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The "train" ordinance, which was on the agenda of yesterday's Government meeting, once again disrupted the business environment, because, in addition to postponing some payments and restructuring the activity of some public institutions, that act provides from January 1, 2024 new tax changes, beyond those introduced by law 296/2023.
Thus, with regard to the generalization of the Ro e-Invoice system, through the future normative act simplified invoices, invoices issued for operations carried out to taxable persons not established and not registered for VAT purposes in Romania, as well as invoices that are not subject to the invoicing rules in Romania are exempt from the obligation to report/transmit through this system.
Due to the fact that in practice there were reported cases in which the system did not work, the "train" ordinance establishes that, in the situation where the RO e-Invoice system is not functional for at least 24 hours, the transmission obligation is suspended until the system is restored. The periods of system downtime will be published on the websites of ANAF and the Ministry of Finance.
Regarding the operations of cash receipts and payments, the normative act establishes that payments from advances for settlement will be made within the limit of a daily ceiling of 5,000 lei, established for each person who received advances for settlement. Cash receipts and cash payments between legal entities and natural persons, representing the value of deliveries or purchases of goods or services, dividends, assignments of receivables or other rights, are carried out within the daily ceiling of 10,000 lei to /from a person. The GEO also establishes that the cash amounts in the cash register cannot exceed, at the end of each day, the ceiling of 50,000 lei. In the case of cash and carry stores, superstores and hyperstores that are organized and operate based on the legislation in force, the cash amounts in the cash register cannot exceed, at the end of each day, the ceiling of 500,000 lei. Cash amounts in excess of the cap are deposited into the bank accounts of these individuals within two business days. Likewise, branches and other secondary offices of legal entities that have their own cash register and/or account opened at a credit institution shall properly apply the provisions for each separate cash register.
The emergency ordinance provides that, starting from January 1, 2024, the expenses representing the purchase cost of electronic fiscal cash registers (cash registers) are no longer deducted from the profit tax due for the quarter in which they were put into operation, in if taxpayers owe quarterly profit tax, or from the annual profit tax, in the case of taxpayers who apply the annual system of declaration and payment of profit tax.
With regard to the regime of micro-enterprises, after the changes made on January 1, 2023 and by law 296/2023, the future normative act contains an amendment that establishes that the number of micro-enterprises is limited per shareholder/associate who owns more than 25% of a single micro-enterprise.
If a micro-enterprise finds itself in special relations with other Romanian legal entities, which lead to their inclusion in the category of "related enterprises", the condition related to the establishment of the ceiling value of 500,000 euros should be checked on the basis of the total income for all related enterprises , including those of the person who verifies the fulfillment of the micro-enterprise conditions.
Starting from January 1, 2024, micro-enterprises in the HoReCa field will be subject to the general rules of the taxation system for micro-enterprises, including regarding the verification of the conditions for inclusion or exit from the taxation system for micro-enterprises.
The government also wants the micro-enterprise temporarily inactive to remain in the micro-enterprise income tax system for the entire period in which it registers this state of inactivity.
The GEO also stipulates that employers will be able to offer employees subscriptions to fitness rooms within the deductible ceiling of 33% within the limit of 100 euros/year, instead of 400 euros, and repeals the provision according to which the sums granted to employees carrying out telework activities, they cannot exceed a monthly ceiling of 400 lei corresponding to the number of days in the month in which the natural person carries out activity.
Also in the field of fiscal measures, the normative act initiated by the Ministry of Finance eliminates facilities deferment of VAT payment to customs for taxable persons registered for VAT purposes. In order to obtain the certificate of deferment from the payment of VAT to customs, for certain outstanding budgetary obligations, the applicants will give a declaration on their own responsibility according to which they do not register such obligations.
Due to the introduction by law 296/2023 of the excise duty on sugar, the new emergency ordinance established that non-alcoholic drinks with sugar that are in stock on January 1, 2024 will not have excise duty. It has also been removed from the definition of added sugar of sugars in unsweetened fruit juices, fruit juice concentrate and fruit purees, given that they do not affect health to the same extent as other types of added sugars.
Regarding traffic fines, the GEO establishes that a fine point represents 5% of the gross minimum basic salary per country guaranteed in payment, established by Government decision. Practically, the fine point increases from 145 lei to 165 lei starting from January 1, 2024.
The GEO also has provisions in relation to the e-Transport system applicable to the transport of goods with high fiscal risk regarding tax evasion.
