By: Alina Moldovan and Ana Zagor
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Legal Update – July 2022
Some of the pieces of legislation that were published in the Official Journal of Romania during July 2022, as mentioned herein, include general interest information, as follows:
I. PROCEDURE FOR USING AND OPERATION OF THE NATIONAL SYSTEM RO E-TRANSPORT
Order No 1190/4626 of June 30th, 2022, published in the Official Journal of Romania No 656, approves the Procedure for using and operation of the national system for monitoring of road transportation of high tax risks goods RO e-Transport and the categories of road vehicles used.
What is the National System RO e-Transport?
▪ It is a set of principles, rules and IT applications intended to monitor the transport of goods on the territory of Romania.
What categories of road vehicles are subject to monitoring via the RO e-Transport system?
▪ Vehicles whose permitted mass is minimum 3.5 tons, Carrying high tax risks goods with a total gross mass of more than 500 kg or a total value of more than 10,000 Lei, in connection with at least one business relation for which the transport is performed.
What kind of data are reported via the RO e-Transport system?
▪ Data about:
➢ the sender,
➢ the beneficiary or the addressee,
➢ the name, the characteristics, the quantities and the value of carried goods,
➢ the loading and unloading places,
➢ details of the transportation vehicles used and the carrier,
➢ the declared date when the transport commences
➢ as the UIT code generated.
II. SALE OF AGRICULTURAL LANDS LOCATED OUTSIDE THE BUILT-IN AREA OF LOCALITIES
Government emergency Ordinance No 104 of June 30th, 2022, published in the Official Journal of Romania No 657/2022, amends and supplements Law No 17/2014 on some measures intended to govern the sale of agricultural lands located outside the built-in area of localities.
What does the law provide for?
▪ The sale of agricultural lands located outside the built-in area of localities is subject to the formal and substantive terms and conditions laid down in the Civil Code and the preemption right, at equal prices and conditions as those described in the offer, observing the following order:
− 1st rank preemptive buyers: co-owners, spouses, relatives up to the 3rd degree and in-laws up to the 3rd degree, in this order;
− 2nd rank preemptive buyers: owners of the agricultural investments for plantations of trees, vines, hop, exclusively private irrigations, located on the lands that are offered for sale and/or the leaseholders. In the event that agricultural investments for plantations of trees, vines, hop and for irrigations exist on the lands offered for sale, priority for the purchase of these lands shall be given to the owners of such investments.
▪ In the event that the landowner requested the posting of the offer for sale at the city hall/mayor’s office, the 1st rank preemptive buyers may accept the offer for sale and the sale and purchase agreement shall be signed based on the clearances referred to in the law.
III. TAX INCENTIVES IN AGRICULTURE AND FOOD INDUSTRY
Order No 1525/2022, published in the Official Journal of Romania No 661/2022 provides for some tax incentives for agriculture and food industry.
When are the incentives going to be granted?
▪ Starting with the income for June 2022.
Who is eligible for such incentives?
▪ Natural persons, for the income obtained from salaries and similar amounts.
Which incentives are offered?
− Exemption from payment of the income tax, in respect of the income from salaries and similar amounts;
− Reduction of the contribution to social insurance, in respect of the income from salaries and similar amounts;
− Exemption from payment of the contribution to health social insurance, in respect of the income from salaries and similar amounts;
− Exemption from payment of the contribution to social insurance due by employers in case of special or particular working conditions.
What conditions are there to be met?
▪ The turnover obtained by the employers of such natural persons from activities carried out in the agricultural and food industries, referred to in article 60(7)(a) of the Tax Code must account for at least 80% of the total turnover.
IV. REFERENCE INTEREST RATE IS 4.75% PER YEAR
Order No 17/2022 regarding the reference interest rate of the National Bank of Romania was published in the Official Journal of Romania No 680/2022.
▪ Effective as of July 7th, 2022, the reference interest rate used by the National Bank of Romania is 4.75% per year.
V. CHANGES IN THE PUBLIC PROCUREMENT LAW
Law No 208/2022, amending and supplementing Law No 98/2016 on public procurement, Law No 99/2016 on sectoral procurement, Law No 100/2016 on concessions of works and concessions of services, and Law No 101/2016 on remedies available in respect of the awarding of public procurement contracts, was published in the Official Journal of Romania No 697/2022.
▪ As regards direct procurement, the thresholds were increased and the contracting authority is entitled to directly procure products or services, provided that the estimated price thereof, exclusive of VAT, is less than 270,120 Lei, and works, respectively, provided that the estimated price thereof, exclusive of VAT, is less than900,400 Lei.
▪ In case of direct procurement, the contracting authority:
− Is under the obligation to use the electronic catalogue made available by SEAP or to publish an announcement in a dedicated section of its own website or of SEAP’s website, accompanied by a description of the products, services, or works to be purchased;
− Is under the obligation to obtain offers from minimum three economic operators for procurements the estimated value of which is higher than 140,000 Lei, exclusive of VAT, for products and services, and 300,000 Lei, exclusive of VAT, for works, respectively;
− Is entitled to purchase based on a single offer, if the estimated value of the products and services is less or equal to 140,000 Lei exclusive of VAT of the estimated value of works is less or equal to 300,000 Lei exclusive of VAT;
− Is entitled to pay directly, based on a legal commitment, without previously accepting an offer, if the estimated value of the purchase is less than 9,000 Lei exclusive of VAT.
▪ The contracting authority is under the obligation to upload in the SEAP, on a quarterly basis, a notification regarding the direct procurements, classified depending on its needs, which shall include at least the subject matter, the quantity purchased, the value and the CPV code.
VI. CHANGES IN THE LAW REGARDING THE ORGANIZATION AND OPERATION OF GAMBLING GAMES
Government Ordinance No 15/2022, amending and supplementing Government Emergency Ordinance No 77/2009 on the organization and operation of gambling games was published in the Official Journal of Romania No 716/05.05.2022.
▪ The contracts whose subject matter consists in the promotion of trademarks, platforms, applications or activities of gambling games via advertising messages posted in localities and on public roads or via a TV broadcast shall be reported to the Romanian Office for Gambling Games by the organizer of gambling games no later than five (5) days from the signing thereof.
▪ The organizers of gambling games are bound to pay a promotion fee for the activities of gambling games. The promotion fee is 5% of the value of advertising and promotion contracts and shall be paid to the state budget no later than the 25th of the month following the one in which the contract was signed.
▪ The above amount shall be calculated by the taxpayers and reported before the due date, via the tax return statement lodged with the qualified tax bodies.
VII. SYSTEM OF ACCOUNTING REPORTING FOR ECONOMIC OPERATORS
Order No 1669/2022 approving the accounting reporting system on June 30th, 2022 for economic operators was published in the Official Journal of Romania No 723/19.07.2022.
What does Order No 1669 provides for?
▪ The accounting reporting system is applicable to entities which obtained a net over higher than the equivalent of 1,000,000 Euros over the last year.
▪ The entities shall lodge the accounting reports in electronic format, via www.eguvernare.ro, signed with a qualified digital certificate.
VIII. PERFORMANCE GUARANTEES IN THE PUBLIC PROCUREMENT CONTRACTS AND SECTORAL CONTRACTS
Law No 225/2022 approving Government emergency Ordinance No 19/2022 on some measures regarding the performance guarantees established under the public procurement contracts and sectoral contract was published in the Official Journal of Romania No 736/2022.
What does the law provide for?
▪ If the parties so agree, in respect of the ongoing contracts, the contracting authority/entity requires the creation of a performance guarantee as follows:
− For products delivered/services provided/works executed – minimum 30% of the initial guarantee established for them, and in case of works contracting agreements, the risk of hidden defects must be minimum;
− For products/services/works remaining to be delivered/provided/executed – 100% of the initial guarantee established for them.
