Law Firm Adela Diaconescu - TAXATION
Investing in Romania
Real Estate Acquisitions
Debt Collection
Accounting Rules
Taxation
Payroll Issues
VALUE
ADDED TAX (VAT)
The Romanian Law no. 571/2003 regarding the Fiscal Code stipulates
the following VAT rates:
the general rate of VAT is 19% for activities in Romanian territory;
the reduced rate of VAT is 9%. This rate applies only in few restricted
areas: museum entry tickets, schoolbooks and newspapers, medical
prosthesis, medicaments, hotel accommodation.
When set up, a company is allowed to choose to be VAT not-payer,
but if its turnover exceeds 35,000 EUR it automatically becomes
VAT payer.
Normally, VAT is calculated, declared and paid on a monthly basis.
When setting up, the companies must declare the yearly provisioned
turnover.
Each company must drawn and deposit on a monthly basis a VAT declaration,
to be deposited at the territorial Financial Administration until
25th of the current month for the previous month.
In order to
recuperate the VAT, the company must ask the reimbursement in
the VAT declaration by ticking the row “Reimbursement
request”. According to the law, within 30 days from the request
date, the tax inspectors should come and perform the VAT control.
The practical experience of the companies acting in Romania has
shown that it is rather difficult to recuperate the VAT and that
the tax inspectors use various arguments in order not to return
VAT. Consequently, the reimbursement of the VAT is a difficult
process, time and effort consuming for the companies
If the VAT to be reimbursed is less than 5000 RON (around 1,500
EUR), the company will not have the right to ask the VAT reimbursement.
The VAT to be reimbursed will be automatically carried forward
for the next fiscal period.
For the imported goods and services, the VAT regime is the following:
For imported goods: VAT has to be paid when the goods arrive at
the Customs Office. The VAT paid on the foreign invoice can be
deducted from the VAT declaration for the next month;
For imported services: no VAT should be paid, but only registered
in the bookkeeping.
The companies importing following goods are exempted from paying
the VAT, if the same goods are exempted from paying the VAT in
Romania, according to the law appliable to the delivery of goods
in Romania or from paying custom duties, according to EU Dirrectives.
PROFIT TAX
Profit Tax Quota
The Romanian Law no. 571/2003 regarding the Fiscal Code stipulates
that the profit tax is 16%.
Profit tax is calculated, declared and paid on a quarterly basis.
It is calculated for the cumulated profit since the beginning of
the fiscal year.
The difference between the result in the books and the fiscal
is linked with the principle of the deductibility of expenses.
In order to be deductible, an expense should correspond to an income.
When calculating the taxation base of a company, one should take
into consideration the fact that Romanian Law considers many expenditures
non-deductible.
For the calculation of the profit tax, previous loss can be recovered
within five years. The Romanian Accountancy Law accepts the in-line
and accelerated depreciation method.
CUSTOMS DUTIES
The Romanian Customs Duties Regulations (the Law no. 86/2006 regarding
the Romanian Custom Duties Regulations) stipulate import duties
for imported goods, and the percentages vary from one product to
another, and from one origin to another. The classification of
the goods and related custom duties can be found in the Customs
Duties Regulations.
From 01.01.2002, customs taxes for the import of most products
from member countries of the European Union, European Free Trade
Association and the Central European Free Trade Association are
0%.
WITHHOLDING TAX
The Romanian Law no. 571/2003 regarding the Fiscal Code stipulates
that any foreign company or natural person who stays in Romania
less than 183 days in a calendar year must pay a withholding tax
for the incomes obtained from activities run in Romania or from
commercial operations with Romanian entities.
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