Winds of Fiscal Change: What Lies Ahead for Romania’s Taxpayers and Businesses

As autumn descends upon us, it carries not only a change in weather but also the promise of significant amendments to the Romanian Fiscal Code. These impending changes are poised to impact both businesses and individuals alike. While the definitive draft proposal of a law amending Law no. 227/2015 on the Fiscal Code remains elusive, voices of discontent have already emerged from various stakeholders regarding the fiscal modifications scheduled for implementation this year and the next.

Unveiling the Key Amendments

Limiting IT Salary Tax Exemptions

One of the noteworthy changes on the horizon involves tax exemptions for incomes earned from IT salaries. These exemptions, subject to specific conditions, are set to persist but with a catch. They will be confined to a single employer and will only apply to gross monthly income up to lei 10,000. Anything exceeding this threshold will be subject to a 10% payroll tax.

Micro Income Tax: Two-Tier System

Another substantial alteration is the introduction of a two-tier micro income tax system. Companies with revenues of up to lei 300,000 may benefit from a 1% micro income tax rate, while those with revenues exceeding this mark, particularly those in the information technology sector, could face a 3% micro income tax rate.

Income Tax Trigger for High-Performing Micro Enterprises

Intriguingly, micro enterprises that achieve revenues over lei 300,000 and maintain a rate of return exceeding 30% during a year may find themselves subject to income tax, starting from the quarter in which this scenario unfolds.

Taxation on Share Sales

Individuals who derive income from the sale of shares through Romanian intermediaries or branches of foreign brokers will encounter new tax rates. Securities held for more than a year will incur a 3% tax, while those held for less than a year will be taxed by 5%.

Limits on Share Ownership

Proposed amendments aim to restrict natural persons from holding more than 25% of shares within a company operating under the micro enterprises taxation system.

Sponsorship Tax Deductions: A Vanishing Act

Another noteworthy change is the proposed elimination of tax deductions for sponsorships. This would effectively strip away any fiscal advantages associated with sponsoring activities.

Assessing the Impact

The government’s forthcoming fiscal actions, though ambitious in their intent, bear the potential to disrupt long-established fiscal principles. These changes carry direct implications for both businesses and individuals, introducing higher tax levels and scaling back tax benefits that have been in place for over a decade. As the government proceeds with its fiscal policy, it must remain attentive to the reactions expressed by stakeholders, recognizing that its decisions ripple through the broader economy.