Employment LawLitigation & Tax Litigationvan de WaartLEGAL NEWS & INSIGHTS DECEMBER 2022

January 12, 2023

LEGAL NEWS

1. Amendments to the Tax Code

At the end of December 2022, new changes to the Tax Code were published (Law no. 370/2022), which clarified in particular the changes to the Tax Code published in July 2022 by Government Ordinance no. 16/202. Such will apply as of January 1st, 2023.

Microentreprises

New conditions and clarifications – A Romanian company may opt for the application of the tax on the microenterprises income if it meets all the following 6 conditions on December 31 of the previous year:

  1. the income has not exceeded the equivalent in RON of 500,000 EUR (condition applicable from the fiscal year 2023)! Legal entities that obtained incomes over 500,000 EUR but less than 1,000,000 EUR in 2022 may opt for the application of the tax on the microenterprises income in 2023;
  2. its share capital is held by persons other than the State and local government units – according to the Tax Code;
  3. it is not being dissolved, followed by liquidation, registered in the Trade Register or in court, according to the law;
  4. its income is obtained, other than from consulting and/or management, representing over 80% of total income, except for income from tax consulting, corresponding to CAEN code: 6920 – “Accounting and financial audit activities; tax consulting”;
  5. it has at least one employee;
  6. it has associates/shareholders who hold over 25% of the value/number of shares in no more than three companies applying the tax system for microenterprises.

Additionally, clarifications are made regarding the rules for the application of the income tax system for microenterprises by HORECA companies – CAEN codes 5510, 5520, 5530, 5590, 5610, 5621, 5629, 5630.

Social contributions & health insurance for independent activities & intellectual property 

Clarifications on how to calculate the incomes that represent the basis for calculating social contributions owed by individuals having income from independent activities & intellectual property. As such, the basis shall be the taxpayer’s chosen income, which may not be less than:

 =  12 gross national minimum salaries for income between 12 gross national minimum salaries including and 24 gross minimum salaries

=  24 gross national minimum salaries for income at least equal to 24 minimum gross salaries at national.

Clarifications on how to calculate the incomes that represent the basis for calculating the health insurance contributions owed by people earning incomes from independent activities and intellectual property:

=  6 gross national minimum salaries for income between 6 gross national minimum salaries including and 12 gross minimum salaries

=  12 gross national minimum salaries for income between 12 gross national minimum salaries including and 24 gross minimum salaries

=  24 gross national minimum salaries for income at least equal to 24 minimum gross salaries at national.

Local taxes

The entry into force of the changes to local taxes and charges provided for in the Government Ordinance no. 16/2022 on the rates and method of their assessment is postponed from January 1, 2023 to January 1, 2025.

2. Amendments to the Tax Procedure Code

On December 29, 2022, new amendments were also made to the Tax Procedure Code by way of Government Emergency Ordinance no. 188/2022

  • Administrative file – The definition of the administrative file and the express obligation to submit the administrative file at the taxpayer’s request are introduced. This obligation was established in case law both by the European Court of Justice and national courts but was not expressly regulated in the Tax Procedure Code.
  • Place of inspection – The rule is introduced to carry out audits at the tax office premises and the possibility for the taxpayer to submit electronically the information requested by the tax authority.
  • Compliance notification – The obligation is introduced to send a compliance notification to the taxpayer selected for control regarding the tax risks identified in order for them to re-examine their tax situation and, where appropriate, to file or correct their tax returns. The taxpayer has 30 days to respond, during which time no activity can be started.
  • Unannounced audit / Anti-fraud audit – Clarifications and amendments are made concerning the procedure applicable to an unannounced audit and an anti-fraud audit, as well as the rights of the taxpayer.
3. News on salary

2023 New minumum gross base salary levels

As of January 1, 2023, the monthly minimum gross base salary at national level is increased from 2,550 RON (approx. 515 EUR) to 3,000 RON (approx. 606 EUR) for a normal work schedule.

The hourly rate will be 18.145 lei per hour for a full work schedule of 165.333 hours per month.

Particularities

1. Construction sector – the monthly minimum gross base salary in the construction sector is increased from 3,000 RON (approx. 600 EUR) to 4,000 RON (approx. 812 EUR)

2. Agri-food sector – the monthly minimum gross base salary for this sector remains the same in 2023, namely 3,000 RON (approx. 600 EUR), i.e., equal to the monthly minimum gross base salary at national level.

Non-taxable part of the minumum gross base salary

As of 2023, an amount of 200 RON of the salary of fulltime employees is exempted from income tax and social security contributions provided that the following conditions are met:

  • the value of the salary set in the employment contract is equal to the minimum gross base salary at national level for the respective month;
  • the total gross value of salary income (i.e., base salary plus all other work indemnities, including in kind benefits), received by the employee for the respective month is less or equal to 4,000 RON.
4. IT facility

Amendments made by Ministry of Finances Order no. 4433/2022 on the classification in the activity of software creation, in force from January 01, 2023.

A new exempt activity is introduced: Software product development engineer: Activities of analysis and evaluation of requirements for existing or new computer applications and operating systems: design, development, testing and maintenance of software solutions to meet these requirements.

The possibility of granting exemptions for employees of public institutions is also foreseen.

Disclaimer: The information provided herein is in no way exhaustive and does not, and is not intended to, constitute legal advice. Readers of this Article should contact their attorney to obtain advice with respect to any particular legal matter.