Last updated: 8 December 2017
Government Emergency Ordinance no. 79/2017, published in the Official Journal of 10.11.2017, which transfers employer's contributions to employees, also amends the provisions of the Fiscal Code on the turnover tax payable by microenterprises.
The main changes (which will apply from the 1st of January 2018) refer to the threshold for the application of the tax and to the new categories of legal persons that, from the 1st of January 2018, will also be subject to the turnover tax for microenterprises. Hereinafter we provide you with a presentation of the main changes regarding the turnover tax.
Increase of the Threshold for the Application of the Turnover Tax
Emergency Ordinance no. 79/2017 amended the conditions that a company must meet in order to be regarded as a microenterprise from a fiscal point of view
From January 2018, the condition regarding the turnover that a company must obtain to be considered a microenterprise will be changed. Thus, all companies with a turnover up to 1 million Euros (the equivalent in lei) will be subject to this tax; previously, this threshold was set at 500,000 Euros.
We remind you that the last change of this threshold was made in early 2017, when the turnover threshold was increased from € 100,000 to € 500,000.
New Categories of Legal Persons Subject to Turnover Tax for Microenterprises
In accordance with the new legislative changes, starting from 1 January 2018, companies operating in the banking, insurance and reinsurance sectors, the capital market, gambling, exploitation, development of oil and natural gas deposits and whose 2017 turnover will be less than 1 million Euros will also be subject to the turnover tax for microenterprises. Thus, from the 1st of January 2018, these categories will no longer be exempt from turnover tax.
Another category of taxpayers who will be subject to the turnover tax for microenterprises are legal entities that earn income from counseling and management activities, provided that this activity represents over 20% of the turnover.
Optional Application of the Tax on Profit
At present, microenterprises with a share capital of at least 45,000 Lei (the equivalent of approximately 9,783 Euros) may opt for the tax on profit (16% of the company's profit), the generally applicable rate.
From the 1st of January 2018, the possibility for microenterprises with a minimum share capital of 45,000 Euro to opt for the tax on profit will be eliminated.
Accordingly, as of the 1st of January 2018, the turnover tax for microenterprises will be due by all companies with a turnover under 1 million Euros (irrespective of the amount of their share capital), except for:
• The Guarantee Fund for Deposits in the Banking System, established according to the law;
• The Investors Compensation Fund, established according to the law;
• The Guarantee Fund for Equity in the Private Pension System, established according to the law;
• The Guarantee Fund for policyholders, , established according to the law;
• Fiscally transparent legal entities.
Starting from the 1st of January 2018, companies that currently pay a 16% tax on profit, but will have a turnover of less than € 1 million by the end of 2017 will automatically switch to the turnover tax for microenterprises (1% or 3% of turnover, depending on the number of employees).
Tax Rate
The tax on microenterprises will remain the same, namely:
• 1% of turnover for microenterprises with one or more employees;
• 3% of turnover for microenterprises without employees.