An important specification for the calculation of tax ceilings: According to the situation registered on December 31, 2018, the exchange rate is of 4.6581 lei/euro.  

1. Income tax threshold for micro-enterprises - turnover less than EUR 1 000 000 (the exchange rate for determining the euro equivalent is the same as at the end of the previous financial year - on 31.12.2018, and 4.6581, respectively, therefore the threshold is of 4,658,100 lei).

Thus, companies that registered a turnover below the threshold, at the end of 2018, starting with 2019 either apply the tax provided for micro-enterprises, where applicable, or a tax rate of 1%, if the company has at least one employee, or a rate of 3%, in case of companies without employees.

According to the new regulations, companies that have obtained revenues from consulting and management services, and their revenues were below one million euros, from 2018 will switch to micro-enterprise taxation, while companies with a minimum share capital of 45,000 cannot opt, at least for the time being, to apply the tax on income.

2. Ceiling for registration as a VAT payer: turnover: 80,000 euros

More precisely, a taxable person registered in Romania with an annual turnover declared or earned lower than the ceiling of 80,000 euros (the equivalent of this amount in lei is established at the exchange rate of the National Bank of Romania on the day of entry and is rounded up to the next thousand, respectively of 300,000 lei) can apply VAT exemption (special exemption regime).

3. Transition from VAT-on-collection to a regular VAT - turnover: 2,250,000 lei.

According to the New Fiscal Code, the VAT-on-collection system can be applied for:

• taxable persons registered for VAT purposes with their registered office in Romania, who in the previous year did not apply the VAT-on-collection system, whose turnover in the previous calendar year did not exceed the ceiling of 2,250,000 lei and who choose to apply the VAT-on-collection system;
• taxable persons with the office of the economic activity in Romania, registered for VAT purposes in accordance with article 316, during the year choose the application of the VAT-on-collection system.

4. Intra-community acquisitions of goods that are not considered taxable operations in Romania - ceiling:

In Romania, the intra-community acquisitions of goods are not considered taxable operations, which, among others, meet the following condition: the total value of these intra-community acquisitions does not exceed, during the current year, or did not exceed, during the previous calendar year, the ceiling of 10,000 euros (34,000 lei at the exchange rate established by the National Bank of Romania on the day of entry).

5. The ceiling for the transition from a quarterly VAT payer to a monthly VAT payer:

Usually, the taxation period represents one calendar month; however, a tax period becomes the calendar quarter for a taxable person who, during the previous calendar year, earned a turnover from taxable operations and/or deductible VAT-exempt operations and/or or non-taxable operations in Romania that did not exceed the ceiling of 100,000 euros.

The equivalent in lei for 2019 will be determined based on the exchange rate established by the National Bank of Romania at the end of 2018 (4.6581 lei for one euro), generating a threshold of 465,810 lei. Exceeding the ceiling means switching from a quarterly VAT payer to a monthly VAT payer.

 

Legal framework:

• Fiscal Code (approved by Law 277/2015 published in the Official Gazette no. 688 of September 10, 2015), amended by Emergency Ordinance 79/2017;
• Methodological regulations for the application of the Fiscal Code (approved by Government Ordinance no. 1/2016).

Duties and taxes regulated by the fiscal code:

1. tax on profit;

2. the tax on micro-enterprise revenues;

3. income tax;

4. the tax on the income earned in Romania by non-residents;

5. tax on representations;

6. value added tax;

7. excise duty;

8. local duties and taxes;

9. tax on constructions.

 

1. Tax on profit

The share of the tax on profit applicable to taxable profit is of 16%.

The tax result is calculated as the difference between income and expenses recorded after deducting non-taxable income and tax deductions, plus non-deductible expenses.

The tax result is calculated quarterly/annually, cumulated from the beginning of the financial year.

 

2. The tax on micro-enterprise revenues

A micro-enterprise is a Romanian legal entity that on December 31 of the previous year cumulatively meets the following conditions:

1. Has earned revenues that have not exceeded the equivalent in lei of 1,000,000 euros;

2. its share capital is held by persons other than the State and the administrative-territorial units;

3. is not in dissolution, followed by winding up, registered in the trade register or at courts of law, according to the law.

