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Order 1107/2020 for the Annual Income Statement

In this issue:

Order no. 1107/2020 providing for the new form for “The annual statement regarding income tax and social charges due from taxpayers”

 

The Order no. 1107/2020 for changing and updating the Order no. 139/2020 issued by the President of the National Agency for Fiscal Administration, provides for the approval of the template, content, filing procedures and administration of the form “The annual statement regarding income tax and social charges due from taxpayers”, was published in the Official Gazette no. 468, dated 3 June 2020.

As a quick reminder:

-     the Annual Income Statement is due from individuals having income/losses from Romania or abroad and who have the obligation to pay income tax and social charges;

-     The types of income reportable via the Annual Income Statement are, inter alia, as follows: income from independent activities, income from intellectual property rights, rental income, income from agricultural activities, investment income, income from other sources (e.g., cryptocurrency);

-     The Annual Income Statement is also due for income from Romania for which income tax is withheld at source (e.g., bank interests, dividends), if the estimated/realized annual income exceeds 12 minimum salaries per economy;

-     It is also due from individuals who opt to pay social charges, even if not being mandatory.

The new Order introduces the following aspects (previously provided by the Emergency Ordinance no. 69/2020):

 

Filing Deadline

In 2020, the deadline has been set for 30 June 2020 for:

-        filing the Annual Income Statement for determining and reporting both the income tax due for the estimated income / income quotas for 2020 and social charges, as well as for determining and reporting the income tax and social charges due for 2019;

-         exercising the option to redirect an amount of up to 3,5% from the annual income tax due for 2019 to support nonprofit entities, cults and private scholarships.

 

Tax incentives

-        5% reduction of the personal income tax and social charges (pension and health contributions) due for 2019 is granted if the tax obligations are settled by means of payment or compensation no later than 30 June 2020 inclusive;

-        5% reduction of the personal income tax and social charges (pension and health contribution) is granted if the Annual Income Statement is filed electronically (i.e., “Virtual Private Space”, “e-guvernare.ro” website). This reduction may be claimed only if the tax payments for 2019 are settled by 30 June 2020, in which case, an overall 10% reduction shall apply.

The tax incentive is determined by the taxpayer and included distinctly in the Annual Income Statement, subject to subsequent verification by the tax authorities. The final tax liabilities will be reduced with the applicable tax incentives.

If the Annual Income Statement was filed before the new form was provided, without claiming the applicable tax incentives, the taxpayer may still benefit from them by filing an amended form by 30 June 2020, inclusive.

 

Changes to the Annual Income Statement template:

The template for Annual Income Statement has been changed to allow:

-        introduction of the tax incentives and their evidence versus the final taxes due from the taxpayer;

-        amendment of the Annual Income Statement purely for applying the tax incentives and, if the case, for adjusting the income previously declared.  

The Annual Income Statement is already available on NAFA website as well.

 

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 specific case.

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

For more information or details on the above you may consult the Official Gazette no. 468/3 June 2020, or you could contact us directly in order to clarify any other questions.

 
Prepared by:
Stela Andrei – Director, People Advisory Services
 
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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