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New Tax Exemptions for Natural and Legal Persons

New Tax Exemptions for Natural and Legal Persons

Significant changes in the tax legislation have been recently  adopted by the Romanian authorities. New tax exemptions for natural and legal persons are implemented since January 1st 2017. These tax exemptions are meant to make Romania a more attractive business investment location and provide further incentives for entrepreneurship. Detailed information about these tax exemptions can be provided to you by our accountants in Romania.

New tax exemptions in the Fiscal Code

The Fiscal Code in Romania was amended at the end of 2016 and its measures became effective in January 2017. New economic terms were introduced, while others are defined in a different manner: dividends, royalties, stock option plan, related parties and tax transparent entities. New tax exemptions for natural and legal persons are included in this fiscal legislation:

•   The health contribution insurance threshold was eliminated;
•   Excise duty levied on certain fuel products was decreased;
•   The tax incentive for reinvested profit was indefinitely extended;

•   Legal persons are exempt from tax on income and salaries obtained from research and development activities;
•  The share capital for companies registering for corporation tax on the date of incorporation was decreased – from EUR 25,000 to EUR 10,000;
•    Natural and legal persons employed in Romania are tax exempt from all gifts received;
•    Buying an electrical vehicle is tax exempted, while acquiring a hybrid vehicle benefits from at least 50% tax reduction;
•   Payments to voluntary pension funds and private health insurance plans of up to EUR 400 per year are non taxable;
•    Excise refunds for certain products exported to other EU member states.

Our Romanian accountants can explain to you the new provisions of the fiscal code and tell you what tax exemptions you can benefit from.

General provisions of the new Fiscal Code in Romania

A series of economic and fiscal measures were adopted by the Romanian government at the beginning of this year. The most significant fiscal decision was to decrease the VAT rate from 20% to 19%. The tax on special constructions was abolished and a cut on the excise tax on fuels was applied. Foreign legal persons having their place of effective management in Romania are considered taxpayers in the new fiscal code. All categories of social expenses are deductible up to 5% (the previous deduction rate was 2%) of the salary fund. There are changes in the tax regime of income derived from disposal of shares in a Romanian company, transfer of real estate and natural resources. Don’t hesitate to contact our accounting firm in Romania for relevant information about the provisions of the new fiscal code.