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Government Emergency Ordinance no. 1/2020

In this issue:

Government Emergency Ordinance no. 1/2020 regarding certain fiscal and budgetary measures and for amending and supplementing certain normative acts, published in the Official Gazette no. 11 of 9 January 2019

Tax on financial assets

The tax on financial assets is repealed starting with the year of 2020.

Nevertheless, the declaration of the tax on assets related to the year 2019 will be performed until 25 August 2020 inclusively, date up to which the positive differences in relation to the tax on assets for the first half of 2019 will have to be paid as well. The negative differences are refunded or compensated according to the provisions of the Fiscal Procedure Code.

The tax on assets is not computed and it is not due for 2020.

Amendments in the field of electricity and natural gas

Electricity

Among the most important amendments introduced by GEO no. 1/2020 in the field of electricity we mention the following:

  • the date by which the supply of electricity for household customers will be performed under the conditions regulated by NRAE has been amended. Initially, the deadline was set to 28 February 2022, but it was pushed for 31 December 2020;
  • the regulated tariffs will be communicated by the NRAE to the last resort suppliers for household customers, for the period up until 31 December 2020;
  • the electricy producers have the obligation of providing towards the last resort suppliers with the required electricity to source the consumption of the household customers for which regulated tariffs are communicated by NRAE, for the period until 31 December 2020;
  • starting 30 April 2020, it will be cancelled the ROR of 6.9% (real terms-before tax) established for the computation of the tariffs for the transportation and distribution of electricity for the regulation period 2019-2024.

Natural gas

Among the most important amendments introduced by GEO no. 1/2020 in the field of natural gas we mention the following:

  • the date by which the Romanian gas producers have the obligation to sell at a price of RON 68/MWh to the suppliers of household customers and the central heating producers has been amended (the initial deadline of 28 February 2022 has been pushed to 30 June 2020). This measure will be applied by NRAE only if the medium market price, monitored by NRAE, will be higher than 68 RON/MWh;
  • starting 30 April 2020, it will be cancelled the ROR of 6.9% (real terms-before tax) established for the computation of the tariffs for the transportation and distribution of natural gas for the regulation period 2019-2024;
  • the supply of natural gas at regulated price for household customers will be performed until 30 June 2020 (initially, the regulated period was until 30 June 2022).
 

Administered pension funds

The GEO no. 1/9 January 2020 brings  several amendments to the Law no. 411/2004 on privately administered pension funds.

Certain changes previously introduced by the Government Emergency Ordinance no. 114/2018 to the Law no. 411/2004 (regulating Romania's private pension funds - Pillar II) have been amended, as for instance:

  • The participants to the private pension funds will not have any longer the options to:
  • Transfer from the private pension funds system to the public pension system (a transfer continue to be possible between private pension funds, under certain conditions);
  • Withdraw from the private administered pension funds system before the person is entitled to the private retirement benefits.
  • The private pension funds’ administration fee, deducted from the contributions made to the fund, may not exceed 0.5% (reduced from 1%) - so long as the deduction is made before conversion of the contributions into funds units. Out of this,0.1% (reduced from 0,5%) shall be subsequently transferred by the funds administrators to the National House of Public Pensions.
 

The Government Emergency Ordinance  introduces a cap to the operational taxes applied by the Financial Supervisory Authority to maximum 10% of the total administration fees collected by the funds’ administrators.

Feel free to reach out to us should you like to receive detailed information on the provisions brought by this normative act as well as its applicability to your business.

Also, we can assist you with tailoring advices on how to comply with the legal requirements provided by this Law (either for you as a natural personal, for your employees, or for the Company you represent).

For more information or details on the above you may consult the Official Gazette no. 11/9 January 2020 or you could contact us directly in order to clarify any other questions.

Prepared by:
Claudia Sofianu - Partner, People Advisory Services
Miruna Enache - Partner, Transaction Tax
 
For additional information, please contact:
Alex Milcev – Partner, Tax & Law Leader Romania
 
Ernst & Young SRL
Bucharest Tower Center Building,
22nd Floor, 15-17 Ion Mihalache Blvd.,
Sector 1, 011171, Bucharest, Romania
Tel: (40-21) 402 4000, Fax: (40-21) 310 7124
Email: office@ro.ey.com
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