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Recent updates to Romanian tax law

Romania

Romania has issued a draft Emergency Ordinance amending and supplementing Law 571/2013 regarding the Fiscal Code. Taxand Romania highlights the main tax changes proposed by the Ordinance. 

Corporate income tax

  • Taxpayers, whose financial year is different from the calendar year, may opt for the fiscal year to correspond to the financial year. At the same time, new rules regarding the calculation, declaration and payment of corporate income tax due in the transitional fiscal year and thereafter are introduced
  • Dividend income received from a Romanian legal entity or a foreign legal entity represent non-taxable income in the case the Romanian legal entity receiving the dividends holds a minimum 10% of the share capital of the legal entity distributing the dividends
  • The income from the sale/transfer of the shares held into / liquidation of a Romanian legal entity or foreign legal entity shall also represent non-taxable income for corporate income tax purposes
  • New provisions regulating the deductibility of interest expenses and net foreign exchange losses related to loans transferred by the assignor to the assignee in the context of reorganisation transactions, such as mergers, spin-offs or partial divisions, are introduced

Withholding tax for income derived by non-residents from Romania

  • The exemption from withholding tax for dividends, interests and royalties paid to companies resident in member states of the European Free Trade Association (ie Iceland, Liechtenstein, Norway) will be eliminated
  • For dividends paid to a company resident in an EU Member State, or to a permanent establishment located in an EU Member State of a company resident in another EU Member State, the minimum holding period will be reduced from 2 years to 1 year, while the other conditions remain unchanged

Value added tax

  • The VAT cash accounting system becomes optional and the provisions regarding collection of VAT within 90 days from the date when the invoice was issued, irrespective of whether the value of the invoice was or not cashed in within this period will be eliminated
  • For VAT refund claims made by taxpayers who are not established for VAT purposes in Romania, the taxpayers will no longer be required to make proof of the VAT payment

Discover more: Recent updates to Romanian tax law


Your Taxand contact for further queries is:
Angela Rosca
T. +40 21 316 06 45 
E. angela.rosca@taxhouse.ro

Also published in Thomson Reuters' Taxnet Pro, 15 November 2013

Taxand's Take

Multinationals who have dealings in Romania or with Romanian firms should investigate the Emergency Ordinance further in order to to keep afresh of all developments and to decipher how these updates will affect their specific situation. 

Taxand's Take Author

Angela Rosca
Romania