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Romania Update
There have been some interesting changes to Romanian
tax legislation over recent months. The key changes are
summarised below.
VAT – reverse charges for cereal and technical
plant deliveries
From June 2011, Romania shall apply reverse charge in
regard to VAT on all cereal and technical plant deliveries.
This change is meant to complete Art.160 of the Romanian
Tax Code (RTC) regarding simplification methods relating to
VAT, by applying reverse charge to all internal deliveries of
the following cereals and technical plants: wheat, spelled,
rye, barley, corn, soy beans, rape seeds, sunflower seeds
and sugar beet.
From June 2011, provided that both partners are registered
for VAT purposes, reverse charge in regard to VAT shall be
applied to:
■ Delivery of waste and raw materials resulting from the
use of waste
■ Wood and wood materials delivery
■ Cereals and technical plants delivery as per the list
mentioned above
■ The transfer of greenhouse effect gas certificates.
Personal Income tax
In March 2011, the Government adopted Decision 248
regarding the procedure applicable for the indirect methods
of establishing the adjusted taxable base in the case of
income obtained by audited individuals. The three main
methods mentioned by the law were:
■
■
■
The method of the source and expense of the funds
The cash flow method
The patrimony method.
Art.15 of this Decision established that the provisions
regarding the application procedure of the abovementioned
indirect methods should be completed with the risk analysis
procedure. This last procedure implied the possibility of the
tax auditors to identify and evaluate the risk of undeclared
income, which would later allow for a selection of the
individuals, which would be submitted to a preliminary
documentary audit.
As per Art.109.1 of the Romanian Tax Procedure Code,
should the tax auditor notice a significant difference between
the income declared by the taxpayer (or in some cases by
the income payer in his name) and the personal tax situation
on the other hand, the auditor should further investigate the
personal tax situation of the taxpayer. The difference between
the declared income and the estimated one is considered
a significant one if it is more than 10% but not less than
50,000 lei (approximately 12,000 EURo). This method shall
allow for a limitation of individual tax audits to those
individuals which, upon the preliminary documentary audit,
surpass the 10% acceptable difference.
The actions required to undertake these new risk analysis
procedures include:
The establishment of databases for information
The collection of data held by third party entities (access
to databases based on protocols and information
exchange collaboration agreements, information received
from judiciary authorities or any other national or
international authorities holding information in regard to
the personal tax situation of a taxpayer)
The definition of those individuals who present a tax
fraud risk (implies the consideration of issues such as
the level of income declared by the individual and the
income payer, the patrimonial increase of that individual,
personal expenses incurred, cash flows).
On the basis of the abovementioned procedures, the tax
authorities shall prepare a list of all those individuals who
surpass the minimum risk and shall propose a preliminary
documentary audit. Should the list identify individuals who
are proved to be related up to a second-degree kinship,
the preliminary documentary audit proposal shall include
all of the related individuals.
“Trust” operations
From October 2011, a New Civil Code shall be applicable
in Romania which, amongst others, contains provisions in
regard to “trust” (fiduciary) operations, whereby one or more
constitutors transfer a set of real rights, receivables,
guarantees, other patrimonial rights or a mass of such
existing or future rights towards one or more trustees
(fiduciaries) who are obliged to administer them with a
specific purpose in the interest of one or more beneficiaries
(which legally are not part of the contract).
34 // PKF International Tax Alert All Regions
Issue 8 November 2011