▪ If the parties so agree, the guaranteeing instruments established under the form of insurance policies may take the legal form of a co-insurance contract.
IX. CHANGES IN THE AREA OF PUBLIC PROCUREMENT
Law No 256/2022 amending and supplementing Law No 98/2016 on public procurement, Law No 99/2016 on sectoral procurement, Law No 100/2016 on concessions of works and concessions of services, was published in the Official Journal of Romania No 744/2022.
What does the law provide for?
▪ As regards the contracts of public procurement of works or services, the subject matter of which refers to the execution of new public investment objectives or interventions on the existing ones, the contracting authority is the one that elects the awarding procedure based on the following arguments:
− The estimated value of the contract for provision of services consisting in the elaboration of the feasibility study for each investment objective;
− The estimated value of the contract for provision of technical design services and designer’s assistance for each investment objective, partly cumulated with the design and assistance for works related to the investment objective, if the same form the subject matter of the same works public procurement contract;
− For specific services in connection with a work, such as verification of projects, expertise, fire scenario, consulting, technical assistance and the like, which require certified/chartered professionals, there shall be determined the estimated value of each service for each investment objective and, depending on the value obtained, there shall be determined the adequate procurement method.
X. COMPUTATION OF TAX ON PROPERTIES
Law 252/2022 amending Law No 227/2015 on the Tax Code and supplementing article 47 of Law No 207/2015 on the Code of Tax Proceedings was published in the Official Journal of Romania No 742/2022.
▪ Among other things, if the owner of the property fails to lodge the valuation report with the qualified tax body no later than the first due date of the tax, the tax shall be calculated by applying a 2% quota on the taxable value established according to the law, provided that the owner of the property was notified by the qualified tax body of the possibility to lodge a valuation report.
▪ The notification shall be served to the owner of the property by publication thereof on the private virtual space or by mail, if the taxpayers are not registered with the private virtual space.
▪ The deadline for serving the notification is October 31st of the current year for the tax due starting with the next year.
XI. REDUCTION OF SEISMIC RISK OF BUILDINGS
Law No 212/2022 on some measures intended to reduce the seismic related risks of buildings was published in the Official Journal of Romania No 708.
What does Law 212 provide for?
▪ The law sets forth the National Program for consolidation of high seismic risk buildings (the “Program”), regarding the design and execution of interventions to existing buildings which are insufficiently protected against earthquakes, are degraded or damaged.
What buildings are included in the Program?
− Multi-story buildings mainly intended for residential purposes;
− Public interest and utility buildings owned by or administered by the authorities and instrumentalities of the central or local public administration.
What are the criteria to be met by buildings intended mainly for residential purposes?
− They must be minimum GF+3S and host minimum 10 apartments;
− The peak value of land acceleration for design against earthquake a(g), according to the zoning map of Romania attached to the Seismic Design Code P100-1, is higher or equal to 0.20 g.
▪ No later than ninety (90) days from the effective date of this Law, that is, from July 29th, 2022, the norm for the implementation of this law shall be published in the Official Journal of Romania, Part I.
XII. CHANGES IN THE TAX CODE
Government Ordinance No 16/2022 amending and supplementing Law No 227/2015 of the Tax Code, repealing some regulations and setting forth other financial and tax measures, was published in the Official Journal of Romania dated June 20th, 2022.
1. Tax on dividends
▪ The tax on dividends is increased from 5% to 8% for dividends distributed/paid between Romanian natural persons – the 8% quota shall be applicable to dividends to be distributed after January 1st, 2023.
▪ If both the beneficiary and the payer of dividends are “joint stock companies”, “partnerships limited by shares”, “limited liability companies”, “general partnerships”, as well as in case of other forms of incorporation of corporate entities governed by the Romanian law, there shall be applicable the exemption on the payment of tax on dividends;
2. Tax on income of micro-enterprises, in force as of January 1st, 2023
▪ The tax on income of micro-enterprises becomes optional.
