Law no. 296/2023 was published | TaxFlash 93


We inform you that in the Official Gazette no. 977 from October 27th, 2023, Law no. 296/2023 regarding some fiscal-budgetary measures to ensure Romania's long-term financial sustainability was published. This Law introduces important changes to the Tax Code, introduces measures related to electronic invoices and strengthening financial discipline (e.g. new ceilings for cash transactions).

Most of the provisions will come into force starting with 2024, with certain exceptions, such as those regarding the tax exemptions applied to some categories of salary income (IT, construction, agriculture) which will come into force starting with November 2023.

The important changes are the following:

1. Corporate income tax

1.1 Minimum tax on turnover

Starting from January 1st, 2024, the minimum tax on turnover will be introduced for taxpayers that register a turnover of more than 50 million euros in the previous year and that determine a corporate income tax in the current year, accumulated from the beginning of the fiscal year until the end of the quarter / year, is lower than the minimum tax on turnover (with the exception of credit institutions and legal entities carrying out activities in the oil and natural gas sectors, for which other regulations are introduced, detailed below). These taxpayers will be obliged to pay the corporate income tax at the level of the minimum tax on turnover.

The turnover of the previous year represents the difference between the total revenues and the revenues that are subtracted from the total revenues, presented below.

The minimum tax on turnover (”MTT”) is calculated according to the formula:

MTT = 1% x (VT – Vs – I – A), where:

  • VT - represents total revenues, determined cumulatively from the beginning of the fiscal year until the end of the quarter/year;
  • Vs - represents revenues that are subtracted from total revenues, determined cumulatively from the beginning of the fiscal year to the end of the quarter/year of calculation, and includes:

(i) non-taxable income referred to in the articles 23 and 24 of the Tax Code;

(ii) revenue related to the costs of inventory;

(iii) revenues related to costs of services in progress;

(iv) income from the production of tangible and intangible assets which are not included in the “I” indicator;

(v) income from subsidies;

(vi) income from compensation from insurance/reinsurance companies, for the damages caused to goods of the nature of stocks or own tangible assets;

(vii) revenues representing excises that were simultaneously reflected in expense accounts.

  • I - the value of fixed assets in progress generated by the acquisition/production of assets, recorded in the accounting records starting with January 1st, 2024, respectively starting from the first day of the modified fiscal year that starts in 2024;
  • A – the accounting depreciation at the level of the historical cost related to the acquired/produced assets starting with January 1st, 2024/the first day of the modified fiscal year starting in 2024. This indicator does not include the accounting depreciation of the assets included in the value of indicator I.

The assets taken into account for determining the indicators I and A will be established by Order of the Minister of Finance within 60 days from the entry into force of Law no. 296/2023.

The minimum tax on turnover is also determined if, at the end of the quarter/year, taxpayers register a tax loss in the current year or a taxable profit in the current year, before the recovery of tax losses carried forward from previous periods.

If, after applying the calculation formula for determining the minimum tax, the result is negative, the minimum tax is zero.

For comparing the corporate income tax and the minimum tax on turnover, the minimum tax is compared with the quarterly/annual corporate income tax adjusted as follows:

  • are deducted from this corporate income tax: the amounts representing sponsorship/patronage, the other amounts that are deducted from the corporate income tax according to the legislation in force and the reduction according to the provisions of the Government Emergency Ordinance no. 153/2020 for the establishment of fiscal measures to stimulate maintenance/increase of own capital.
  • the following are not subtracted: the external fiscal credit, the exempt corporate income tax according to art. 22 and exempt corporate income tax according to the Law of agricultural cooperative no. 566/2004.

In case the taxpayer owes the minimum tax, from this tax are not substracted the amounts representing reduced/exempt corporate income tax, nor other amounts that are deducted from the corporate income tax, according to special laws, nor the reduction of the corporate income tax according to the provisions of the Government Emergency Ordinance no. 153/2020.

However, sponsorships/patronage are deducted at the level of the minimum value between 0.75% of the turnover and 20% ​​of the corporate income tax (only if the beneficiary of the sponsorship is registered, at the date of concluding the contract, in the Register of cult entities/units for which tax deductions are granted in case of sponsorships made to non-profit legal entities, including cult units).

For the taxpayers that have a different fiscal year, the provisions are applicable starting with the modified fiscal year which starts in 2024.

No minimum tax is owed by the economic operators that carry out exclusively activities of distribution/supply/transport of electricity and natural gas and which are regulated/licensed by the National Energy Regulatory Authority.

1.2 Supplementary tax for credit institutions - Romanian legal entities and Romanian branches of credit institutions - foreign legal entities

For credit institutions - Romanian legal entities and Romanian branches of credit institutions - foreign legal entities, in addition to the corporate income tax, it is introduced a turnover tax calculated by applying the following tax rates to the turnover:

  • 2% in the period 2024 - 2025,
  • 1% from 2026.

For computing the supplementary tax, the turnover includes:

  • interest revenues;
  •  dividend revenues ;
  • revenues from taxes and commisions;
  • net gains or losses from the derecognition of financial assets and liabilities that are not valuated at fair value through profit or loss;
  • net gains or losses related to financial assets and liabiliteies held for trading;
  • net gains or losses related to financial assets not intended for trading, necessarily valued at fair value throgh profit or loss;
  • net gains or losses related to financial assets and liabilities designated as measured at fair value through profit or loss;
  • net hedge accounting gains or losses;
  • net foreign exchange differences;
  • net gains or losses from derecognition  non financial assets;
  • other revenues from exploatation.

The turnover tax is calculated, declared and paid quarterly as follows:

  • for the first three quarters, until 25th of the month following the quarter for which the payment is done;
  • for the last quarter, until March 25th inclusively of the following year.

Other aspects to be considered:

  • for determining the corporate income tax, the turnover tax is a non-deductbile expense;
  • the quarterly turnover tax due is determined as the difference between the turnover tax cumulated since the beginning of the fiscal year and the turnover tax due for the period prior to the calculation.

1.3 Supplementary tax for legal entities carrying activity in the oil and natural gas sectors

Starting with January 1st, 2024, a specific is introduced, additional to the corporate income tax, for legal entities that carry out activities in the oil and natural gas sectors and that register a turnover of more than 50 million euro in the previous year.

The specific turnover tax (“STT”) is determined as follows :

STT = 0,5% x (VT - Vs - I - A), where :

  • ICAS – specific turnover tax, determined cumulatively from the beginning of the fiscal year/amended fiscal year until the end of the quarter/calculation year;
  • VT, Vs, I, A – similar as mentioned above at point 1.1 minimum tax on turnover.

The specific turnover tax is calculated declared and paid quarterly as follows:

  • for the first three quarters, until 25th of the month following the quarter for which the payment is done;
  • for the last quarter, until the date of submission of the annual corporate tax return Form 101.

Other aspects to be considered:

  • for determining the corporate income tax, the turnover tax is a non-deductbile expense;
  • the turnover tax due quarterly is determined as the difference between the turnover tax cumulated since the beginning of the fiscal year and the turnover tax due for the period prior to the calculation.

Taxpayers that carry out exclusively activities of distribution/supply/transport of electricity and natural gas and who are regulated/licensed by the National Energy Regulatory Authority do not owe this specific tax.

The specific tax for the oil and natural gas sector is applied for the period January 1st 2024-December 31st 2025, and for taxpayers with a different fiscal year for the period between the modified fiscal year that begins in 2024 and the modified fiscal year that ends in the year 2026.

2. Micro-enterprises income tax

Starting with January 1st 2024, the tax rate is changed, as follows:

  • 1% for micro-enterprises that book revenues not higher than 60,000 Euro and that do not carry out the activities mentioned below (for which the 3% tax rate applies);
  • 3% for micro-enterprises that:
    • obtain revenues over 60,000 euro; or
    • carry out activities, main or secondary, corresponding to the NACE codes: 5821 - Computer game publishing activities, 5829 - Other software product publishing activities, 6201 – Computer programming activities (customer-oriented software), 6209 - Other information technology service activities, 5510 - Hotels and other similar accommodation facilities, 5520 - Holiday and short-stay accommodation facilities, 5530 – Camping grounds, recreational vehicle parks and trailer parks, 5590 - Other accommodation services, 5610 - Restaurants, 5621 - Food activities (catering) for events, 5629 - Other food services activities, 5630 - Bars and other beverage serving activities, 6910 - Legal activities - only for companies with legal personality that are not fiscally transparent entities, constituted by lawyers according to the law, 8621 - General medical practice activities, 8622 - Specialized medical assistance activities, 8623 - Dental assistance activities, 8690 - Other activities related to human health."

