Category: Uncategorized

Article written by Florin Gherghel, Tax Manager Ensight Finance

Emergency Government Ordinance no. 29 / 2020 was published in Official Gazette no. 230 as of 21.03.2020 regarding some economic and tax measures in relation with the current pandemic.

The main adopted measures are:

• Granting of state guarantees for SMEs up to 80% for investment loans capped at 10 million RON, as well as the subsidization of related interests for a specified period (at least until March 31, 2021)
• Granting of state guarantees for SMEs up to 80% for loans in order to insure working capital up to the average of the expenses related to working capital during the last 2 fiscal years, capped at 5 million RON, as well as the subsidization of related interests for a specified period (at least until March 31, 2021)
• Granting of state guarantees for micro or small enterprises up to 90% of the credits / lines of credit for financing working capital, up to the average of the expenses related to working capital during the last 2 fiscal years, capped at 500,000 RON for micro and 1 million RON for small businesses, as well as subsidization of the related interests for a certain period (at least until March 31, 2021)
• Postponement of payment deadline for local taxes (buildings tax, land tax, car tax) until June 30, 2020, with the retention of the bonus established by the local councils
• Postponement until July 31, 2020 of the notification deadline towards the tax authorities regarding the intention to apply for restructuring of taxes and postponement of the restructuring request until October 30, 2020
• No interest and penalties for late payment are computed for unpaid taxes with a due date / payment date during the state of emergency (starting with 21.03.2020) and 30 days after the closure of the state of emergency
• The enforced collection of taxes is suspended / does not start during the state of emergency and 30 days after the closure of the state of emergency
• The taxpayers who apply the system of advance payments of profit tax can make quarterly advance payments for 2020 up to the amount resulting from the computation of the current 2020 quarter profit tax
• During the state of emergency, SMEs, which have discontinued their activity totally or partially and hold an emergency situation certificate, issued by the Ministry of Economy, Energy and Business Environment, benefit from deferred payment for utilities services (electricity, water, gas, telephone and internet services), as well as for rents for social or secondary offices (Ensight Note: we understand that the certificates will be available online by companies in the areas of transport, tourism, hospitality industry / HoReCa, organization of events, advertising, private education, clothing industry, footwear and leather goods, services for the population)
• The force majeure can be invoked in the contracts with the SMEs possessing emergency situation certificates only after the written proof of the renegotiation efforts of the contractual clauses, to adapt them to the situation generated by the state of emergency
• The submission of declaration regarding the beneficial owner for anti-money laundering purposes is suspended during the state of emergency, and the submission term is extended by 3 months from the date of closure of the state of emergency

 

Emergency Government Ordinance no. 30 /2020 was published in Official Gazette no. 231 as of 21.03.2020 regarding social protection measures in relation with the current pandemic.

The main adopted measures are:

• Granting of leave for care of children during temporary closure of the educational units, amounting to a daily amount of 75% of the salary related to a working day, but not more than the 75% of the daily average gross salary at national level. These amounts are supported from the Guarantee Fund for the payment of salaries. This facility can be granted only after all other legal options have been exhausted: work schedule delay, shift work, telework
• Extension for a period of 90 days under certain conditions for granting the insertion incentive related to the child care leave
• Granting of unemployment benefits for the period of temporary suspension of the individual employment contract at the initiative of the employer, as a result of the effects produced by coronavirus, amounting to 75% of the salary, but not more than 75% of the average gross salary at national level. The benefit is supported by the unemployment insurance budget. The unemployment benefit is to be granted to the employees of the employers who fulfill one of the following conditions:
  • interrupt the activity totally or partially during the period of state of emergency and hold the certificate of emergency situations issued by the Ministry of Economy, Energy and the Business Environmen
  • reduce the activity due to the effects of COVID-19 epidemic and do not have the financial capacity to pay all salaries of their employees. Employers can benefit from the payment of the aforementioned allowance for up to 75% of employees who have individual work contracts active at 21.03.2020. 

    In this case, the allowance is granted on the basis of a declaration on its own responsibility regarding the diminishing of cash receipts from the month previous to the submission of the declaration on its own responsibility, by a percentage of at least 25% compared to the average of cash receipts from January-February 2020, and that the lack of financial capacity to pay all employees.

 

Article written by Florin Gherghel, Tax Manager Ensight Finance

Romania has implemented the EU provisions regardingelectronically supplied services, namely services delivered over the internetor via an electronic network and rendered in an essentially automated fashion involvingminimal human intervention.

