Romania: Tax Update 2020

13. March 2020

 

Tax highlights romania 2019 - TPA news

Amendments to the tax legislation

We present below the main amendments to the tax legislation that would apply in 2020:

1. Corporate income tax

Entities performing sponsorships or acts of patronage will benefit from more favourable tax incentives. More specifically, the amounts that can be deducted from corporate tax liability are determined at the level of the minimum value of the following:

  • 75% of the turnover (previously 0.5% was used);
  • 20% of the corporate tax liability.

Similar to prior years, the tax credit that cannot be enjoyed in the current year may be carried forward in the next 7 years in order to be deducted from future profit tax liabilities, under similar conditions.

2. Amendments of VAT 2020

The provisions of European Union Directive 2016/1065 as regards the VAT treatment of vouchers were transposed into Romanian legislation.

In 2020, it is expected that the legislation regarding the VAT quick fixes be implemented in the Romanian legislation. Also, based on draft legislation, the VAT rate might be reduced from 19% to 16%.

3. Personal income tax and social contributions for the construction sector

Employees working in the construction sector are exempt from income tax and pension contribution. Also, the health insurance contribution was lowered by 3.75% (i.e. to 6.25%). Specific conditions are in place for applying this incentive, such as: the income to which the incentive applies should be between RON 3,000 – RON 30,000 (for part of the income above this threshold, the incentive is no longer applicable), the employer has to obtain at least 80% of its turnover from construction activities etc.

 

New: 12 Countries. 12 Tax Systems.

Are you up-to-date with the current taxation of the Central and South Eastern region? Find out more in our recently published Investing in CEE / SEE 2020 Collection

Investing in CEE - TPA Update of tax systems in CEE/SEE

Your contact: