Last updated: 28 September 2017
Among this year’s numerous legal changes in tax law, this September marks the entry into force of new changes regarding the exemption from the income tax. These changes concern a new category of professionals, namely those who work in the research, development and innovation sector. The joint Order of the Minister of Public Finance and of the Minister of Research and Innovation no. 2326/2.855/2017 was published in Official Journal no. 717/2017 and became effective as of 5 September 20167. This Order introduces new rules regarding this tax facility, presented to you hereinafter.
EASIER ACCESS TO THE EXEMPTION FROM THE INCOME TAX
First of all, this new Order sets forth a more comprehensive definition of research, development and innovation. Thus, this sector will be interpreted in relation to the applicable general law, namely Government Ordinance no. 57/2002 on scientific research and technological development.
Secondly, the Order extends the beneficiaries of the exemption from the income tax to all natural persons who obtain salary income from salaries or other similar sources, unlike the previous law, which only referred to “employed persons”.
Order no. 2326/2.855/2017 also eliminates several conditions for the granting of the tax facility, the most important of which refer to the beneficiary’s level of education and to the employer’s scope of activity. Previously, it was mandatory for the employer’s scope of activity to include research and development activities.
As a consequence, the list of supporting documents to be filed in order to obtain this tax facility was simplified. Therefore, the file must currently include only three types of documents, namely: documents providing the project identification data, the time sheets corresponding to the project and the pay slips, drafted separately for each project.
Please also note that the Order expressly provides that the exemption from the income tax will be granted even if the objectives of the research, development and innovation project are not achieved.
DISADVANTAGES COMPARED TO THE PREVIOUS LAW
In accordance with the new rules, the research, development and innovation project must include a fairly important additional element: the result indicators, namely the intended quantifiable results of the project. In our opinion, this element could pose significant problems in practice…
Moreover, in accordance with the former regulation, in order to validate the activities for which the tax exemption was granted, employers, employees or the tax authorities could request the expert reports, drafted by authorized experts. Since the entry into force of the new regulation, this possibility no longer exists; this could give the tax authorities a too large discretion in taking this decision