In a bid to support Romania's business environment and social protection during coronavirus crisis, on 31 March the Romanian government issued two emergency decrees that create new and favourable tax measures.
The decrees passed include Government Emergency Ordinance no.32/2020 for amendment and completion of Government Emergency Ordinance no.30/2020 (GEO 32/2020) and Government Emergency Ordinance no. 33/2020 regarding tax measures and amendment of legislation (GEO 33/2020). Both were published in the Official Gazette and immediately entered into force.
Amendment on Government Emergency Ordinance no. 30/2020
The original measures imposed by Government Emergency Ordinance no. 30/2020 can be found here.
Under the new rules, however, employees will benefit from technical unemployment indemnity should their employers experience a reduction or stoppage (in total or in part) in business activity as a result of the pandemic during the state of emergency. The impact on business activity can be affirmed by an affidavit from the employer.
Also, the employer has the possibility (depending on its financial capabilities) to increase compensation to employees by paying the difference between the technical unemployment indemnity (still capped at 75% of the average gross salary) and 75% of the base salary.
The application procedure for the indemnity has been simplified. Employers will submit a request electronically accompanied by an affidavit and the list of employees.
The payment will be completed by the local unemployment agency within a maximum of 15 days and the employer should pay employees within three working days.
The technical unemployment indemnity is subject to income tax and social contributions (i.e. social insurance and health insurance contributions), which the employer will compute and pay from amounts received from the unemployment agency. This indemnity is not subject to the labour insurance contribution of 2.25%. The related tax declaration and payment should be performed by the 25th of the month following the month when the payment from the unemployment agency is received.
In addition, GEO 32/2020 clarifies the situation of employees working under more labour agreements. In case all labour agreements have been suspended, the employee has the possibility to benefit from the compensation set down in the most advantageous labour agreement. If at least one of the full-time labour agreements has not been suspended during the state of emergency, the employee cannot benefit from this compensation.
GEO 32/2020 also includes provisions regarding the payment of technical unemployment indemnity to freelancers, individuals that perform sport activities under a sport activity agreement and individuals who obtain copyright revenues. Note that in case of freelancers and individuals obtaining revenues from copyrights, the payment of such indemnity will be performed by the local agency for payments and social inspection (i.e. for each county and for Bucharest). The individual will submit the request electronically accompanied by a copy of his identity card and an affidavit. In regard to individuals performing sport activities under a sport-activity agreement, the legal representative of the sport bodies will submit the request.
Furthermore, during the state of emergency, GEO 32/2020 also introduces provisions on the granting of insertion stimulants or child-growth allowance, trainings, and granting of death aids.
Bonification for payment of corporate income tax
Through GEO 33/2020, a bonification is granted to corporate income tax (CIT) payers, irrespective of the declaration or payment system applied. Hence, taxpayers paying CIT in advance for the first quarter of 2020 until the deadline of 25 April 2020 benefit from the following bonification calculated by the CIT due:
- 5% for large taxpayers.
- 10% for small or medium-sized taxpayers.
The bonification is also applicable to taxpayers whose fiscal year is different than the calendar year. In this case, taxpayers benefit from the bonification if they pay CIT in advance before the deadline in the period 25 April to 25 June 2020.
The bonification is also granted to the taxpayers subject to a specific tax for the CIT related to the first quarter of 2020, as determined by the activities carried out, except for those activities corresponding to NACE codes provided by law.
For taxpayers subject to microenterprise income tax, a bonification of 10% of the tax due is granted if the tax payment is performed by 25 April 2020.
Exemption of VAT payment for import of medical equipment
GEO 33/2020 exempts the payment of VAT to customs bodies for taxable persons performing imports of protective equipment, medicines or other medical equipment used in prevention, limitation, treatment and control of COVID-19, during the period from 16 March until 30 days after the state of emergency ceases.
The VAT for the above operations will be evidenced in VAT returns as both input and output VAT in accordance with Romanian Fiscal Code provisions.
For more information on how these tax changes might affect you, contact our local CMS experts Roxana Popel or Andrei Tercu.