[ESTABLISHING A BUSINESS ENTITY IN ROMANIA] 397
the income recipient provides a valid tax residency certificate and a sworn statement attesting the fulfilment of conditions. 4.7 Further corporate tax exemptions In the area of corporate income tax, the following tax incentives are available:
processing activities as well as for assets characterized by re-digitalization. • Profit tax exemption applicable to taxpayers which exclusively carry out innovation and R&D activities during the first ten years of activity. The abovementioned tax incentives are available only for corporate income taxpayers and not for taxpayers applying the microenterprise tax regime. In Romania, in the area of corporate tax, there are two applicable regimes: the standard corporate income tax regime and the microenterprise tax regime. According to the standard corporate income tax regime, the taxable profit is computed based on the following formula: total revenues – (ii) non-taxable revenues – (iii) total expenses + (iv) non-deductible expenses. Companies reporting a turnover lower than EUR 500,000 at 31 December or during the fiscal year and meeting the other requirements stipulated by the Fiscal Code – they have at least one employee, do not generate consultancy and/or management income of more than 20% of the total revenues, have shareholders/associates who do not hold more than 25% of the shares in more than three Romanian legal entities that qualify for the microenterprise income tax regime – will be able to opt for the microenterprise tax regime. This will mean a turnover tax rate of 1%, regardless of the number of employees. Moreover, the microenterprise tax regime is an optional one, companies being able to choose from the beginning the standard income tax regime, even if they qualify for the microenterprise tax regime. 4.8 Residency and visas The majority of immigration regulations are contained in: Emergency Ordinance no. 102/2005, Emergency Ordinance no. 194/2002, Regulation (EU) No. 492/2011 on the freedom
Holding related tax incentives: (i) Dividends received from a non- EU corporate income taxpayer are non- taxable, as long as there is a double tax treaty concluded between Romania and the respective non-EU country and certain conditions are fulfilled (i.e., the Romanian taxpayer has held at least 10% of the share capital of the non-EU taxpayer for an uninterrupted 1-year period); (ii) Revenues derived from the disposal of shares held in a Romanian legal entity or in an entity residing in a state with which Romania has concluded a double tax treaty are non- taxable, as long as the income recipient has held at least 10% of the share capital of the non-EU taxpayer for an uninterrupted one-year period.
•
• Tax exemption on reinvested profit – Companies which reinvest their profits in new technical equipment, computers, invoicing machines, software (including the right of use) used for business purposes may apply the tax exemption on the reinvested profit. There are specific conditions that must be fulfilled as far as the duration of use of such equipment subject to reinvested profit is concerned. Starting from 1 January 2023, the tax exemption on reinvested profit is also applicable for investments in assets used for production and
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator