Summary of Romanian fiscal and accounting news of May 2024

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Summary

1. VAT deduction is eliminated for invoices issued to employees (GD 451/2024)
2. Amendments to RO e-Transport, Fiscal Code and Application Norms of the Fiscal Code (GEO 43/2024)
3. Sanctions for tax evasion cases - new offences are defined, penalties are increased, also increase in maximum damage ceilings that eliminate penalties and replace them with fines (Law 126/2024)
4. Updated VAT tax return (Order 888/2024)
5. Complement on regulations regarding sale of agricultural land outside residential areas (Law 116/2024)
6. Complement to the list of fiscal liabilities which are paid to the sole account (Order 874/2024)
7. Other legislative news
8. May 2024 closing exchange rates

Decision 451/2024 to amend and complement Methodological Norms to apply Law 227/2015 on the Fiscal Code, approved by Government Decision 1/2016 (Official Gazette 410/2024)

The Decision amends and complements Methodological Norms to apply the Fiscal Code.

Among other things, given the introduction of the compulsory e-Invoice/e-Factura system, the provision on VAT deduction for invoices issued to employees, directors or personnel at the disposition of a taxable entity, traveling for work-related purposes, for transportation or accommodation, is repealed.

Emergency Ordinance 43/2024 to amend and complement certain normative acts (Official Gazette 409/2024)

Summary

The Ordinance brings a series of amendments and complements to the following normative acts:

• GEO 41/2022 to set up national RO e-Transport system to monitor road transport for goods with high fiscal risk;
• Fiscal Code;
• GD 479/2003 to approve Methodological Norms to apply GEO 28/1999 on the obligation of economic operators to use electronic fiscal cash registers.

Details

We present the most significant provisions as follows:

1. RO e-Transport system changes

The list of entities/persons having the obligation to declare data related to international transportation of goods with the RO e-Transport system is complemented. The following users are added to the RO e-Transport system:

• service provider from Romania, for commercial operations representing a non-transfer both for goods unloaded on the territory of Romania for the provision of services, and for resulting goods that are reshipped to the state of the commercial partner;
• beneficiary in Romania, for commercial operations representing a non-transfer both for goods shipped from Romania for provision of services in a member state of the European Union, and for resulting goods reshipped to Romania;
• customer from Romania, for commercial operations that subscribe to call-off stock (consignment stock) arrangements in the situation where Romania is the member state where goods were shipped or transported both for goods unloaded on the territory of Romania and for goods delivered at a later stage after arrival, to another taxable entity in Romania or if the goods in question are returned to the member state from where they were originally shipped or transported;
• supplier from Romania, for commercial operations that subscribe to call-off stock (consignment stock) arrangements in the situation where Romania is the member state from where goods were shipped or transported, both for goods shipped from Romania, and in the case when those goods are returned to Romania.

To have a complete picture, we recall that the following users already had the obligation to declare international transport of goods in RO e-Transport system:

• Consignee registered on the import customs declaration, for goods that are the subject of import operations;
• Consignor registered on the export customs declaration, for goods that are the subject of export operations;
• Beneficiary from Romania, for intra-community purchases of goods;
• Supplier from Romania, for intra-community deliveries of goods;
• Depository, for goods that are the subject of intra-community transactions in transit, both for goods unloaded on Romanian territory for storage or to form a new shipment from one or more consignments of goods, as well as for goods loaded after storage or after the formation of a new transport on national territory from one or more consignments of goods.

The following shipments are exempt from the declaration obligations using the RO e-Transport system:

• transport of goods intended for diplomatic missions and consular offices, as well as international organizations, armed forces of NATO or European Union member states, member states of the Partnership for Peace or states with which Romania has concluded agreements in the field or as a result of execution of classified contracts according to law or execution of public procurement contracts that require the imposition, according to legal provisions, of special security measures to protect essential security interests of the state;
• transport of excisable products circulating under excise duty suspension regime or with excise duty paid within the sending member state; that is, by using the excise goods movement control system, called EMCS, for issuing electronic administrative document e-DA or the simplified electronic administrative document e-DAS
• transport of goods by postal service providers in postal packages.

Confiscation as a complementary sanction is no longer applied for findings resulting from verifications subsequent to the completion of the road transport of goods, when they were recorded in supporting documents that are the basis of accounting records, as well as in accounting ledgers of the users, as the case may be, for the period to which the respective operations refer. This provision is applicable both for international transport of goods and for transport of goods with high fiscal risk.

Regarding the application of sanctions for international transport of goods, they are applied for offences committed and discovered starting the 1st of July 2024

2. Amendments to the Fiscal Code

CORPORATE TAX

A new category of non-taxable income is introduced when calculating the fiscal result: income from the reversal of adjustment of receivables resulting from operations related to subscribed and unpaid share capital, recorded as financial assets according to IFRS accounting regulations applicable to credit institutions that are Romanian legal entities established according to Law 207/2022.