Through the new regulations, road freight transport operators will be obliged to equip transport vehicles with telecommunication terminal devices that use satellite positioning and data transmission technologies in the situation where the transport vehicle is not equipped with its own equipment positioning. Moreover, the driver of the means of transport has the obligation to start the positioning device before starting the transport on the national territory, and to keep it in operation until the place of delivery declared on the national territory or after leaving the national territory. Violation of these provisions will be penalized as a misdemeanor.
• Small and medium-sized entrepreneurs criticize the new tax changes
Florin Jianu, the president of the National Council of Small and Medium-sized Private Enterprises in Romania, told the BURSA newspaper that the representative of entrepreneurs in the CES gave a negative opinion to the draft emergency ordinance regarding the new tax changes, especially since this normative act does not have a study financial impact, which also shows the number of enterprises/organizations affected by the respective changes.
In the negative opinion sent by CNIPMMR to the CES, it is stated that there was no time for the analysis and transmission of proposals for modification and negotiation of the normative act, which contains numerous aspects unfavorable to the development of the business environment, among which are:
-limiting the number of micro-enterprises from 3 to only one in which an associate can own more than 25%, ownership that does not have to be direct, but can also be indirect, thus including companies where there are spouses or relatives up to grade III inclusive. CNIPMMR believes that this amendment widens the tax base and this should not be done by limiting/violating some rights of association, in a way that affects free will when making the decision to associate.
-limiting the deductibility of depreciation and operating expenses related to social premises purchased by the taxpayer in residential complexes to 50% if they are not used exclusively for the purpose of the activity, and in the situation where such premises are also used for personal purposes by associates, all the expenses listed above are non-deductible. CNIPMMR representatives claim that this provision will give rise to abuses to the extent that it is not clear how it can be demonstrated whether the headquarters is also used as a home, given that, especially after the pandemic, there are many entrepreneurs who provide remote/work services -from-home.
- the recovery of fiscal losses can only be done in proportion to 70% and only in 5 years
- it is no longer possible to deduct from tax the cost of electronic fiscal marking devices, given that recent legislative changes have forced taxpayers to invest in such equipment in order to fulfill their legal obligations
- failure to submit the balance sheet on time by microenterprise income tax payers leads to classification as a profit tax payer, and the deadline for submitting financial statements for 2023 for microenterprises will be March 31, 2024.
- lowering the ceiling of expenses that could be paid to employees for medical subscriptions or sports facilities from 400 euros/year to 100 euros/year
- imposing on legal entity tenants the obligation to withhold, declare and transfer to the budget the tax on income from rents owed by natural person owners, increasing without any counter-advantage the taxpayers' compliance effort, because the state was not able to implement effective measures to collect this tax from natural persons.
CNIPMMR believes that the vast majority of SMEs will be directly affected by these changes which will not benefit the state budget either.
• Concordia opposes some of the new tax measures
The Confederation of Employers Concordia approved negatively in the Economic and Social Council the fiscal-budgetary measures, noting that there was no consultation and discussion with any industry, and the social dialogue is again a form that ticks a legal requirement and nothing more.
According to Agerpres, Radu Burnete, the executive director of the Concordia Employers' Confederation, said: "There was no consultation and discussion with any industry, the social dialogue is again a form that ticks off a legal requirement and nothing more, and from a first analysis we see an excessive and unjustified optimism regarding the income level. ANAF aims to collect 30 billion lei in addition next year, although this year it is 12 billion lei below what it proposed. The government expects more than 60 billion lei from European funds and PNRR, although it will achieve just under 29 billion lei from the 55 billion lei it has proposed in 2023. (...) pots break quickly in the heads of good tax payers. They will again be called upon to pay a larger deficit than estimated, despite promises that there will be no tax increases in 2024."
His lordship shows that through the new fiscal measures the Government wants to narrow again the area of deductibility of sponsorships even though this system has generated a lot of social benefits at very low costs. The transition fund, although fueled by overtaxing energy companies, is empty in the draft budget. In addition, the ceilings for Rabla decrease significantly discouraging these programs even though money from the Environmental Fund cannot be reallocated to other budget areas. Also, Burnete claims that the turnover tax remains with significant uncertainties "and we also see fiscal decisions that will have retroactive effect".
The executive director of the Concordia Employers' Confederation mentioned: "The punishments for evasion are being tightened, which in itself is very good, but in the absence of ANAF reform and digitization, we fear that the institution will become more oppressive even with good taxpayers, not with evasionists. (...) The government continues not to take seriously those who ultimately produce the well-being of Romania, the employees and employers. We take our role seriously and will publish our own analyzes and opinions in the next period even if the measures have already been adopted".
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