for granting personal deductions and those for dependents is changed. The maximum salary limit for which a personal deduction is granted is up to 2,000 lei above the minimum gross basic salary per country guaranteed in payment;
• Individuals who own agricultural and forestry land over 10,000 m2 in hilly and plain areas and over 20,000 m2 in mountainous areas are not considered dependents;
• The additional personal deduction is granted as follows:

– 15% of the gross minimum basic salary per country guaranteed in payment for natural persons up to 26 years of age, who earn income up to the limit of 2,000 lei above the level of the gross minimum basic salary per country guaranteed in payment;
– 100 lei per month for each child up to 18 years old, enrolled in an educational unit.

• The share of deductible expenses of 40% is eliminated when calculating the taxable income in the case of rentals.

📌 CAS and CASS calculation base

• The taxable per diem is limited to 2.5 times the level of state institutions, within the limit of 3 basic salaries corresponding to the workplace;
• The part that exceeds 33% of the income stated previously, is also included in the CAS/CASS calculation basis;
• The annual basis for calculating CAS / CASS in the case of income obtained from independent activities and copyrights cannot be less than:

– 12 gross minimum wages per country in the case of incomes between 12 and 24 gross minimum wages per country;
– 24 gross minimum wages per country, in the case of incomes of more than 24 gross minimum wages per country.

Other amendments to GO 16/2022 refer to the obligation of merchants who register cash receipts with a value greater than 50,000 lei annually to accept payments with debit/credit or prepaid cards, through a POS terminal and/or other solutions modern acceptance systems, including applications that facilitate the acceptance of electronic payments.

This material is intended to be a summary of only the most important proposed changes and please note that it does not present all the details of the proposed changes as set out in the Ordinance.

For additional details, but also for support in the interpretation of legal provisions in tax matters, do not hesitate to contact us.

Please find below the list of services offered by CABOT:

◦ Transactions and risk assessment;
◦ Development of transfer pricing policies;
◦ Preparation of transfer pricing files;
◦ Support for advance pricing procedures (APA) and mutual agreement procedure (MAP);
◦ Preparation of comparability studies;
◦ Tax consultancy services regarding direct and indirect taxation;
◦ Income tax consultancy for residents and non-residents;
◦ Business restructurings, with changing functions and risks;
◦ Assistance during tax audits and investigations, including support in the preparation of appeals;
◦ Specialized assistance for VAT refunds;
◦ Fiscal opinions and fiscal assistance in the case of reorganization operations (mergers, divisions, liquidations);
◦ Fiscal Due Diligence Services.

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