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Law on the application of certain rent payment facilities for the period related to the state of emergency

In this issue:

Law on the application of certain rent payment facilities for the period related to the state of emergency

 

Law no. 62 of 20 May 2020 on the application of certain rent payment facilities for the period related to the state of emergency (Law 62/2020), published in the Official Gazette no. 425 of 21 May 2020, entered into force on 24 May 2020.

 

The purpose of the law

Law 62/2020 aims to support certain categories of lessees that, in the context of the economic difficulties caused by the Covid-19 pandemic, can no longer pay the rent.

These lessees may request that the rent be deferred, without being obliged to pay interest and penalties, in such case the payment of the rent will be made by the competent territorial tax authority in the bank account of the lessors, at the lessees’ request.

The lessees that make such requests to the tax authorities and that benefit from the provisions of Law 62/2020 must reimburse these amounts to the competent territorial tax authority, in equal installments, after the period for which the payment has been deferred, by 31 December 2020, otherwise they will be subject to enforcement proceedings.

 

The beneficiaries of the facilities

Law 62/2020 provides that the payment of rent for the use of buildings registered as offices, working point or homes may be postponed at the request of the following categories of lessees:

(i) economic operators, independent professionals, legal entities under private law, whose activity has been interrupted or whose incomes or revenues have decreased by at least 15% in March 2020 compared to the average of the last calendar year during the state of emergency period;

(ii) individuals who were economically affected, directly or indirectly, during the state of emergency period.

 

The conditions under which the payment of rents may be deferred

To benefit from the postponement of rent payment, these lessees must submit to the competent territorial tax authority a request accompanied by the following documents:

(i) the lease agreement between the lessor and the lessee;

(ii) an addendum to the lease agreement which must include, among others, the parties’ agreement to defer the payment of the rent, the duration of the period of postponement of the rent payment, the value of the rent for that period of deferral;

(iii) any type of document proving the lessee’s inability to pay the rent within the period specified in the addendum.

The request may also be submitted by e-mail to an e-mail address that will be indicated on the website of each territorial tax authority.

 

In order to benefit from the postponement of rent payment, the following conditions must be met cumulatively:

(i) the monthly rent specified in the addendum concluded between the lessor and the lessee is lower than or at most equal to the rent of February 2020;

(ii) the value of the monthly rent provided by the addendum concluded between the parties, for each location, is of maximum RON 10,000 for the economic operators and of maximum RON 2,000 for individuals.

 

Corporate income taxpayers and micro-enterprise taxpayers

Corporate income tax payers and micro-enterprise tax payers which obtain revenues derived from rental of immovable properties based on rental/ sub-rental or usufruct agreements can benefit of a different tax treatment, such revenues being considered in a proportion of 20% as non-taxable income when computing the corporate income tax / micro-enterprise tax, under certain conditions.

The benefit applies only for taxpayers which reduce the rental price of the immovable property during 2020, either in cash and/ or in kind, as per the relevant agreement between the parties, with at least 20% of the rental price of use of the immovable property that was contractually perceived in February 2020.

Revenues for which the benefit is available are those resulted from agreements concluded by taxpayers that reduced their prices for the use of their immovable properties as per the present law.

This benefit can be applied only for the period the reduced price for the use of the immovable property was negotiated, but not later than 31 December 2020.

 

Individuals deriving income from providing rights of use of immovable properties                   

Individuals deriving income from providing rights of use of immovable properties based on contracts of letting/subletting or usufruct may benefit of an exemption to pay the income tax and health fund contribution due for the such income.

The benefit applies only for individuals who reduce the price of use of their immovable property in 2020, either in cash and/or in kind, as per the relevant contract between the parties, with minimum 30% of the price of use of the immovable property that was perceived in February 2020.

Also, individuals who derived income from providing rights of use of immovable properties from a number of more than 5 contracts, during 2019, may also benefit of the aforementioned exemptions, if during tax year 2020 they qualified such income in the independent activities category.

This benefit can be applied for the period the reduced price for the use of the immovable property is negotiated, but not later than 31 December 2020.

 

Applicability

The facilities regulated by Law 62/2020 apply for the entire period of the state of emergency, as well as for the month following the month in which the state of emergency ceased.

The norms for the implementation of Law 62/2020 are to be issued within 15 days from the date of its publication.

 

If you are in the categories of taxpayers targeted by the facilities provided by Law no. 62/2020, EY specialists are happy to assist with practical advice on income reporting obligations and proficient communication with the tax authorities.

For more information on the legal issues detailed under this alert, please contact Radu și Asociații SPRL team.

 
Prepared by:
Eduard Florea – Associate, Radu și Asociații SPRL
Alexandra Siminiceanu – Senior Associate, Radu și Asociații SPRL
Miruna Enache – Partner, Tax & Law Department, Transaction Tax Leader
Inga Țîgai – Director, People Advisory Services
Ana-Maria Călțun – Tax Manager, Direct Tax
 
For additional information, please contact:
Radu Diaconu – Associate Partner, Radu și Asociații SPRL
Alex Milcev, Partner – Tax & Law Leader Romania
 
Radu și Asociații SPRL
Bucharest Tower Center Building,
22nd Floor, 15-17 Ion Mihalache Blvd.,
Sector 1, 011171, Bucharest, Romania
Tel: (40-21) 402 4100, Fax: (40-21) 310 6987
Email: office@ra-law.ro
 
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