Larger Contributions for Some Taxpayers due to a Regulatory Mistake

Written by: Bridgewest

Larger-Contributions-for-Some-Taxpayers-due-to-a-Regulatory-Mistake.jpgThe Romanian Fiscal Code suffered successive changes over the past months and the additional legislation hasn’t been clarified through secondary laws. These yet unclear regulations have made it possible for some taxpayers to face additional taxes. Our accountants in Bucharest can help you with specialized consulting services so that you can clarify any questions regarding the new Code.

Law 187/2015: issues regarding transactions 

Law 187/2015 regarding transactions by tax reconsideration is one that brings major implications regarding the due taxes in Romania. However, it is yet unclear how the law is applied and its enforcement (or failure to do so) may in some cases result in disputes with the fiscal authorities in Romania.
Experts have pointed out that until additional regulations are published, the economic substance of the transactions can be subject to debate. This law is particularly important for the calculation of the contribution rate. If a transaction is not considered by the fiscal authorities, its tax rate climbs to 50%.

Who is influenced by the unclear law?

Because the procedure for the enforcement of the provisions of law 187/2015 have not been published yet, the article cannot be enacted which means that there’s a risk for imposing additional taxes. The previous article contained explanations for artificial transactions (without economic content) which cannot be usually used within normal economic practices. The new version does not contain explanations for these types of transactions.
The 50% tax rate is applicable to the gross income of non-residents in Romania. The new legislative document doesn’t clearly specify the type of transactions meaning that, until further clarifications are issued, any transaction between affiliated individuals can be reconsidered for tax purposes. This can influence the entire business relationship between companies and individuals in Romania.
The income considered for taxation can be derived from interest, royalties, fees, various services (management, consulting, marketing, technical assistance, research and design, advertising and publicity, regardless of their form) or liberal professions.
Our Romanian accountants can help you if you are a foreign investor in Romania and are in need of accounting services and tax consultancy.