Government Emergency Ordinance no. 153/2020

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Government Emergency Ordinance no. 153/2020 for the establishment of fiscal measures to stimulate the maintenance / increase of the own capitals, as well as for the completion of some normative acts

 

GEO 153/2020 provides, among other things, a tax reduction for taxpayers who maintain or increase their own capital.

From the reduction of the annual profit tax / income tax of micro-enterprises / activity-specific tax, benefit the following:

– the taxpayers who pay tax on profit, regardless of the declaration and payment system;
– the taxpayers who pay tax on micro-enterprises income;
– the taxpayers who fall under the provisions of Law no. 170/2016 regarding the tax specific to certain activities.

The exceptions are the taxpayers for whom the accounting regulations are issued by the National Bank of Romania, respectively by the Financial Supervisory Authority.

Applicable tax reductions:

a) 2%, if the accounting equity in the year for which it is owed tax is positive; the accounting equity must result from the annual financial statements or from the annual accounting reports in the case of the permanent establishments of the legal persons residents in the European Economic Area; for taxpayers who, according to the legal provisions, have the obligation to set up the share capital, the accounting equity must also meet the condition of being at the level of a value at least equal to half of the subscribed share capital;

b) if it is registered an annual increase of the adjusted equity of the year for which it is owed the tax towards the adjusted equity registered in the previous year and at the same time fulfills the condition provided in let. a), the discounts have the following values:

Tax reduction percentage Adjusted annual equity growth intervals
5% up to 5% inclusive
6% over 5% and up to 10% inclusive
7% over 10% and up to 15% inclusive
8% over 15% and up to 20% inclusive
9% over 20% and up to 25% inclusive
10% over 25%

c) 3%, if it is registered an increase over the next level:

The year for which it owes the tax Minimum adjusted equity increase percentage
2022 5%
2023 10%
2024 15%
2025 20%

of the adjusted equity of the year for which it is owed the tax on the adjusted equity registered in 2020 and if it simultaneously meets the condition from letter a; the provisions of this letter apply starting with the year 2022, respectively starting with the modified fiscal year starting in the year 2022.

If two or three of the above reductions are applicable, in order to determine the amount of the reduction, the corresponding percentages shall be added together and the resulting value shall be applied to the tax.

Adjusted equity includes the following items:

– paid-in subscribed capital / endowment capital (permanent premises);

– the patrimony of the directorate;

– the public patrimony;

– the private patrimony;

– the patrimony of the national research and development institutes;

– share premium;

– the legal, statutory or contractual reserve and other reserves constituted from the net profit as a result of the decision of the shareholders / associates or according to the legal provisions;

– net carried forward result – credit balance, representing the positive difference between credit and debit balances

presented in the annual financial statements / annual accounting reports (permanent establishments).

If in the year for which the tax is due, the following reorganization operations are carried out, which take effect in that year, the taxpayers determine the adjusted equity of the previous year, respectively of 2020, according to the following rules:

– the taxpayers who, in the case of a merger, absorb one or more legal entities, add up the adjusted equity registered by them in the previous year, respectively 2020, with the adjusted equity for the same year registered by the other transferring companies;

– the taxpayers established as the result of the merger of two or more legal entities sum up the adjusted equity registered in the previous year, respectively the year 2020, by the transferring companies;

– the taxpayers established as the result of a division in any form of a legal entity divide the adjusted equity registered in the previous year, respectively in 2020, by the transferring company in proportion to the value of the transferred assets, according to the division project prepared according to the law;

– the taxpayers who receive assets and liabilities through division operations in any form of a legal entity add up the adjusted equity recorded by them in the previous year, respectively 2020, with the adjusted equity recorded by the transferring company in the same years, recalculated in proportion to the value of transferred assets , according to the division project prepared according to the law;

– the taxpayers who transfer, according to the law, part of the patrimony to one or more beneficiary companies recalculate the adjusted equity for the previous year, respectively 2020, in proportion to the value of assets held by the legal person transferring the assets, according to the division plan prepared according to law.

During the period of application of the above reductions, the deadlines for filing returns and paying the tax are as follows:

– for the taxpayers who pay tax on profit, the deadline for filing the annual income tax return and payment of corporate income tax for that fiscal year is until June 25 of the following year, and for taxpayers with a modified financial and fiscal year until the 25th of the sixth month inclusive from the end of the modified fiscal year;

– for the taxpayers who pay tax on micro-enterprises income, the deadline for submitting the declaration for the fourth quarter and the payment of the tax for this quarter is until June 25 of the following year;

– for the taxpayers who pays the tax specific to certain activities, the deadline for submitting the declaration for the second semester and the payment of the tax for this semester is until June 25th inclusive of the following year.

For the taxpayers established during the year, except for those established following some reorganizations, the year of establishment represents the base year that replaces the year 2020 for the application of the percentage of reduction of 3% from let. c).

The provisions on tax reductions as described above, enter into force on 1st of January 2021 and apply for the period 2021-2025.

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