Most significant tax changes in Romania for 2015

Most significant tax changes in Romania for 2015, from HLB Romanian member Contexpert.

Good News for Tax Payers in Romania

Contexpert team presents you briefly the most significant tax changes applying in 2015 which might be worthy of your attention. The Romanian Fiscal Code was changed partly last year and partly from January 1, 2015. The main issues refer to: social contributions paid by the employer, the tax on special construction, the VAT and the fiscal year.

Social contributions were decreased with 5 percentage points

The most important fiscal change impacting the companies is the reduction of the social contributions (pension) rates paid by employers with 5 percentage points. The measure is in force since October, 2014.

According to the Romanian legislation, employment income is generally subject to social contributions. The social contributions rates paid by employers and employees apply on certain computation bases that may be capped as provided by the Romanian Fiscal Code.

For 2015, the contribution rates are: 10.5% for employee and 15.8% for employer ( 20.8% and 25.8% for special working conditions).

Also, the taxable income derived from independent activities (other than those for which the income tax is withheld at source) is subject to social security contributions of 26.3%. There are minimum and maximum limits for the insured amount for independent activities. Thus, the insured amount cannot be lower than 35% of the average gross salary or higher than five times the average gross salary per month established by the social insurance budget for the current year. In case the individuals are also employees they do not pay the social contribution for the independent activities.

Tax on special constructions reduced with 0.5 percentage point

In 2014, the Romanian Fiscal Code established a new tax for constructions by applying a 1.5% rate to the value of the constructions recorded in the taxpayer books as at 31 December of the previous year.

The rate was reduced to 1% at the beginning of 2015.

The assets that are subject to the building tax (charged by the local authorities) are exempted. The taxpayers required to pay the tax on constructions are Romanian legal persons, foreign legal persons operating through a permanent establishment in Romania and legal entities with registered offices in Romania established according to the European legislation.

Reduced VAT of 9% for touristic services

The standard VAT rate in Romania is 24%. Romanian fiscal legislation, also, establishes reduced VAT rates of 5% and 9% for the delivery of different goods and services.

From January 1, 2015, the reduced VAT rate of 9% is levied also on touristic services.

The fiscal year may be different from the calendar year

In Romania, the fiscal year is the calendar year. But from 2014, the legislation has introduced exceptions. Thus, the financial year may be different from the calendar year for:

  • branches established in Romania belonging to a legal person established abroad
  • consolidated subsidiaries of a company – foreign-based parent, as well as for the subsidiaries of the subsidiaries.