 

 

Tax shares for micro-enterprises:

- 1% for micro-enterprises with one or more employees;

- 3% for micro-enterprises without employees.

 

The taxable base for the tax on micro-enterprises revenues represents income from any source, WITH SOME EXCEPTIONS

 

3. Tax on income

Categories of income subject to the tax on income:

a) income from individual activities;

b) income from salaries and from those equivalent to salary income;

c) income from the transfer of property usage rights;

d) income from investments;

e) income from pensions;

f) income from agricultural, forestry and fishing activities;

g) income from prizes and gambling winnings;

h) incomes from the transfer of real estate properties;

i) income from other sources.

 

Taxation rate - 10%

 

!!! Minimum salary in 2019:

- 2,350 lei for people holding positions that require higher education, professional experience of at least one year in the field of higher education;

- 3,000 lei in the field of constructions (activities provided in art. 66 p. 1 - exemption from salary tax), for the period 01.01.2019 - 31.12.2019;

• 2,080 lei for persons who do not fall into the above categories

 

- Starting with January 1, 2019, all the rights and obligations established in accordance with the law are determined according to the level of the minimum gross salary in the country, guaranteed for payment, amounting to 2,080 lei.

- For part-time employment contracts, the same reasoning applies as for full-time employment, in order to determine the minimum salary.

 

Changes in the field of constructions in terms of SALARIES

- Between January 1, 2019 - December 31, 2028, individuals who satisfy the following conditions are exempt from the salary income tax (and similar):

• The activity carried out by employers in the field of constructions falls under the scope of: NACE code 41.42.43 - section F - Constructions; fields of production of construction materials with the following NACE codes: 2312, 2331, 2332, 2361, 2362, 2363, 2364, 2369, 2370, 2223, 1623, 2512, 2511, 0811, 0812, 711.
• The turnover generated in the mentioned fields is of at least 80% of the total turnover - cumulated from the beginning of the year until the month when the exemption is applied;
• The gross income of the person to whom the exemption is applied is between 3,000 and 30,000 lei per month, included, and is based on an individual employment contract. The exemption is applied in accordance with the instructions of the general order of the Minister of Public Finance, the Minister of Labor, Family, Social Protection and the Elderly and the Minister of Health, provided in art. 147 part (17) of the Fiscal Code (Framework Order and content D112, instructions for completion).
• Regulations on social contributions in the field of constructions between January 1, 2019 - December 31, 2028, if the aforementioned conditions are satisfied:

- Social security contribution is reduced by 3.75 percentage points (21.25%) - exemption from paying contributions to the private pension fund (pillar 11)

- Exemption from paying social security contributions for particular (4%) and special (8%) working conditions;

- Exemption from paying the social health contribution; employees will be insured in the public health system without paying contributions;

- The labor insurance contribution is reduced to the level of income in the Special Guarantee Fund for salary payment (15% * 2.25% = 0.3375%)

- The statement regarding the obligation to pay social security contributions, income tax and the nominal record of the insured persons (D 112) becomes an affidavit in order to comply with the conditions for applying the exemption.

 

4. Daily allowance in 2019. (Government Ordinance 714/2018):

- beginning with 01.01.2019, the secondment indemnity for the staff of public institutions will be increased up to 20 lei/day, thus, private sector employees can receive a non-taxable daily allowance in the maximum amount of 50 lei/day (2.5 * 20).

 

5. THE NEW GAMBLING DUTY

- Beginning with January 1, 2019, online gambling organizers stipulated in the Government Emergency Ordinance no. 77/2009 on the organization and operation of gambling, approved with amendments and additions by Law no. 246/2010, with the amendments and additions, have the obligation to pay a monthly fee of 2% of the total amount of monthly collected participation fees.

- The tax is calculated, declared and paid to the State budget until the 25^th of the month following the month of collection of the participation fees.

 

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