Tax reform in Romania. Substantial amendments brought to the Fiscal Code and Fiscal Procedure Code22 December 2020
On December 21st, 2020, Law no. 296/2020 for the amendment and completion of Law no. 227/2015 on the Fiscal Code (“Law no. 296/2020”) as well as Law no. 295/2020 for the amendment and completion of Law no. 207/2015 on the Fiscal Procedure Code (“Law no. 295/2020”) have been published.
The provisions of the Fiscal Code and those of the Fiscal Procedure Code are substantially modified, being introduced new facilities for taxpayers and a resettlement of the applicable institutions in the field of taxation.
Main amendments regarding the Fiscal Code
Full deduction of adjustments for impairment of receivables
Taxpayers are entitled to the full deduction of adjustments for impairment of receivables, and not only within the limit of 30% of their value, as provided in the previous regulation.
This facility shall apply from January 1st, 2021.
Fiscal consolidation in the field of corporate income tax
The corporate income tax can be paid by reporting to the level of the profit of the tax group, constituted according to the law, and not to each company. Each member of the tax group, according to the law, determines the tax result individually, and the consolidated tax result of the group consists of the sum of the tax results determined individually by each member of the group. The corporate income tax is computed by applying the quota provided by law on the positive consolidated fiscal result of the group. The negative consolidated fiscal result represents fiscal loss of the group.
The period of application of the fiscal consolidation system is of five fiscal years, computed starting with the first year of application of this system and until the dissolution of the group.
This system is optional and shall apply from January 1st, 2021.
VAT recovery for invoices not collected from individuals
The computation base is reduced if the total or partial value of the goods delivered or services rendered has not been collected from the beneficiaries natural persons, within one year from the payment term established by the parties/from the date of issuing the invoice, except for the situation where the supplier and the beneficiary are affiliated. If following the adjustment of the computation base, amounts related to those debts are collected, the adjustment made, corresponding to the amounts collected, shall be cancelled.
Non-taxable benefits for employees
Under the new regulation, no tax on income from salaries and assimilated to salaries is due for:
► the value of the tourist and/or treatment services, including transportation, during the leave, for its own employees and their family members, granted by the employer, as provided in the employment contract; these amounts are exempt from the payment of income tax insofar as their total value does not exceed during a fiscal year the level of an average gross salary used to substantiate the state social security budget for the year in which they were granted;
► the amounts granted to employees engaged in telework activities, to support utility expenses at the place where employees work (g. electricity, heating, purchase of office furniture and equipment), within the limits set by the employer through the employment contract, or the internal rules, within the limit of a monthly threshold of RON 400, corresponding to the number of days in the month in which the individual carries out telework activity;
► the coverage of epidemiological testing and/or vaccination costs of employees to prevent the spread of diseases that endanger the public health and the health of employees;
► the benefits granted to employees in the form of personal use of vehicles that are not used exclusively for the purpose of economic activity and are owned/used by legal persons applying the micro-enterprise income tax or the tax specific to certain activities.
These benefits apply starting with the income related to January 2021.
In addition to the above, the amendments also cover issues such as (i) the possibility of appointing an authorized tax representative to fulfil the obligations from the VAT perspective on behalf of the taxable person not established in Romania and not registered for VAT purposes in Romania, (ii) the establishment of residence according to the place of effective management, (iii) the introduction of the 10% quota applicable to taxable income obtained from Romania by non-residents, (iv) the submission of the sole declaration on income tax and social contributions due by individuals until May 25 of the year following the year in which the revenue was generated.
Main amendments regarding the Fiscal Procedure Code
New cases of nullity of the fiscal administrative act
► the tax authority does not present the arguments for which it does not take into account the prior opinion issued in writing or the solution adopted by the tax authority or the court, provided by the taxpayer;
► the tax authority does not comply with the merits of the decision issued in the procedure of settling the appeal in case of issuing the new fiscal administrative act after solving the appeal;
► the tax authority issues the fiscal inspection report and the taxation decision or the decision not to modify the tax base, after the expiration of the double period for which the fiscal inspection is allowed;
► the tax authority issues the fiscal inspection report, the taxation decision or the decision not to modify the tax base in the situation where it is carried out in parallel a criminal investigation.
These new cases can be invoked by taxpayers only for those fiscal administrative acts communicated after 24.12.2020, the date of entry into force of Law no. 295/2020.
Conducting the tax inspections
► if the tax inspection is not completed within a period representing twice the period for which the tax inspection is allowed, the tax authority no longer has the right to issue the tax inspection report, the taxation decision or the decision not to change the tax base;
► the taxpayer’s right to be informed about any other means of the proof obtained by the tax authority, as a result of the actions that constituted causes of suspension and that are related to the taxpayer’s tax situation, is expressly regulated;
► the possibility for the taxpayer to challenge the decision to suspend the tax inspection is expressly regulated.
These provisions are also applicable to the tax inspections in progress on 24.12.2020, the date of entry into force of Law no. 295/2020.
Interests and Non-declaration Penalty
► it is expressly provided that the taxpayer’s right to claim interest from the tax authority expires within 5 years;
► the reduction by 75% of the non-declaration penalties is achieved automatically in case of payment, clearing or schedule the payment of the main debt, no further request from the taxpayer being needed;
► the lack of the mention in the content of the fiscal inspection report regarding the application of the non-declaration penalty leads to the revocation of the fiscal body from the right to apply the penalty by other subsequent or accessory administrative acts. This applies to the fiscal inspection reports issued after 24.12.2020, the date of entry into force of Law no. 295/2020;
Appeal against the fiscal administrative acts
► the competence to settle the appeals submitted against the fiscal administrative acts issued by the central fiscal body is transferred from the National Agency for Fiscal Administration (“ANAF”) to the specialized structure within the Ministry of Public Finance. This transfer is made within 6 months from 24.12.2020, the date of entry into force of Law no. 295/2020 and all pending appeals will be referred to the new specialized appeals resolution structure within the Ministry of Public Finance;
► it is introduced the possibility of the taxpayer to request the re-examination of the solution of the appeal submitted against the tax administrative act. The re-examination is possible in the following situations:
▸the application in the case of certain legal provisions that would have fundamentally changed the adopted solution was not taken into account;
▸ after the issuance of the decision by the appeal settlement structure, a decision is issued by the Central Fiscal Commission which offers a different interpretation to the legal provision’s incident to the case;
▸ before or after the issuance of the decision by the structure for resolving the appeal, a decision of the High Court of Cassation and Justice of Romania is issued either for the resolution in principle of legal issues or a referral in the interest of the law which dictates a different certain judicial practice for the issue under analysis, different from the one in the decision to settle the appeal;
▸before or after the issuance of the decision by the structure for resolving the appeal, a decision of the Court of Justice of the European Union is adopted, which is contrary to the decision to resolve the administrative appeal;
These provisions apply both to the decisions pending on 24.12.2020, the date of entry into force of Law no.295/2020, as well as the decisions solving appeals issued before this date.
 Published within the Official Gazette, Part I, no. 1266 and 1269 dated December 21, 2020.