▪ The conditions to be met on December 31 of the previous fiscal year in order to apply for the tax on income of micro-enterprises are:
− The income obtained are not in excess of 500,000 Euro;
− The income obtained from activities other than consulting and/or management account for more than 80% of the total income;
− The enterprise has at least one employee;
− The micro-enterprise’s shareholders hold more than 25% of the value/number of shares or of the voting rights in maximum three (3) Romanian corporate entities which are eligible for the system of taxation on income of micro-enterprises.
▪ Law No 170/2016 on the specific tax shall be repealed effective as of January 1st, 2023.
▪ The following new categories of Romanian corporate entities are not eligible for the new rules on taxation of income of micro-enterprises:
− The Romanian corporate entities that carry out their activity in the banking area;
− The Romanian corporate entities that carry out their activity in the insurance and re-insurance area, on capital markets, including brokerage activities in these areas;
− The Romanian corporate entities that carry out their activity in the area of exploration, development, exploitation of oil and natural gas deposits.
▪ The tax on income of micro-enterprises is 1%.
▪ If a micro-enterprise obtains income in excess of 500,000 Euro or the income obtained from consulting and/or management activities accounts for more than 20% of its total income included, during a tax year, the micro-enterprise shall pay the profit tax starting with the quarter in which its income exceeds these thresholds.
3. Income tax
▪ The incentive regarding the exemption from payment of the income tax for income obtained from salaries and similar amounts, in connection with the activity carried out in Romania in the aeras of construction, agriculture and food industry is limited to the persons employed based on an individual employment agreement.
▪ Starting with August 2022, the limit of the gross monthly income from salaries and similar amounts which are not subject to taxation is reduced from 30,000 Lei to 10,000 Lei.
▪ To determine the percentage of the turnover actually obtained, the parameter “turnover actually obtained from constructions” includes solely the income from activities carried out on the territory of Romania and the parameter “total turnover” includes the income from activities carried out on the territory of Romania and outside Romania.
Activities carried out on the territory of Romania are the activities effectively carried out in Romania in order to execute products and provide services.
▪ The limit up to which the taxpayers who obtain income from independent activities are entitled to determine their net income based on income tax brackets is reduced from 100,000 Euro to 25,000 Euro in Lei equivalent. The taxpayer who obtains a yearly gross income above this limit shall determine their net annual income based on the actual income method, starting with the following year.
▪ For income obtained from transfer of ownership title and sub-divisions thereof, via writs between living persons regarding constructions of any type and the land related thereto, as well as lands of any type without constructions, the tax shall be paid as follows:
− 3% for constructions of any type and the related lands, and for the lands of any type without constructions, in which they held the ownership title for up to three (3) years included;
− 1% for the properties described above, in which they held the ownership title for more than three (3) years.
4. VAT in force as of January 1st, 2023
▪ The VAT applicable in HORECA is increased from 5% to 9%. Thus, the accommodation in hotels or similar accommodation facilities and the restaurant and catering services shall be subject to a 9% VAT quota.
▪ Any natural person is entitled to acquire, whether individually or jointly with other(s), one single residential unit the value of which does not exceed 600,000 Lei, exclusive of VAT, with a 5% reduced VAT quota.
5. Local taxes and fees, in force as of January 1st, 2023
▪ The tax/fee for buildings that include residential units and non-residential units is determined based on the destination of areas accounting for more than 50%, by applying the quota corresponding to the majority destination on the entire building value, as follows:
− Minimum 0.1% for residential buildings, on the entire value of the building;
− Minimum 0.5% for non-residential buildings, on the entire value of the building.
▪ To calculate the area of lands inside the built-in area or outside the built-in area of localities, the area of the lands which is covered with buildings is deducted from the area of the land. For lands outside the built-in area of localities, correction coefficients are applied to determine the tax/fee on land.