If during the fiscal year, the revenues booked by a micro-enterprise exceed the level of 60,000 euro or the micro-enterprise begins to carry out the activities corresponding to NACE codes provided above, the tax rate of 3% is applicable starting with the quarter in which such situations appear.

3. Income tax and social contributions

  • Starting November 1st 2023, a threshold of 10,000 lei representing gross monthly income is introduced, up to which the tax exemption is applied for individuals who carry out computer program creation activities. The exemption will apply only to the basic function, until December 31, 2028.
  • Also, the exemption from the payment of the social insurance contribution and the preferential quote of the work insurance contribution for employees working in the field of construction and agriculture/food industry is eliminated.
  • Also starting with November 1st 2023, for individuals who realize income from creating computer programs, the social insurance contribution rate will be reduced by the percentage points corresponding to the contribution rate to the privately administered pension fund, i.e. by 3.75% (4.75% starting January 1st, 2024). However, employees can opt for the payment of the contribution owed to the privately administered pension fund, through a written request submitted to the employer.
  • Starting January 1st 2024, the annual computation base for the health insurance contribution due by individuals who obtain income from independent activities, will be equal to yearly realized net income/gross/income norm, but no more than the level of 60 minimum gross salaries per country, in force at the date for filing the estimated income tax return. Also, the annual basis for computing the health insurance contribution for the above taxpayers cannot be less than 6 minimum wages per economy, except for those who obtain income from annual salaries of more than 6 minimum wages per economy or other types of income for which the contribution of more than 6 minimum wages per economy is due.
  • Starting January 1st 2024, the meal tickets and holiday vouchers will be included in the category of income which is subject to health insurance contribution.
  • From July 1st 2024, for any income whose source cannot be identified, the tax rate is increased from 16% to 70%.

4.    VAT
Changes starting January 1st 2024:

  • Clarifications regarding the level of finishes required in the case of homes that, at the time of delivery, can be lived in as such, are brought in order to apply the reduced rate of 5%.
  • Increases to the VAT rate from 9% to 19% for:
    • delivery of non-alcoholic beer;
    • foods with added sugar, whose total sugar content is at least 10 g/100 g of the product, other than sweetbread and biscuits.
  • Increases to the VAT rate from 5% to 9% for:
    • the delivery of high-quality food, namely mountain, eco, traditional products;
    • the delivery of housing as part of the social policy, including the land on which they are built (housing with a useful surface of a maximum of 120 square meters, excluding household annexes, the value of which, including the land on which they are built, does not exceed the amount of 600,000 lei, excluding the value added tax). The reduced rate applies only to houses that, at the time of delivery, can be lived in as such.
    • delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems, including installation kits, as well as all necessary components purchased separately, for central or local public administration buildings, the buildings of institutions under their coordination/subordination, with the exception of companies;
    • the delivery and installation of components for the repair and/or expansion of the systems mentioned above;
    • the delivery of systems as a component part of construction deliveries, as well as the delivery and installation of the systems provided for in the same letters, as extra options when delivering a construction;
    • access to fairs, amusement parks and recreational parks whose activities are included in CAEN codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events, other than tax-exempt ones;
    • allowing access to sports events.
  • Increases to the VAT rate from 5% to 19% for:
    • the right to use sports facilities whose activities are included in CAEN codes 9311 and 9313, other than the exempt ones;
    • the transport of people by trains or historic vehicles with steam traction on narrow lines for touristic or leisure purposes;
    • the transport of people using the cable transport facilities - cable car, aerial lift, ski lift - for tourist or leisure purposes;
    • transporting people with animal-drawn vehicles, used for tourist or leisure purposes;
    • transporting people with boats used for tourist or leisure purposes.
  • VAT exemption for construction services, rehabilitation, modernization of hospital units in the public state network, deliveries of medical equipment, devices, accessories and protective equipment, materials and consumables for sanitary use, as well as for adaptation, the repair, rental and leasing of such goods is applicable only when these operations are carried out to non-profit entities registered in the Public Registry organized by ANAF and are intended for hospital units owned and operated by the non-profit entity or those in the state public network.
  • Transitional measures for housing deliveries for which contracts were concluded until December 31, 2023, and which will be delivered between January 1 and December 31, 2024, are established in order to apply the reduced VAT rate of 5% or 9%.

5.    Excise duties 
Changes starting January 1st 2024:

  • Clarifications and extensions are brought regarding the unharmonized excise duties due in the case of products containing tobacco, intended for inhalation without burning and in the case of certain liquids with or without nicotine, intended for inhalation without burning.
  • Unharmonized excise duties are introduced for non-alcoholic drinks with added sugar for which the total sugar level is over 5 g/100 ml.
  • New contraventions are introduced in the field of excisable products and the amounts of contravention fines are increased for non-compliance with the legislation in the field.

6.    Special tax on high value movable and immovable goods 

Starting from January 1st 2024, the special tax on high-value goods will be introduced for the following categories of taxpayers:

  • individuals who, as of December 31st of the previous fiscal year, own residential buildings in Romania solely or under joint ownership, whose taxable value exceeds 2,500,000 RON. The tax is computed as 0.3% applied to the difference between the taxable value of the building communicated by the local fiscal authority through tax decision and the threshold of 2,500,000 RON;
  • individuals/legal entities that own vehicles registered in Romania and whose purchase value exceeds 375,000 lei. The special tax is computed as 0.3% applied to the difference between the purchase value and the threshold of Lei 375,000 and is due for a period of 5 years from the date of registration of the vehicle or for the fraction of time until the completion of the 5-year period.

Deadlines for submission of the tax return and payment of tax:

  • April 30th of the current fiscal year, for owners of residential buildings;
  • December 31st of the current fiscal year, for vehicle owners.

7.    The national system regarding the electronic invoice RO e-Invoice

Starting from January 1st, 2024, the RO e-Invoice system will become mandatory for:

  • taxable persons established in Romania, regardless of whether or not they are registered for VAT purposes, for the supplies of goods and the provision of services that take place in Romania, carried out in the B2B relationship;
  • taxable persons established in Romania, regardless of whether or not they are registered for VAT purposes, for the supply of goods and the provision of services that take place in Romania, carried out in relation to public institutions, as defined in art. 5 lit. w) from the Government Emergency Ordinance no. 57/2019 regarding the Administrative Code, others than those carried out in the B2C relationship;
  • non-established taxable persons, but registered for VAT purposes in Romania, for the supply of goods and the provision of services that take place in Romania, carried out in the B2B relationship.

Exports and intra-Community deliveries are excluded.

The deadline for submitting invoices in the RO e-Invoice national electronic system is 5 working days from the invoice issuance date, but no later than 5 working days from the deadline provided in the Fiscal Code for issuing the invoice.

The following fines are provided for non-compliance with the use of the e-Invoice system:

  • 5,000 lei - 10,000 lei for large taxpayers;
  • 2,500 lei - 5,000 lei for medium taxpayers;
  • 1,000 lei - 2,500 lei for other legal entities, as well as for individuals.

During January 2024 - March 2024, the sanctions for non-compliance with the obligation to use the e-Invoice system are not applied.

Starting from July 1st, 2024, between taxable persons established in Romania, for the supplies of goods and the provision of taxable services in Romania, carried out in the B2B relationship, only invoices sent through the RO e-Invoice system are considered invoices.

The receiving and registration by the recipient - taxable person established in Romania according to an invoice issued by economic operators established in Romania, in the B2B relationship, in a way other than RO e-Invoice, constitutes a contravention and is sanctioned with a fine equal to the amount of VAT in the invoice.

8. Changes to Law no. 70/2015 – the new thresholds starting from 11.11.2023 for cash collection and cash payment operations

Cash amounts in the cash register cannot exceed, at the end of each day, the threshold of 50,000 lei (currently there is no threshold for the cash register balance). Cash amounts that exceed the threshold are deposited into the bank accounts of these persons within two working days.

As an exception, it is allowed to exceed this threshold only with the amounts related to the payment of salaries and of other personnel rights, as well as other operations with individuals, for a period of 3 working days from the date provided for their payment.

Failure to comply with the above-mentioned provisions constitutes contraventions, if they were not committed under such conditions that, according to the criminal law, constitute crimes, and are sanctioned with a fine of 25% of the amount collected/paid (currently 10%), respectively held in the cash register, which exceeds the threshold established for each type of operation, but not less than 500 lei (currently 100 lei).