Official Monitory no. 817 of 03.11.2015 & Emergency Order no. 50 of October 27th, 2015 for the modification and addition of the Law no. 227/2015 regarding the Fiscal Code and of the Law no. 207/2015 regarding the Fiscal Procedure Code

I – Taxation system for microenterprises

Starting with January 1st, 2016 the turnover that classifies an entity from fiscal standpoint as a microenterprise is increased at 100.000 euro (currently it is 65.000 euro). The exchange rate for determining the equivalent in euro is the one valid at the closing of the financial year when the incomes were registered.

If during a fiscal year a microenterprise derives incomes greater than 100.000 euro or the percentage of the incomes derived from consulting and management in the total incomes derived is equal to or above 20% inclusive, it owes profit tax starting with the quarter when any of these ceilings were surpassed. The taxation quotas are differentiated starting with January 1st, 2016 by the number of employees:

• 1 % for microenterprises that have employed 2 employees and above;
• 2 % for microenterprises that have employed one employee;
• 3 % for microenterprises without employees.

Currently it is applied a sole quota of 3%.

As an exception, for Romanian legal persons newly established and employers of at least one employee and are incorporated for a duration longer than 48 months, and their shareholders/associates did not own participation titles in other legal persons, the taxation quota will be 1% for the first 24 months since the day of the registering of the legal person. This quota is applied until the end of the quarter which ends the 24 months period. These stipulations are applied if, during a 48 months period since registration, the microenterprise is not in one of the following situations:

• Voluntary liquidation through a decision of the general assembly of the shareholders, according to the law;
• Dissolving without liquidation, according to the law;
• Temporary inactivity, according to the law;
• The statement on self-responsibility of not performing activities at the official address/office address, acc. to the law;
• The increase of the shared capital through contributions made, according to the law, of the new shareholders/associates;
• The shareholders/associates sell / cede /exchange the participation titles owned.

The condition regarding the employees is considered to be fulfilled if the employment is made in a 60 days term inclusive since the date of registering the legal entity.

For the maintaining/modification of the taxation quotas, the new employees must be employed with an individual employment agreement for undetermined period (permanent employment) or for a determined period of at least 12 months. If during the fiscal year the number of employees is changed, the above mentioned quotas are applied adequately, starting with the quarter when the change occurred. For the microenterprises with one employee, respectively two employees whose employment agreement ceases, the condition regarding the number of employees is considered fulfilled if during the same quarter new employees are hired.

II – Taxation of dividends starting with January 1st, 2016

The dividend tax is reduced at 5% (now the taxation quota is 16%) starting with the dividends distributed after the date of January 1st 2016, both for the payments made between the Romanian legal persons, and the payments between Romanian legal persons and Romanian natural persons.

For the year 2016 it is kept the current stipulation stating that if the natural person derives incomes from salaries, from independent activities or other incomes for which he or she pays the health insurance contributions, the natural person will not pay the health insurance contributions for the dividends received.

Starting with the year 2017 it is mentioned that regardless of the incomes derived besides the dividends income, the natural person will pay the health insurance contributions (5.5%) for this income.

For legal persons it is maintained for the year 2016 the exemption from the dividend tax for the dividends paid from a company to a company if the legal person receiving the dividends owns more than 10% of the capital of the dividend payer for a period longer than 1 year, analyzed at the date of the payment of the dividends.