Corporate Tax 2010 - BMR Advisors

Pachiu & Associates
Romania
drugs, accommodation services, school materials, books, etc., a
reduced VAT rate of 9% will apply.
A reduced 5% VAT rate is applicable on the sale of dwellings, under
certain conditions, as part of a governmental social programme.
2.3 Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions
As a rule, VAT is applicable to all economic activities having as an
object the supply of goods or provision of services performed in the
territory of Romania by a (VAT) taxable person acting as such in
exchange for payment. Other operations subject to VAT in
Romania are the import of goods by any person, intracommunity
acquisitions and some operations deemed as intracommunity
acquisitions. As regards the import of goods, VAT will be charged
on the customs value of the goods, defined under question 2.6 (b).
The Fiscal Code provides, however, for the following exemptions
from VAT:
a. Exemption without credit:
activities of public interest (e.g. healthcare and healthcare
related services, teaching activities (as such are defined
under the law), social services, cultural activities and
services, public postal services, sorts related services, TV
and non-commercial radio related goods and services, etc.);
most of the banking, financial, insurance and reinsurance
activities with some exceptions (e.g. debt collection,
factoring, etc.);
authorised gambling;
some forms of lease of real estate assets and sale of land not
used for construction purposes; and
the sale of old buildings (a building is considered old after 31
December of the year following the year when the building
was used for the first time) or buildings on which the
transformations costs performed did not exceed 50% of its
value, exclusive of tax.
b. Exemption with credit:
export of goods, transport and related services;
international transport of passengers;
intra-community supply of goods;
some operations performed in free trade zones or free
warehouses;
supply of goods to a bonded warehouse, VAT warehouse and
related services and supply of services related to goods
placed under customs suspensive regime;
supply of foreign goods placed under customs suspensive
regime; and
supply of goods and services to diplomatic missions, NATO
forces and other international organisations.
purchased goods and services to transactions chargeable at each
VAT rate. In cases where the amount of VAT paid for goods and
services by a taxpayer during the reporting period exceeds the
amount of VAT collected for goods and services delivered to
customers, the taxpayer is entitled to claim the reimbursement of
the VAT from the State. Reimbursement shall not be available if the
amount of VAT to be reimbursed is less than RON 5,000 (approx.
€1,200). Nevertheless, the tax payer may carry forward such
balance between collected and paid VAT in order to set it off against
VAT liabilities reported in future returns. VAT is usually paid on a
monthly basis. Businesses with a turnover under EUR 100,000
during a fiscal year, calculated at the exchange rate from the last day
of the fiscal year, may choose to pay VAT on a quarterly basis.
2.5 Are there any other transaction taxes
Customs duty is a tax collected by the Romanian State for goods
imported (as a rule, exported goods are exempted from customs
duties) in Romania from outside the European Union. Customs
duties are specified in EU Common Customs Tariff. The Romanian
Customs legislation provides for a certain situation under which the
goods imported could benefit from favourable treatment and partial
or total relief of customs duties. Customs duties are levied on an ad
valorem basis as well as a fixed amount applied to a specific
quantity (specific taxes). Customs duties are computed on the
customs value of the goods, which represents the acquisitions value
of the goods together with the transportation expenses, insurance
expenses and other expenses incurred.
2.6 Are there any other indirect taxes of which we should be
aware
The excise tax is another indirect tax collected by the Romanian
state for several sorts of goods such as beer, wines, fermented
drinks other than beer and wine, strong alcoholic drinks, ethylic
alcohol, tobacco products, electricity, energy products (liquid/fossil
fuels), coffee, perfumes, jewellery (gold/platinum), sail and motor
boats etc., regardless of their domestic or foreign origin. The excise
tax is levied on the basis of unit of weight or volume, subject to the
type of goods, as well as on an ad valorem basis. Certain
exemptions regard products like ethyl alcohol and other alcoholic
products if they are denaturated, used in nutritional,
pharmaceuticals or cosmetic industry.
3 Cross-border Payments
3.1 Is any withholding tax imposed on dividends paid by a
locally resident company to a non-resident
Romania
2.4 Is it always fully recoverable by all businesses If not,
what are the relevant restrictions
A business can recover VAT paid to the State budget in two ways,
by deduction of VAT and/or by reimbursement of VAT. VAT
collected for goods and services delivered to customers may, under
certain conditions, be set off in the books of the taxpayer against
VAT paid for the purchase of goods and services. If the taxpayer
performs transactions subject to different VAT rates (i.e. the regular
19% rate and the reduced 9% rate), specific records should be
maintained by the taxpayer, in order to show the allocation of goods
and services to each type of transaction. The deduction is
performed on a pro-rata basis, subject to the amount of purchased
vs. delivered goods and services and the apportionment of
ICLG TO: CORPORATE TAX 2010
© Published and reproduced with kind permission by Global Legal Group Ltd, London
Dividends paid by Romania legal entities to legal entities registered
in an EU or European Free Trade Association (EFTA) Member State
to legal entities registered in an EU or EFTA Member State or to the
EU or EFTA permanent establishments of such legal entities are:
a) subject to a 10% withholding tax; or
b) exempt from withholding tax in Romania, provided that the
receiver of the dividends has held at least 10% of the
Romanian dividend payer’s share capital for at least 2 years
ending at dividend distribution date.
Dividends paid by a Romanian legal entity to foreign legal entities,
other than legal entities registered in a EU or EFTA Member State
or the EU or EFTA permanent establishments of such legal entities,
are subject to a 16% withholding tax, unless a more favourable tax
rate is provided under a relevant income tax treaty.
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