It will be applied for the calculation of corporate tax starting with fiscal year 2024.

SPECIAL TAX ON HIGH-VALUE IMMOVABLE AND MOVABLE ASSETS

The obligation of local fiscal authorities to send a notification to individuals who own/jointly own residential buildings located in Romania with a value exceeding RON 2,500,000 is introduced. The notification will include information such as the taxable value determined to calculate tax on the building and will be sent by the 30th of May of the year for which the special tax on high value immovable and movable assets is due.

The deadline to calculate, declare and pay this tax is changed, being the 30th of September of the year for which it is due. Previously, the deadline was the 30th of April.

Within 30 days, by ANAF Presidential Order, the template and content of the tax return on special tax on high value immovable and movable assets will be established.

More information on this tax in Nowium Newsletter – October 2023.

3. Amendments to Application Norms for GEO 28/1999 on the obligation of economic operators to use electronic fiscal cash registers

Other data and information from fiscal receipts and the daily closing fiscal report from electronic fiscal cash registers, other than those provided in annex no. 11 to the Methodological Norms to apply GEO 28/1999, that are transmitted by electronic fiscal cash registers in the national IT system to supervise and monitor fiscal data will be established within 30 days.

Law 126/2024 on certain measures to consolidate capacity to combat tax evasion, as well as to amend and complement certain normative acts (Official Gazette 437/2024)

Summary

Provisions of Law 241/2005 to prevent and combat tax evasion are complemented by introducing new offences or increasing the penalties for some offences. This update of Law 241/2005 also comes in the context of implementation of the RO e-Factura system and expansion of RO e-Transport system.

Details

The law expands the definition of legal documents, adding electronic invoice issued, transmitted and received through the RO e-Factura national system. It is specifically established that the legal documents analysed to establish tax evasion also include those issued electronically, including the electronic invoice issued from the RO e-Factura system.

New acts constituting tax evasion offences are regulated, as follows:

• failure to withhold taxes and contributions - is punishable with prison from 1 to 5 years or a fine. Previously, it was only punishable in the situation where the tax was withheld, but not paid. Examples: salary taxes and contributions, tax on dividends, tax on non-resident income – the full list is presented as Annex to the updated Law 241/2005.
• are punishable with prison from 3 to 10 years and the prohibition of certain rights or by fine:lending funds, directly or indirectly by any individual, with the purpose of making payments with money that comes from the omission of operations in supporting accounting documents and/or the income obtained. We underline that the fiscal changes introduced at the end of 2023 allow individuals to grant loans to companies only through bank transfer, not in cash.reporting expenses that are not based on real operations or are fictitious operations in accounting documents, electronic invoice or other legal documents;alteration, destruction or concealment of accounting documents, storage of toll machines or electronic fiscal cash registers or other means of data storage, including electronic methods;double accounting records using documents or other means of data storage, including electronic methods.
• are punishable with prison from 3 to 10 years and the prohibition of certain rights or by fine, if they are committed in order to avoid observance of fiscal obligations:use of RO e-Factura national system in bad faith by the taxpayer, in order to create the appearance of legality for fictitious operations or to disguise the true transactional circuit of goods/services;use of electronic fiscal cash registers that are not connected to the national IT system to supervise and monitor fiscal data, according to law, or the alteration of electronic fiscal cash registers in order to suppress submission of fiscal data or to transmit false fiscal data.
• is punishable with prison from 7 to 15 years and the prohibition of certain rights, any offence committed within certain fraudulent schemes having the effect of reducing the resources of the state budget by at least EUR 1,000,000, equivalent in national currency, through:use or presentation of false declarations or documents, and false, incorrect or incomplete electronic documents regarding VAT;intentional non-disclosure of VAT information when this information should be disclosed according to law;presentation of correct declarations, correct electronic VAT tax returns to fraudulently mask the lack of payment or to create improper rights to VAT reimbursements.

It should be emphasized that attempts on the above offences are also punishable.

Increasing penalties

For damages of more than the RON equivalent of EUR 500,000, the minimum and maximum penalty limit is increased by 3 years. For damages of greater than the RON equivalent of EUR 1,000,000, the minimum and maximum penalty limit is increased by 5 years.

Situations when penalties may be reduced/eliminated or replaced by fine

If damages do not exceed EUR 1,000,000, special situations are provided when the offence will not be punished nor will a criminal investigation start, as follows:

• if the taxpayer pays the damages in full plus 15% of its value including related interest and penalties, within the maximum period of 30 days from the end of the inspection carried out by fiscal authorities that found the existence of damages that does not exceed EUR 1,000,000, then the offence is not punished, and fiscal authorities do not notify criminal investigation authorities.
• if damages, increased by 25% plus interest and penalties, are paid in full during the criminal investigation, the offence is not punished;
• if damages, increased by 50% of its value plus interest and penalties, are paid in full, during the procedure in the preliminary chamber or trial, prior to delivery of initial sentence, the offence is not punished;
• if damages, increased by 100% of its value plus interest and penalties, are paid in full during an appeal, prior to the issuance of a final court decision, the offence is not punished.

