Amendments To The Romanian Tax Code

Government Ordinance no. 30/2011 published in the Official Gazette no. 627 on September 2 2011 modifies the Tax Code and regulates some fiscal measurements.

1. The main changes of the Tax Code refer to:

   1. General provisions

      1.1. Introducing provisions related to fiduciary operation. The provisions of the Civil Code are being implemented in the Tax Code.

      1.2. Requirement to register with the tax authorities the contracts for providing services, which may lead to creation of a permanent establishment, concluded between a resident (individuals and legal entities) and a non-resident (legal entities and individuals). Previously, only the resident legal entities were obliged to register the service contracts concluded with non-residents (legal entities and individuals), with the tax authorities.

      1.3. Validity/invalidity of transactions concluded with inactive taxpayers.

      Expenses related to the transactions concluded with an inactive taxpayer and the VAT related to such transactions will be considered as disallowed (non-deductible) expenses for the corporate income tax purposes. This requires periodic review of the status for existing and potential partners before signing a contract or billing for services or goods. Verification can be done via "Register of Inactive Taxpayers", which is published on-line by the Ministry of Finance.

   2. Corporate income tax

      2.1. The tax treatment of fiduciary contracts.

      In case of fiduciary contracts, the mass transfer of trust property from the settlor (as beneficiary) to the fiduciary is not a taxable transfer, while mass transfer expenses recorded in the accounting records of the fiduciary are considered disallowed expenses if the beneficiary is the fiduciary or a third person (this applies with the entry into force of the new Civil Code on October 1 2011).

      2.2. The following are considered as allowed (deductible) expenses for calculation of corporate income tax:

      Expenses recorded in relation to valuation of fixed assets received in concession / management belonging to the public domain of the state or local administrative authorities Expenses on land registration of the assets held by the state, received under management or concession by taxpayers(entered into force on September 5 2011) 2.3. The taxation of an association with legal personality established according to the legislation of another state (other than Romania) as follows:

      Non-resident legal entities and individuals within an association with legal personality, established according to the laws of another state, owe profit tax in Romania for the activities carried out in...