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Amendments to the Fiscal Code by Laws 239/2020, respectively 230/2020

In this issue:

Amendments to the Fiscal Code by Laws 239/2020, respectively 230/2020

Law no. 239/2020 for the amendment of Law no. 227/2015 on the Fiscal Code provides the following:

A. Corporate Income Tax

Expenses related to early education units

Although in an unclear way, the Law includes in social expenses (deductible up to a rate of up to 5%, applied to the amount of staff salary expenses), indicating the inclusion of the expenses for the proper functioning of some early education units.

Moreover, the expenses triggered by the operation of the early education units under the taxpayer's administration or the amounts paid by the taxpayer for placing the employees' children in early education units are included in the category of non-deductible expenses. However, for these expenses a fiscal credit is granted, similar to the one granted for sponsorships, in the amount of 1,500 RON/month for each child. If the amount exceeds the profit tax due, the difference will be deducted, in order, from the payroll tax withheld by the taxpayer for employees, from the value added tax due or from the excise duties due.

Deductible expenses and tax depreciation

In this category are introduced the expenses made for the organization and development of the dual pre-university and university education. Also, the fixed assets held and used for the organization and development of dual pre-university and university education, as well as the investments made in this respect, represent depreciable fixed assets.

 

B. Personal Income tax

Non-taxable income

- In the sense of the personal income tax, the incomes received by the children/students during the dual pre-university/university education are not taxable;

Determination of annual net income from self-employment, determined in real terms

- The expenses incurred for the organization and development of dual pre-university and university education are deductible expenses;

Income from salaries and assimilated to salaries

- The amounts paid by the employer for the early education of the employees' children represent non-taxable income, within the meaning of income tax.

These provisions entered into force on 9 November 2020.

 

Law no. 230/2020 for the amendment of Law no. 227/2015 on the Fiscal Code clarifies the conditions that must be met in order to benefit from tax exemptions for land and buildings used for the provision of tourist services in the sense of reformulating the text of art. 456 para. (4) and from art. 464 para. (4) from "seasonal tourist services, for a maximum of 6 months during a calendar year" to "tourist services, for a maximum of 180 consecutive or cumulated days, during a calendar year". These provisions will apply starting with 1 January 2021.

Important: Currently, there is a draft amendment to the Fiscal Code in the Chamber of Deputies, which provides, among other things, the abrogation of the provisions that include the expenses for the proper functioning of some early education units in the category of social expenses. Thus, this initiative must be followed carefully as it will clarify these provisions which, in their current form, leave room for interpretation.

For more details, you can consult the Official Gazette no. 1030/4.11.2020 and no. 1041/6.11.2020.

The EY Team is available for further information on the matter mentioned above.

 
Prepared by:
Cristina Mogoș ― Tax Senior Manager, Direct Tax
Ecaterina Boca ― Senior Consultant, Knowledge Management Department
 
For additional information, please contact:
Alex Milcev, Partner ― Tax & Law Leader Romania
 
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