Decision No. 1393/2024 on the modifications and completion of the Methodological Norms for the application of the Fiscal Code

On November 11, 2024, Decision No. 1393/2024 was published in the Romania Official’s Gazette No. 1125 which brings amendments to the Methodological Norms for the application of Law No. 227/2015 regarding the Fiscal Code in relation to the minimum turnover tax (‘MTT’) and the taxation system for micro-enterprises.

In relation to MTT, the following clarifications regarding the application methodology have been provided:

• In the case of MTT, as well as the additional turnover tax (‘ATT’) applicable to legal entities operating in the oil and natural gas sectors, the “VT” total income indicator represents the total revenues recorded in accordance with the applicable accounting regulations, out of which any commercial discounts granted after invoicing are deducted.
• In the context of MTT payment, for the tax credit granted for sponsorship or patronage, the same methodological norms presented for the corporate income tax apply when calculating the 0.75% turnover limit, and the 20% limit applies to the corporate income tax that would have been owned if the taxpayer were not obligated to pay the MTT.
• To determine the quarterly corporate income tax /MTT owed, the corporate income tax /MTT calculated cumulatively from the beginning of the fiscal year is deducted from the IMCA/corporate income tax owed for the previous period.
• For excise duty payers, the revenues from excise duties that are simultaneously reflected in expense accounts are deducted from the MTT. Such operators include:
  • Authorized warehouse keepers, registered consignee, or any other person who releases excisable products from the excise duty suspension regime or on whose behalf this release is carried out;
  • Importers of excisable products into the territory of Romania;
  • Certified consignee who purchase excisable products from the territory of another EU member state;
  • Authorized distributors or redistributors of natural gas;
  • Economic operators who produce or make intra-community acquisitions or import coal, coke and lignite;
  • Producers, distributors, or redistributors of electricity;
  • Economic operators who produce and sells in Romania products subject to non –harmonized excise duties, purchase such products from the territory of the European Union, or import these products.
• The foreign tax credit determined according to Article 39 on the avoidance of double taxation is deducted from the MTT.
• The MTT is considered corporate income tax for the application of the avoidance of double taxation treaties.
• Comparison of corporate income tax with MTT:
  • Following the comparison, if the taxpayer has to pay corporate income tax, this obligation remains even if, after deducting amounts representing foreign tax credit, exempt corporate income tax for reinvested profit, or exempt corporate income tax according to the Agricultural Cooperation Law No. 566/2004, the reduced value of the corporate income tax falls below the value of the MTT.
  • Following the comparison, if the taxpayer is obligated to pay MTT, this obligation remains even if, after deducting amounts representing foreign tax credit, tax credit for sponsorships/patronage, or the additional deduction related to eligible expenses for research and development activities, the reduced value of the MTT falls below the value of the corporate income tax.
• Presentation of 3 examples of calculations for comparing MTT with corporate income tax.
• Additions made for economic operators regulated/licensed by the National Energy Regulatory Authority who calculate MTT and ATT:
  • Revenues from activities of distribution/supply/transport of electricity and natural gas are not excluded from the calculation of turnover for MTT and ATT;
  • The activities included in the scope of electricity distribution, as well as those included in the scope of natural gas distribution are presented.

In relation to the micro-enterprise income tax:

• In applying the provisions of Article 47 para. (1) regarding the holdings of associates/shareholders, the percentage of ownership will be computed and verified based on the holdings existing on December 31 of the previous fiscal year;
• In the case of indirect holdings, these are calculated by multiplying the percentage of holdings starting with the percentage of direct ownership in the first Romanian legal entity held and continuing with the percentage of direct ownership along the chain of legal entities up to the one for which the micro-enterprise status is being verified. The provisions of Article 47 para. (11) of the Tax Code are applicable if the percentage of indirect ownership thus calculated exceeds 25% or if the sum of the percentages of direct and indirect ownership exceeds 25%;
• Types of economic activities carried out by entities without legal personality (e.g. PFA, II, IF, other forms of organization without legal personality, etc.) and the revenues considered at the level of linked enterprises are enumerated;
• Clarifications are provided regarding legal entities that do not fall under the micro-enterprise taxation regime – credit institutions, legal entities operating under specific legislation in the fields of insurance, reinsurance, and capital markets, as well as in the field of insurance, reinsurance, and capital market intermediation/distribution (with certain exceptions), legal entities engaged in gambling activities or activities of exploitation, development, and exploitation of oil and natural gas deposits;
• Clarifications are provided regarding the calculation of the taxable base, specifically the taxable base is represented by the total revenues from the credit accounts in class 7, from which the non-taxable revenues provided in the Fiscal Code at Article 53 para. (1) are deducted, and to which the elements from para. (2) are added.

In relation to excise duties:

• Authorized tax warehouses for processed tobacco production may conduct manufacturing activities inside the tax warehouse for inhalable products that do not involve combustion, containing tobacco substitutes with or without nicotine, falling within CN tariff codes 2404 12 00, 2404 19 10, as well as for reserves delivered with electronic cigarettes and other similar personal electronic vaporizing devices of CN code 8543 40 00;
• Tax warehouses intending to carry out additional production activities inside the tax warehouse must submit a notification towards the territorial customs authority in this respect and submit to this authority the manual of procedure for the non-taxable goods and goods subject to non-harmonized excise duties referred to above;
• All activities involved in the production of excisable goods authorized for the tax warehouse are permitted, if are mentioned in the authorization.

The EY team is available for further details regarding the above-mentioned points.