Tax measures in response to COVID-19
The Romanian government has adopted a series of measures to support the economy and companies affected by the spread of the COVID-19 virus, including high-impact measures to ensure SMEs’ liquidity during this period. Specifically, the following emergency ordinances have been issued:
Emergency Ordinance no. 29 regarding some economic and fiscal-budgetary measures coming into force on 21 March 2020
The deadlines for paying the following local taxes: building tax, land tax, and tax on means of transport, and the deadline for granting the bonus with respect to the payment of the local taxes in one tranch, have been postponed from 31 March 2020 to 30 June 2020.
Taxes on coporate income
Taxpayers applying the annual corporate income tax (CIT) filing and payment system, with quarterly advance payments, will be able to make quarterly advance payments for 2020, in an amount resulting from the calculation of the current quarterly CIT (i.e. and not by taking into account the last year's CIT, as initially provided by the law).
A series of fiscal measures regarding state revenue collections have been approved for application to within 30 days as of the end of the state of emergency, as follows:
- For fiscal obligations due after the date of entry into force of this emergency ordinance and not paid within 30 days as of the end of the current COVID-19 state of emergency, interest and late-payment penalties will not be calculated and due, these fiscal obligations not being considered outstanding.
- Measures for enforcing budgetary receivables by means of seizure have been suspended or not implemented, except for enforced executions applied for the recovery of budgetary receivables established by judicial decisions in criminal matters.
Emergency Ordinance no. 33 regarding some economic and fiscal-budgetary measures coming into force on 30 March 2020
Taxes on corporate income
A reduction (i.e. of 5% for large taxpayers and 10% for the other taxpayers) from the CIT due is granted to taxpayers that pay the CIT due for the first quarter of 2020 by the standard deadline of 25 April 2020. These reductions apply also to the CIT payers with a fiscal year different than the calendar year if they pay the quarterly CIT by the due date between 25 April 2020 and 25 June 2020.
Taxpayers that pay micro-company tax will be granted with a 10% reduction on the micro-company tax due for the first quarter of 2020 if this tax is paid by 25 April 2020.
Value-added tax (VAT) and customs
No VAT applies to imports of medical equipment and drugs for combatting COVID-19 during the state of emergency and for a further period of 30 days after the government lifts it, as referred to in the Annex of Emergency Ordinance no. 33.
Emergency Ordinance no. 48/2020 regarding some financial-fiscal measures coming into force on 16 April 2020
Value-added tax (VAT) and customs
The facility for import VAT deferment is granted, as established by GEO no. 33/2020, also for imports of protective mask production machines, during the state of emergency period and the following 30 days, and for completely denatured ethyl alcohol, used for the production of disinfectants only during the state of emergency period. For imports of completely denatured ethyl alcohol, only importers with an end-user authorization according to the legal provisions, valid as at the date of import, benefit from the VAT deferment.
A special VAT reimbursement procedure was introduced for the VAT refund applications submitted during the state of emergency and for 30 days thereafter, including VAT refund claims pending and for which the VAT Refund Decision has not been issued by the date of entry into force of this GEO no. 48/2020, with certain exceptions. Specifically, requests for VAT refunds will be solved with subsequent tax audit, which will be decided based on a risk analysis.
This procedure shall not apply to the following VAT refund requests:
- Where the tax inspection had started prior to the date of entry into force of GEO no. 48/2020;
- For VAT refund requests submitted by large and medium-sized taxpayers:
- Having deeds sanctioned as crimes entered in the fiscal record;
- NAFA finds the risk of undue reimbursement;
- The voluntary liquidation procedure/insolvency procedure has been initiated, except for those for which a reorganisation plan was confirmed, under the conditions of the special law.
- Claims submitted by taxpayers other than large and medium-sized taxpayers in any of the above situations, or:
- Submitting a request for VAT refund after registration for VAT purposes;
- The balance of the VAT amount claimed for reimbursement comes from more than 12 monthly reporting periods, i.e. four quarterly reporting periods.
The facility if the special VAT refund procedure carried out with subsequent performance of fiscal inspections established by GEO no. 48/2020 is extended until 25 October 2020, through Government Emergency Ordinance no. 99/2020 (GEO 99/2020).
Emergency Ordinance no. 69/2020 regarding several fiscal measures, extension of deadlines, tax facilities granted and amendment of law items coming into force on 14 May 2020
Value-added tax (VAT) and customs
The companies with the seat of their economic activity in Romania, established under the terms of Companies Law no. 31/1990, will be subject to a risk analysis conducted by the central fiscal body after their registration for VAT purposes.
