Legislative summary – August 2018

  • VAT

CJEU Decision in the case C-5/17 DPAS Limited

On 25 July 2018, the Court of Justice of the European Union (“CJEU”) released its decision in the case of DPAS Limited (C-5/17). This case is relevant to businesses operating across a range of sectors, including banks, outsourcers, as well as FinTech platforms.

The CJEU has held that the VAT exemption for transactions concerning payments and transfers is not applicable in case of a supply of services which concerns the transmission of a direct debit request and the order of bank transfers from one account to another. Although this type of service is essential in the performance of a payment, the CJEU assessed that it has an administrative nature and does not produce the financial and judicial effects of a transfer of funds, the actual payment transfers being effected by the relevant credit institutions.

Please refer to Tax Alert no. 23 of 8 August 2018 for more details.

Draft Law for amending and completing the Law 227/2015 regarding the Tax Code, published on the website of the Ministry of Finance

On 27 August 2018, the Ministry of Public Finance published a draft law for amending and completing the Law 227/2015 regarding the Tax Code. A series of modifications were proposed regarding:

  • the VAT treatment of vouchers;
  • certain VAT obligations for supplies of telecommunication, radio and TV and electronically supplied services to individuals and distance sales of goods.

The new legislation should apply as of 1 January 2019.

  • Customs and excise duties

Amendments of the Union Customs Code – the definition of the “exporter”

The Commission Delegated Regulation (EU) 2018/1063 of 16 May 2018 amends and corrects the Delegated Regulation (EU) 2015/2446 to the Union Customs Code

The Commission Delegated Regulation of the Union Customs Code brought amendments and corrections to certain customs provisions. The main change refers to the definition of the “exporter” term.

Please refer to Tax Alert no. 24 of 23 August 2018 for more details.

Registration procedures for economic operators that carry out trading activities of energy products, respectively distribution and trading activities of alcoholic beverages and/or manufactured tobacco

Order no. 1.960 for the amendment of the Order of the President of the National Agency for Tax Administration no. 1.849 / 2016 for the approval of the registration procedure for economic operators that carry out trading activities, in wholesale or retail, of energy products and of the Order of the President of the National Agency for Tax Administration no. 1.850/2016 for the approval of the registration procedure of the distribution and trading activity in wholesale of alcoholic beverages and/or manufactured tobacco, as well as the template and content of certain forms related to these two Orders.

The Order repeals the procedure for authorization of economic operators that carry out distribution and trading activities of energy products (gasoline, diesel, kerosene, liquefied petroleum gas and biofuels), alcoholic beverages and/or manufactured tobacco, without storing them.

Please refer to Tax Alert no. 25 of 28 August 2018 for more details.

  • Income tax and social security

NAFA Order no. 1.701 from 4th of July 2018 on the approval of the procedure for establishing and reconciling the health fund and pension contributions due by individuals and of form 631 ”Annual decision for establishing the health fund and pension contributions”, published in the Official Gazette, part I, no. 672 of 2 August 2018

The Order approves the procedure for establishing and reconciling the health fund and pension contributions due by individuals who obtained pension income, income from independent activities, intellectual property rights, association with a legal entity, agricultural/forestry/fishery activities, rental activities, investment and other sources, from Romania and from abroad.  In addition, the Order approves the format of form 631 which will be issued by NAFA in respect of these contributions.

NAFA Order no. 1.869 of 31 July 2018 regarding the approval of the Procedure for establishing ex-officio the annual income tax due on incomes earned by individuals, published in the Official Gazette, part I, no. 701 of 10 August 2018

The Order approves the procedure for establishing ex-officio the annual income tax due for incomes earned by individuals in 2016 and 2017

The procedure amongst others, provides that:

– Non-submission of the annual tax return for 2016 and 2017 allows the relevant tax authority to impose ex-officio the income tax due on the annual taxable net income / the annual income tax, on which source and type of income.

– The annual income tax will be established ex-officio considering the fiscal prescription period and does not concern the periods which were subject to an inspection.

NAFA Order no. 1.855 of 26 July 2018 regarding the Procedure for the annulment of tax decisions issued by tax authorities to individual taxpayers in respect of advanced tax payments related to 2018, published in the Official Gazette, part I, no. 721 of 21 August 2018

The Order approves the Procedure on the annulment of tax decisions issued by tax authorities to individual taxpayers in respect of advanced tax payments related to 2018. Where such tax payments have already been made although the taxes were annulled by the tax authorities, the individual has the possibility to claim their refund through a request within 5 years as of 1st of January of the year following the one when the refund right was borne. To solve the refund request, the authorities will review the tax decision imposing the advanced tax payments, as well as the amount actually cashed-in by the State Treasury.

NAFA Order no. 2.093 of 24 August 2018 for approving the procedure regarding the final annual income tax due by individuals on their income, as well as of the format and content of some forms, published in the Official Gazette, part I, no. 745 of 29 August 2018

The Order establishes the procedure for the final annual income tax due on incomes earned by individuals as well as for establishing the 2% of the annual income tax due towards NGOs, religious entities and private scholarships granted according to the law.

