Amendments to the Fiscal Code – construction companies and the treatment of value tickets

Starting with January 2019, Government Emergency Ordinance 114/2018 has brought several amendments to the Fiscal Code, out of which the most important concern the construction companies and the treatment of value tickets.

1. Changes regarding the taxation of construction companies

The following fiscal incentives are valid for the period2019-2028 for employees of construction companies / such companies:

– salary tax exemption

– reduced social contribution from 25% to 21.25% (thepublished legislation does not mention explicitly the reduction, so arectification should be expected)

– exemption from health contribution – the employees areinsured for health services without the payment of the contribution

– the employers are exempted for social contribution forparticular working conditions, respectively special working conditions

– reduced work insurance contribution from 2.25% to 0.3375%.

The conditions to be fulfilled by these employees /employers for the application of the incentives are:

a) the employers carry out activities in the constructionsector which include:

(i) construction activity definedby NACE code 41.42.43 – section F – Construction;

(ii) production of buildingmaterials, defined by the following NACE codes: 2312 – Processing and shapingof flat glass; 2331 – Manufacture of ceramic tiles and slabs; 2332 –Manufacture of bricks, tiles and other construction products of burned clay;2361 – Manufacture of concrete products for construction; 2362 – Manufacture ofplaster products for construction; 2363 – Manufacture of concrete; 2364 –Manufacture of mortar; 2369 – Manufacture of other articles of concrete, cementand plaster; 2370 – Cutting, shaping and finishing of stone; 2223 – Manufactureof articles of plastics for construction; 1623 – Manufacture of other builders’carpentry; 2512 – Manufacture of metal doors and windows; 2511 – Manufacture ofmetal structures and parts of metal structures; 0811 – Extraction of ornamentaland building stone, extraction of limestone, gypsum, chalk and slate; 0812 –Gravel and sand extraction; 711 – Architectural, engineering and technicalconsultancy services;

b) the employers achieve the turnover from the aboveactivities within the limit of at least 80% of the total turnover, calculatedcumulatively from the beginning of the year, including the month in which theexemption applies;

c) the salary monthly gross incomes are between 3,000 and30,000 lei per month inclusive and are obtained on the basis of the individuallabor agreement;

d) the exemption is applicable on the basis of furtherinstructions (to be issued) and Declaration 112 represents a declaration on ownresponsibility for the fulfillment of the above conditions.

Separately, for the period 01.01 – 31.12.2019, the minimumgross monthly salary for construction workers (for the above-mentioned areas ofactivity) is of RON 3,000, regardless of the positions held by the respectiveemployees (e.g. accountant or secretary), the new legislation making norestrictions in this regard.

2. The taxation of value tickets

The fiscal treatment of the value tickets granted toemployees has been unified, so that gift tickets, meal tickets, holidayvouchers, nursery vouchers and cultural vouchers are subject to 10% income tax,but they are not included in the computation of social contributions.

3. Extension of the validity of VAT simplification measures

The application of VAT simplification measures was extendeduntil June 30, 2022 for certain operations (such as cereal delivery), as thesupplier issues the invoice without VAT, whereas the buyer registers the VATthrough the reverse charge mechanism.

4. Separately from the above modifications of the FiscalCode, the electrical energy license holders will owe a contribution of 2% fromtheir turnover.

5. Also in addition to the fiscal modifications, the bankinginstitutions will owe  a tax on their financial assets in case thequarterly ROBOR (Romanian inter-banking interest rate) will exceed 2%. The taxon the financial assets will be computed by applying quarterly a rate to thefinancial assets of the banking institution as follows: a rate of 0.1 % if thequarterly ROBOR is between 2% and 2.5%; a rate of 0.2 % if the quarterly ROBORis between 2.5% and 3%; a rate of 0.3 % if the quarterly ROBOR is between 3%and 3.5%; a rate of 0.4 % if the quarterly ROBOR is between 3.5% and 4%; a rateof 0.5 % if the quarterly ROBOR is above 4%.

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