Taxation in Romania
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Octombrie 2009 |
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VENKATESH SRINIVASAN - Partner - Head of Tax Advisory & Compliance Services
ERNST & YOUNG S.R.L. |
Adresa
Strada Dr. Felix Iacob, Nr. 63-69
Cladirea Premium Plaza, Etaj 15
011033 Bucuresti, Sector 1
Telefon
+40-21-402.40.00
Fax
+40-21-310.71.93
Website
www.ey.com
Corporate taxes at a glance
(a) See section on profits tax.
(b) The withholding taxes referred to above are levied on income earned in Romania by non-resident individuals and legal entities (referred to below as "non-residents"), income that is not attributable to a Romanian permanent establishment of the non-resident income recipient.
(c) See section on dividends.
(d) See section on withholding tax.
(e) Withholding tax generally applies to services rendered in Romania, except for international transport and services related to such transport. However, income from management and consulting services is taxable regardless of whether these services are rendered in Romania or abroad, if such income is obtained from a resident, or if it is a cost of a permanent establishment in Romania.
(f) Withholding tax applies to the proceeds from liquidation of a Romanian legal entity.
(g) See section on determination of taxable income.
Taxes on corporate income and gains
The Fiscal Code came into effect on 1st of January 2004. The code integrates key tax legislation and provides the basis for a more stable framework of tax legislation by requiring amendments to follow a specific juridical route.
Fiscal year
In Romania, the fiscal year is the calendar year.
Profits tax
Resident entities are subject to tax on worldwide income. An entity is resident in Romania if it is incorporated in Romania or if its effective management and control are in Romania.
Associations or consortia between Romanian legal entities, which do not qualify as legal persons, are taxable in Romania separately at the level of each partner. For such associations between a Romanian legal entity and individuals or foreign entities, the tax must be computed and paid by the Romanian legal entity on behalf of the individuals or its foreign partners.
Non-resident companies are subject to tax on their Romanian-sourced income only. Sale of shares held in Romanian companies by non-resident companies, and sale of real estate located in Romania, are also subject to profits tax in Romania (see section on Capital gains tax).
A permanent establishment in Romania may be constituted inter-alia by: an office, a branch, a factory, a mine, land for oil and gas extraction, or a building site that exists for a period exceeding six months.
Romanian legal entities should register with the relevant tax authorities any contracts signed with non-resident legal entities or individuals performing in Romania construction and assembly works, surveillance, consultancy, technical assistance or any other activity performed in Romania if such activities could give rise to a permanent establishment of the non-resident in Romania. The contracts should be registered by submitting a declaration within 30 days from the date they were concluded. The form and content of the respective declaration is approved by order of the National Agency of Fiscal Administration (ANAF).
The fine for non-compliance with the above registration requirements is RON 1,000 - RON 5,000.
Rates of profits tax or the minimum corporate income tax
Based on the recent changes introduced through Emergency Ordinance 34/11 April 2009, taxpayers will pay the higher of the standard profits tax rate or the minimum quarterly/annually income tax. The standard profits tax rate is 16%.
The minimum corporate income tax ranges between RON 2,200 - RON 43,000, depending on the level of total income derived in the previous year.