As a general rule, in the case of electronicallysupplied services by EU companies to Romanian non-taxable persons (e.g.individuals), the place of supply is the place where the customer isestablished and the supplier could be required to register for VAT inRomania.

Nevertheless, the services will be considered renderedfrom the country where the supplier is established (no VAT registrationis required in Romania), if the following conditions are fulfilled cumulatively:

• the supplier isestablished in a single EU member state;
• the services arerendered to non-taxable persons established in any other EU member state,except the state of the supplier;
• the total value of therendered services, without VAT, does not exceed EUR 10,000 (RON 46,337) in thecalendar year and did not exceed EUR 10,000 in the previous calendar year either.

If the value of the supplied services exceeds the EUR10,000 threshold, the place of supply of these services will become thecountry where the customer is established from the moment the threshold is exceeded,and the supplier could be required to register for VAT in Romania.

Irrespective of the above, if the EU supplier is registeredas a supplier of electronically supplied services in its country, the EUsupplier is no longer required to register for VAT purposes in Romania for thesupply of such services to Romanian non-taxable persons.

Supplyof e-books – VAT implications

The supply of the digitalised content of books isconsidered an electronically supplied service and, consequently, such supplyrepresents a service and not a delivery of goods from a Romanian point of view.

Consequently, the reduced VAT rate of 5%(applicable in general to the supply of books) is not applicable and,therefore, the regular 19% VAT rate is applicable to the supply of e-books byRomanian suppliers to Romanian entities.

Onlinecommunication with tax authorities

Almost all tax returns (submitted monthly / quarterly/ yearly) must be submitted online, and an electronic signature must beobtained for this.

A company can also have access to its private virtualspace in order to check the status of submitted tax returns and paid taxes.Thus a company can obtain online certificates attesting that it does nothave outstanding tax liabilities (such certificates are useful, for example,when a company takes part in a bidding process).

Financial statements can also be submitted online usingthe same electronic signature.

Besides the online submission of tax returns, officialcommunication with the tax authorities can only be performed by submittingvarious requests directly to the registration office of the tax authorities or bypost.

The tax authorities do not have access to the accounting systems of the companies or to the invoices issued by the companies.

The article is part of the WTS CEE Tax Bridge #2/2019 edition, which can be read here: https://wtsklient.hu/wp-content/uploads/2019/10/wts-cee-tax-bridge-201902.pdf

by Mihaela Danalache, Managing Partner Ensight Finance

I have been working in business consulting for many years and I was involved in countless optimization projects of the finance function in larger or smaller companies. I am familiar with the problems encountered by professionals in the field, one of the most common being the incorrect positioning of the Finance Department within the company.

Often perceived as “a necessary evil”, Finance Department can be an essential business partner for all other departments within the company. All processes of a company (Procurement, Production, Sales, or support processes) involves at their end the Finance Department. Therefore, all decisions made in the “upstream” departments could be positively influenced if the financial impact of such decisions is known in advance. This is where the role of the Finance Department intervenes as a business partner – in preventing the waste of resources, in anticipating possible risks and preventing their occurrence, in communicating the incentives the company can benefit from.

Unfortunately, in general, the effort is concentrated on the proper and timely data processing and less or at all on prevention. It is about reconciliations, verification, recording each transaction, tax computation, declaration and payment. It is not an easy job, as all these activities are done in parallel with the permanent monitoring of legislative changes (frequent in Romania). However, accounting can be creative, being based on professional interpretations and judgments. Thus, the most suitable accounting policies for the business can be selected, and there is the possibility of complete separation of the accounting area from the fiscal one.

How can Finance Department become a business partner in the company? The management of the Finance Department has a defining role in this regard. In general, people with special professional results are promoted in management positions, very “technical” people who feel comfortable in dealing permanently with data. Having reached the management position, these people have major difficulties in understanding their new role and for being recognized as such by their colleagues. The classical notions of management are less known, they do not know what their actions as managers should be, and what they should focus on first and how. For a period, they continue to focus strictly on the technical area (comfort zone), perhaps with more dedication than before. But they soon become aware about the need to change.

Support is needed to determine them to act, to make them setting personal goals, to make them to prioritize and achieving them. Experience has shown that the most appropriate guidance comes from a “coach” with experience and expertise in the finance field. Common technical language and understanding of financial processes and technical details often helps.

I discovered with great satisfaction how much and how quickly people can change if they really want this. The change of the individual (manager) triggers changes in the organization: team motivation, a relaxed working atmosphere, less frustration and conflicts. That is why I encourage those who face the problems described above to try a coaching program dedicated to this field.

Ensight Finance can help you through coaching services dedicated to the financial function of the company.