Legislative summary – September 2018

In this issue:

  • Amendments brought to the Tax Code
  • Personal income tax and social security contributions
  • Electronic cash registers
  • Accounting regulations regarding interim dividends

Amendments brought to the Tax Code

The Government Emergency Ordinance no. 89/9 October 2018 brings amendments to the provisions of the Law 227/2015 regarding the Tax Code on the following matters:

  • Granting of a 5% incentive for the electronic submission of the Annual tax return and for the advance payment of the income tax due for the year 2018
  • Payment of the health fund contribution in case of individuals for whom the “Tax Decision regarding the health fund contribution due from individuals”
  • Payment deadlines for tax obligations established through tax decisions issued by the competent tax authority for the 2014-2017 tax regularization
  • Applying the reduced 5% VAT rate for several categories of services
  • The tax result computation of the entities that fall under the application of the IFRS 9 standard “Financial instruments”.

Please refer to Official Gazette no. 854/9 October 2018 and the Tax Alert no. 27 for more details.

Personal income tax and social security contributions

The model, wording and the administrative documents used for the individual tax audit process

The NAFA Order no. 2,117/5 September 2018 approves the model, wording and the administrative documents used for the individual tax audit process, regulated by Law no. 207/2015 on the Tax Procedure Code.

At the date of entry into force of NAFA Order no. 2,117/5 September 2018, the NAFA Order no. 393/2013 is repealed.

Please refer to Official Gazette no. 766/5 September 2018 for more details.

The structure and periodicity of information exchange between NAFA and the Romanian Health Insurance House

The Order establishes the procedure by which NAFA and the Romanian Health Insurance House will perform the exchange of certain information concerning individuals who are contributing to the public health insurance system, as well as individuals who benefit of the public health system insurance without being liable to pay the health fund contribution.

As such, NAFA will communicate the relevant information to the Health Insurance House as following:

  1. On a daily basis, for individuals included in Form 112 registered by their employers;
  2. On a daily basis, for individuals who file the annual tax return after the Order entries into force (i.e., starting 21 September 2018);
  3. Within 10 days after the Order entries into force, for individuals who filed the annual tax return, Form 604 or Form 605 in the period 1 January 2018 – 20 September 2018;
  4. On a monthly basis, presenting the situation of the employers for which the insured individuals carry out their activity, specifying the date of commencement of the activity, the suspension or the termination of the activity – if the case.

Also, the Romanian Health Insurance House will communicate to NAFA the list of individuals who benefit of the public health system insurance without being liable to pay the health fund contribution, registered in the Health Insurance Information System at the end of a certain month, by the 25th of the following month.

The list of concerned individuals are contained in the annexes of the Procedure, as following:

Annex no. 1 – Individuals who contribute to the public health insurance system;

Annex no. 2 – Individuals who benefit of the public health system insurance without being liable to pay the health fund contribution.

At the date of entry into force of the NAFA Order 3,903/21 September 2018, the NAFA Order no. 1,987/2015 is repealed.

Please refer to Official Gazette no. 812/21 September 2018 for more details.

Parental leave and monthly child care allowance

The Government Emergency Ordinance no. 81/17 September 2018 brings amendments to the provisions of the Government Emergency Ordinance no. 111/2010 on parental leave and monthly child care allowance, the emphasis relying on the following matters:

  • The income from intellectual property rights will be included in the category of income taken into consideration when determining the taxpayers who are eligible to benefit of the provisions of Emergency Ordinance no. 111/2010 on parental leave and monthly child care allowance;
  • The taxpayers entitled to benefit of the monthly child care allowance, which applied for such benefit without having considered their intellectual property rights income earned after 23 March 2018, may submit the documents attesting such income within 60 days after the entry into force of the Government Emergency Ordinance no. 81/17 September 2018 (i.e., 16 November 2018).

Please refer to Official Gazette no. 792 /17 September 2018 for more details.

The rights and obligations of public authorities personnel during the delegation and posting in another locality and in interests of the service

The Decision no. 714/18 September 2018 approves a set of rights and obligations applicable to public authorities’ personnel, delegated or posted in another locality, or traveling in interests of the service.

Amongst others, a relevant amendment brought by Decision no. 714/18 September 2018 would the extension of the tax-free allowance cap from RON 17/day to RON 20/day.

Please refer to Official Gazette no. 797/18 September 2018 for more details.

Electronic cash registers

The contravention applicable for the failure to observe the deadlines provided by the law to use cash registers with electronic journal

Decision no. 701 on the modification of point 42 of Annex no. 1 of the Government Decision no. 33/2018 regarding the establishment of contraventions covered by the Prevention Law no. 270 / 2017 as well as the model of the correction plan, also introduces the contravention applicable for the failure to observe the deadlines provided by the law to use cash registers with electronic journal among the contraventions for which the Prevention Law applies.

According to the applicable legal provisions, the failure of the users to comply with the deadlines stipulated by the law for using the cash registers with electronic journal (1 September 2018 for large and medium taxpayers and 1 November 2018 for small taxpayers) is a contravention and is subject to a fine from RON 8,000 to RON 10,000, as well as the seizure of unjustified amounts of money and the suspension of the economic operator’s activity.

Moreover, two forms for the validation of the XML files created by the cash register with electronic journal (A4200 and A4203 declaration), which should be submitted until the 20th of the month following the reporting period in which the electronic tax cash registers have been used.

Please refer to Official Gazette no. 777/11 September 2018 for more details.

Accounting regulations regarding interim dividends

Order no. 3067/2018 for the completion of accounting regulations

The Order brings clarifications regarding the interim financial statements prepared by the entities that opt ​​for the quarterly distribution of dividends.

Entities applying the accounting regulations regarding the individual annual financial statements and the consolidated annual financial statements, approved by the Order of the Minister of Public Finance no. 1802/2014, that have opted for the quarterly distribution of dividends, prepare interim financial statements including balance sheet and profit and loss statement. These will be accompanied by the significant accounting policies.

Entities applying the accounting regulations conformant with the International Financial Reporting Standards, approved by Order 2844/2016, that have opted for the quarterly distribution of dividends, prepare interim financial statements including the statement of financial position and the statement of comprehensive income. These components have the same structure as applicable to the annual financial statements.

For the purpose of recording in the accounting books the dividends distributed during the financial year, the account 463 „Receivables from dividends distributed during the financial year”, an asset account, was added to the chart of accounts provided by Order no. 1802/2014, as well as to the chart of accounts provided by the Order no. 2844/2016.

The interim financial statements are financial statements with special purpose, intended for the distribution of dividends during the financial year. The revenues and expenses are taken into consideration cumulatively from the beginning of the financial year to the end of the quarter for which the entity has opted to distribute dividends.

For the purpose of preparing the interim financial statements the entities shall perform the patrimony count of assets, liabilities and equity, and shall revalue these elements.

The interim financial statements shall be submitted to the territorial units of the Ministry of Public Finance within 30 days of their approval by the general meeting of shareholders/associates.

 

For additional information, please contact:

Alex Milcev, Partner – Head of Tax & Legal

Email: office@ro.ey.com



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