The applications for registration for VAT purposes, filed and unprocessed until the date of entry into force of GEO 69/2020, will be processed without being subject to the analysis of the criteria for assessing the fiscal risk.
Emergency Ordinance no. 70/2020 on some fiscal measures, extension of deadlines, establishment of tax facilities and amendment of normative acts coming into force on 14 May 2020
Value-added tax (VAT) and customs
Supplies to legally constituted associations and foundations, carried out by 1 September 2020, of medicinal products, protective equipment, other medical devices or equipment and sanitary materials which may be used in the prevention, treatment and control of COVID-19 are exempt from VAT with the right to deduct. The goods subject to this exemption are listed in Annex 2 of OUG 70/2020.
Suppliers have to justify the VAT exemption with a statement of own responsibility from the beneficiary association / foundation concerning the destination of the goods.
Non-compliance by associations and foundations purchasing goods exempt from value added tax with the requirement to provide a statement regarding their destination constitutes an infringement and is punishable by a fine equal to the amount of VAT for which the exemption was granted when purchasing the goods. This provision entered into force on 24 May 2020, i.e. ten days after OUG 70/2020 was published.
Government Emergency Ordinance no. 99/2020 on some fiscal measures, amendment of normative acts and extension of deadlines, in force since 25 June 2020
Until 1 October 2020, the following operations with protective masks and medical fans are exempt from VAT with the right to deduct:
- Deliveries made to public institutions responsible for setting up the rescEU reserve. The supplier justifies the VAT exemption through a declaration of own responsibility regarding the destination of the delivered goods, by the time of delivery;
- Intra-Community imports and purchases by public institutions responsible for setting up the rescEU reserve. Exemption from VAT is justified on the basis of the beneficiary’s declaration of own responsibility, to be lodged with the customs authorities at the time of importation.
- Starting with 14 May 2020 expenses resulting from assignments of government securities, bonds and other debt instruments which give the holder a contractual right to receive cash are deductible when calculating the CIT result.
- On 31 January 2020, the Ordinance for implementing mandatory disclosure rules pursuant to Council Directive (EU) 2018/822 (DAC6) was published in the Official Gazette. The Romanian version of the law is closely aligned with the DAC6 Directive’s scope, hallmarks and reporting requirements.
- The provisions of ATAD II have been implemented in the Romanian tax legislation. The Ordinance implementing ATAD II (published in the Official Gazette on 31 January 2020) is in line with ATAD II provisions.
- Starting with July 2019, the threshold turnover of the fiscal credit that may be granted through sponsorship is computed considering a rate of 0.75% from turnover instead of 0.5%.
- Starting with Q3 of 2018, companies may opt for quarterly distribution of profits to shareholders. Reconciliation of such amounts is performed subsequent to the approval of the annual financial statements is performed subsequent to the approval of the annual financial statements. Those who opt for the quarterly distribution of dividends are required to prepare interim financial statements. Any differences resulting from the reconciliation are payable within 60 days of the date of approval of the annual financial statements. Failure to meet that deadline results in penalty interest being due.
Value-added tax (VAT)
- The period of application of the reverse-charge mechanism in connection with certain transactions under VAT law, such as the supply of grain delivery, green certificates transfer or mobile phone provision, has been extended to 30 June 2022.
- A reduced VAT rate of 5% for sports and leisure activities, accommodation, restaurant and catering was introduced as of November 2018.
- The European Commission (EC) has decided that Romania’s VAT split-payment mechanism is contrary to both European Union (EU) VAT law and the principle of the freedom to provide services within the Union. The VAT split payment mechanism, the so-called “VAT Split”, will be abolished as of 1 February 2020.
- Romania transposed the EU provisions regarding the VAT treatment applicable to transactions with vouchers into the national legislation as of 17 April 2019.
- Effective from 13 January 2019, a reduced VAT rate of 5% has been introduced for the supply of various transport services for tourism or leisure purposes.
- Effective as of 1 June 2019, a reduced VAT rate of 5% applies for the supply of high-quality food products, i.e. products sourced from mountain areas, organic and traditional products, certified by the Ministry of Agriculture and Rural Development (MARD).
- The provisions of Directive 1910/2018, which establishes a common regulatory framework at the EU level for the simplification of call-off stock arrangements, allocation of transport for chain transactions and the conditions for applying the VAT exemption for intra-Community supplies (the so-called "quick fixes") were transposed in the national legislation.
- The content of Form 390 (VIES) has been changed as of March 2020 in order to contain a special row for information regarding goods dispatched or transported from Romania under the call-off stock regime. As such the form should be filled in and submitted starting with the transactions performed in February 2020.