The year of 2018 brings major changes in the Fiscal Code, having a direct influence on the Romanian business market. Most of these changes are regulated by European directives and designed to align the EU countries at the fiscal level, while also marking the beginning of a slightly different fiscal future in our country: what will be the implications for businesses?

VAT

The change regarding VAT is transposed from the directives of the European Court of Justice. It offers tax authorities the right to cancel the VAT deduction right for purchases from suppliers with inappropriate tax behaviour. However, the deduction may be canceled only if the authorities have evidence that the company knew or ought to have known about the supplier’s fraudulent actions.

Split VAT

Split VAT involves a breakdown of VAT on the remaining product / service price. However, the use of the VAT account clearly leads to a doubling of the operational costs, regarding bank account management and payment fees. Beyond costs and complications, this system is currently only mandatory for companies with non-VATable or insolvent debts.

Microenterprises

The income tax is 10%. However, being exempt from the scope of the European Directives, micro-companies will not be able to benefit from their favorable tax regime (e.g. interests, royalties or dividends)

Merchandise tax

As local tax, it increases by 7% for freight cars with a total authorized weight of 12 tonnes or more.

Sales Tax

For a full or partial transfer of a business to another state, taxpayers will be subject to a 16% corporate tax.

Foreign Companies

There are new rules concerning the taxation of foreign companies. The taxpayer will have to include in his taxable base in Romania the undistributetd income of the controlled foreign company, in proportion with its participation, coming from: interests, royalties, dividends and income from shares transfer, income from financial lease, insurance, banking or other financial activities, etc.

Anti-abuse Rule

A general rule that becomes applicable if a company takes fraudulent actions in order to obtain a tax advantage over their competition.