The special limits are reduced by half if the person who committed the crime informs the criminal investigation or fiscal authorities about the crime committed, while still in progress or within a year from the end date of the criminal activity and prior to notification of the criminal investigation bodies and, subsequently, facilitates finding the truth and the prosecution of one or more participants in committing the crime.

The limits of the punishment provided by law are reduced by half if damages are fully covered prior to the first hearing. The punishment limits are reduced by one third if damages are fully covered after the first hearing and prior to the final proceeding of the case. Criminal fines are possible if damages caused and recovered under these conditions is less than EUR 1,000,000.

Exceptions

These situations to reduce/eliminate punishment or transform/convert it into fines do not apply for tax evasion offences represented by lending funds to company by individuals and fraudulent schemes.

The offender will not benefit from these provisions if, within a period of 5 years from committing the offence for which he/she already benefited from these provisions to reduce/eliminate punishment or transform/convert it into fines, he/she already committed another offence provided by this law.

The statute of limitations for criminal liability begins from the date when the fiscal authority or criminal investigation body was notified, but no later than 10 years from the date when the crime was committed.

Tax evasion offences causing damages higher than RON 10,000,000, are investigated by the National Anticorruption Directorate, regardless of the person's quality.

The new amendments apply starting the 16th of May 2024.

Order 888/2024 to amend ANAF Presidential Order 1253/2021 to approve template and content of form (300) – VAT Tax return (Official Gazette 448/2024)

The Order updates template and content of the VAT tax return (form D300).

The updates were necessary as a result of legislative changes that removed VAT exemptions for certain operations in hospital units within the state network.

The new VAT tax return template is used starting with the declaration month of May 2024.

Law 116/2024 to approve GEO 104/2022 to amend and complement Law 17/2014 on certain measures to regulate the sale-purchase of agricultural land located outside residential areas and to amend Law 268/2001 on privatization of companies that manage public and private land owned by the state for agricultural purposes and establishment of the State Domains Agency, as well as to complement Law 287/2009 on the Civil Code (Official Gazette 406/2024)

Summary

The Law approves GEO 104/2022 and complements it by mentioning that sale of agricultural land located outside residential areas without complying with provisions on obligation to pay the related tax is prohibited and sanctioned with partial invalidity.

Details

According to GEO 104/2022, an 80% tax is due on the positive difference between value of the agricultural land on date of sale/alienation of the control package and on date of purchase of the land, determined according to the indicative value established by expert data prepared by the chamber of public notaries or the minimum value established by a market study carried out by the chambers of public notaries, as the case may be, during the respective period, in the event of change of ownership, through sale, prior to completion of the 8-year period after the purchase of:

• agricultural land outside residential areas;
• the control package of legal entities that own one or more agricultural properties located outside residential areas and represent more than 25% of real estate properties of the legal entity (representing any land, building or other construction erected or incorporated on land, registered according to applicable accounting regulations).

More Details on GEO 104/2022 may be found in Nowium Newsletter July 2022.

More on the procedure to calculate, collect and pay the tax, as well as the declarative obligations may be? found in Nowium Newsletter – February 2023.

Order 874/2024 to amend and complement the annex to ANAF Presidential Order 1612/2018 to approve list of fiscal liabilities which are paid to the sole account (Official Gazette 422/2024)

Summary

The Order complements the list of fiscal liabilities which are paid to the sole account.

Details

New fiscal liabilities, which are added to existing obligation types, are paid to the sole account are:

• Tax on turnover owed by credit institutions – Romanian legal entities and Romanian branches of credit institutions that are foreign legal entities;
• Specific tax on turnover for legal entities carrying out activities in oil and natural gas sectors;
• Tax on income obtained from rental activities, other than those from lease of agricultural goods and rental of rooms located in one’s own property for tourist purposes, withheld by legal entities or other entities that have the obligation to keep accounting records;
• Tax on income obtained by individuals carrying household activities;
• Contribution to social insurance owed by individuals carrying out household activities;
• Contribution to social insurance owed by individuals qualified according to provisions of art. 60 point 7 of the Fiscal Code;
• Contribution to social insurance owed by individuals qualified according to provisions of art. 60 point 2 of the Fiscal Code.

Order 1/2024 to amend and complement NBR Order 27/2010 on approving IFRS Accounting Regulations, amending, and complementing NBR Order 6/2015 to approve Accounting Regulations in accordance with European directives (Official Gazette 499/2024)

Valuation of monetary items in foreign currency for May2024

The May 2024 closing NBR exchange rates to use for valuation of monetary items (cash on hand, receivables, payables) denominated in foreign currency, as well as receivables and payables denominated in RON but pegged to a foreign currency for collection/disbursement are:

1 EUR = 4,9767 RON; 1 USD =? 4,5898 RON;

1 CHF = 5,0656 RON; 1 GBP = 5,8378 RON