Main aspects:

  • The Order provides for the format and content of the 250 and 251 forms – annual tax decision for income earned in Romania by individuals and annual tax decision for income earned from abroad by individuals.
  • By 30 October 2018 the relevant tax authorities calculates the income tax due and issues the annual tax decisions.

 

  • International taxation

Order regarding the entry into force of certain international treaties, published in the Official Gazette, Part I, no. 725 of 22 August 2018

The Order specifies inter alia the entry into force of the following:

  • On 1 April 2018, the Administrative arrangement, signed in Belgrad, 28th of October 2016, for the application of the Agreement between Romania and Serbian Republic in the social security field; (Please refer to Tax Alert no. 20/2 July  2018 for more details)
  • On 14 May 2018, the Convention for the avoidance of double taxation and prevention of tax evasion with respect to income taxes between Romania and Bosnia and Herzegovina, signed at Sarajevo on the 6th of December 2016. (Please refer to our Legislative Summary no. 3 / March 2018 for more details)

Order regarding the expiry of certain international treaties, published in the Official Gazette, Part I, no. 733 of 24 August 2018

On 1 January 2019, the following will expire:

  • For Aruba, the Convention between Romania and the Kingdom of the Netherlands on automatic exchange of information on savings income in the form of interest payments;
  • For Curaçao, the Convention between Romania and the Kingdom of the Netherlands Antilles on the automatic exchange of information on savings income in the form of interest payments.

 

  • Miscellaneous

Order for approval of Applicant’s Guide and the Payment’s Guide elaborated under the Government Decision no. 807/2014 regarding state aid schemes supporting investments with major impact on the economy

The Order no. 2.629/2018 approves Revision 2 of the Applicant’s Guide, as well as Revision 2 of the Payment’s Guide elaborated under the Government Decision 807/2014.

The Ministry of Public Finance revised the new version of the Applicant’s Guide, as well as the Payment’s Guide, which up to this date have not been posted on the official website of the Ministry of Public Finance. For more details, you may consult Official Gazette 666 bis of 31 July 2018.

Please refer to Tax Alert no. 22 of 6 August 2018 for more details.

Amendments to Government Ordinance no. 80 / 2001 establishing expenditure norms for public authorities and public institutions, published in the Official Gazette Part I no. 754 of 31 August 2018

The amendments are aimed at extending the application scope of expenditure norms with regard to protocol and equipment with cars. Hence, these norms apply also to inter alia autonomous (independent) administrations set up by the state or by a territorial administrative unit, national companies and enterprises, companies in which the state or the territorial administrative unit is the sole, majority or controlling shareholder.

As per the amendments, the norms on telephone costs were excluded and a new Appendix is introduced which provides inter alia for maximum limits within which expenses with protocol actions may be approved and performed, to be updated periodically through Government decision, depending on the evolution of consumer price index. The Ordinance specifies that lower expenditure levels may be approved, respectively, upon the interested companies’ proposal, other norms may be approved and / or maximum expenditure levels for special protocol actions, based on fundamental justifications.

Government Ordinance no. 18 / 29 August 2018, published in the Official Gazette Part I no. 755 of 29 August 2018

The Ordinance introduces inter alia a new article in Sponsorship Law no.32 / 1994 which enables tax inspectors to verify the purpose / utilization of the financial means and goods received by beneficiaries of sponsorship activities. The verification is performed via economic-financial inspections.

Order approving the ‘de minimis’ state aid scheme to support the development and promotion of export to key target countries for SMEs in eco-agriculture and the furniture industry, published in the Official Gazette Part I no. 704 of 13 August 2018

The ‘de minimis’ scheme is part of the Romanian – Swiss cooperation program for reducing social and economic disparities. The main objective of this state aid scheme is the set up of two business centers for exporters, in two regions of Romania (North East and South-Muntenia), facilitating inter alia the access to (new) international markets for SMEs in eco-agriculture and the furniture industry.

The total estimated value of the ‘de minimis’ aid to be granted according to the present scheme is the RON equivalent of CHF 2,941,176 (i.e. approx. RON 12,533 mil.). This state aid scheme will be applicable for the period June 2018 – 7 September 2019.

Amendments to Order no. 4.999 / 2018 regarding the approval of the support measure consisting of the granting of state aids and ‘de minimis’ aid for suporting scientific and technological parks within the framework of the Regional Operational Program 2014-2020, published in the Official Gazette Part I no. 754 of 31 August 2018

As per the amendments brought, the members of the association / the Project / Partnership Leader and the entity implementing the service component should have the financial capacity to ensure:

  • Own contribution to the project’s eligible value (50% / 65% for state aid, respectively 10% for de minimis aid);
  • Financing of non-eligible costs of the project, where the case;
  • Financial ressources for the optimum implementation in case of subsequent repayment of eligible costs from structural instruments.

The own contribution should be made either from own sources, or from resources gathered in a form which is not the subject of any other public aid.

 

For additional information, please contact:

Alex Milcev, Partner – Head of Tax & Legal

Email: office@ro.ey.com



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