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Amendments & Completions Brought to the Fiscal Code

12 Jan 2012

On 30 December 2011 the Romanian government announced an Emergency Ordinance amending the Fiscal Code. It covers various aspects of tax from VAT to amendments to social security contributions and affects most Romanian Tax payers. Taxand Romania analyses the Emergency Ordinance and how it will likely affect taxpayers based in Romania.

Amendments regarding the fiscal treatment applicable for the acquisition of vehicles and fuel

  • From a corporate income tax perspective, expenses with fuel for vehicles owned or used by the taxpayer, are tax deductible in the limit of 50%
  • From a VAT perspective, the VAT related to the acquisition of vehicles and fuel for vehicles

Corporate income tax

  • Positive differences resulted from the valuation of shares and of long term bonds are subject to corporate income tax
  • Negative differences related to shares and long term bonds are excluded from the non deductible expenses provided by the Fiscal Code
  • The carrying fiscal value, for fixed assets/ intangibles for which components are replaced, should be recalculated by subtracting the carrying fiscal value of the replaced components and by adding the fiscal value of the new components. In case of replacing components to a fully depreciated fixed
  • assets a new useful life would need to be set by a technical commission or an independent technical expert

Value-Added Tax
Amendments brought to the definition of capital goods: according to the new provisions, in case of leasing companies, the automobiles and depreciable fixed assets for which the minimum limit of the normal useful life period is less than 5 years, are not treated as capital goods anymore.

Taxand's Take

Most of the changes brought by Emergency Ordinance entered into force starting 1 January 2012. Taxpayers whose VAT number was cancelled do not have the right to deduct VAT but are subject to payment obligations in respect of VAT. Multinationals and individuals need to look at their tax situation in view of this announcement and assess whether any action is required to be taken.

Your Taxand contacts for further queries are:
Angela Ro?ca
T. +40 21 316 06 45

Cristian R?dulescu
T. +40 21 316 06 45

Taxand Romania provides a full analysis of the Emergency Ordinance in the full article (PDF)

Taxand's Take Author