Tax alert 10 – Proposal for simplifying the reporting obligations for individuals

The new mechanism for reporting and paying the income tax and social security charges due by individuals.

This projects is intended to solve all the misunderstandings and contradictions that arise in the reporting and payment of tax and social charge by several categories of individual taxpayers.

Purpose of the proposal

This mechanism aims to simplify the reporting obligations by introducing a single statement which will replace the following current statements:

  • Form 200 – income from Romania;
  • Form 201 – income from abroad;
  • Form 220 – estimated income/income quota;
  • Form 221 – income quota – agriculture;
  • Form 600 – base income for social insurance contribution;
  • Form 604 – determining the health fund contribution for individuals with no income;
  • Form 605 – canceling the obligation of health fund contribution for individuals with no income.

Deadlines and means of submission

The proposal provides a single deadline for submitting the statement during a fiscal year:

    • For 2018 – 15 July 2018 (reconciliation of tax year 2017 and estimation for 2018)
    • Starting 2019 – 31 March of the current year (finalization of the previous tax year and estimation for the current tax year) 

The statement will be submitted by means of:

  • Hard-copy (only for 2018)
  • Electronic transmission systems – “SPV” (user and password identification system is used)
  • E-government (electronic signature based on qualified certificate)

The proposal provides a single payment deadline of 31 March of the following year when the income was earned, which will replace the 5 different deadlines imposed by the current legal provisions.

Taxpayers will be able to make advance payments for income tax, social insurance contribution and health fund contribution during the year, due for the estimated income of the current year, before 31 March of the following year.

In addition, The Ministry of Finance informs that, for the year 2018, is analyzing the possibility to introduce a payment system based on bonuses for taxpayers who pay in advance their tax liabilities.

Furthermore, the taxpayer is allowed to rectify the statement by the payment deadline.

Income subject to social insurance and health fund contributions

The new mechanism envisages the assessment of the social insurance contribution and health fund contribution considering the estimated income for the current year, independent of the income earned in the previous year.

Income from independent activities

The following changes to the social contributions due for income obtained in relation to certain categories of self-employed activities are proposed:

  • Exemption from the social insurance contribution for copyright income and the possibility to opt for registering on a voluntary basis to the National Pension House
  • Reintroducing the health fund contribution withholding mechanism for income earned from copyright, lease of agricultural goods or associating with legal entities
  • Exemption from health fund contribution for income from intellectual property rights for certain categories of persons (retirees, children, individuals up to 26 years old from the child protective services system)

Author: Corina Mîndoiu – Senior Manager, People Advisory Services

 

For additional information, please contact: 

Alex Milcev, Partner – Head of Tax & Legal

Email: office@ro.ey.com

 



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