Last updated: 30 March 2018
The Fiscal Code was changed again! Emergency Ordinance no. 18 as of 15 March 2018, published in Official Journal no. 260/23.03.2018, approving certain fiscal and budgetary measures and amending and supplementing certain regulations, reduces the number of declarations that must be filed by natural persons with the tax authority. It also aims at simplifying the procedures for the determination of the income tax, both for the taxpayer and for the Tax Authority.
Even if Emergency Ordinance no. 18/2018 has entered into force upon its publication in the Official Journal (namely 23 March 2018), the form and the instructions for filling-in the unique declaration regarding the income tax and social security contributions due by natural persons will be approved by an order of the President of the Tax Authority within 30 days from the entry into force of Emergency Ordinance no. 18/2018, so perhaps around 23 April 2018.
Taxpayers Concerned
Taxpayers who carry out an activity individually or in the form of an unincorporated association during a fiscal year are required to file a unique declaration concerning income tax and social security contributions that they owe for income that they estimate to obtain during each fiscal year, even if during the previous tax year they registered losses. However, taxpayers who obtain income for which the tax is withheld at the source are exempted from this obligation.
Deadline for Filing the Unique Declaration
Starting from 2019, the deadline for filing the unique declaration will be March 15 of each year. The unique declaration will be used to report income earned in the previous year, estimated earnings for the current year, and the tax and social security contributions due.
Thus, the declaration concerning the tax and social security contributions due for the estimated income will have to be filed by the 15th of March (included) of the year when the income is obtained. The declaration concerning the tax and the social security contributions due for the income actually obtained will have to be filed at the latest on March 15 (included) of the year N + 1.
Filing Methods
Starting from 2019, the unique declaration will have to be sent to the Tax Authority only in electronic format. For 2018, the unique declaration may be filed on paper.
According to the statements made by the Minister of Finance, the unique declaration will be available in electronic format from May 2018. Apparently, all taxpayers will receive their passwords at home, in a sealed envelope… Also, the authorities intend to develop a mobile application, to simplify the public administration.
Deadline for Paying the Income Tax
As a general rule, the deadline for payment of the estimated annual income tax, as well as the annual income actually obtained is March 15 (included) the year following the year when the income was earned. The amount of the tax is determined by the taxpayers themselves, by applying a 10% rate.
Incentives
Natural persons who make advance payments on the estimated annual income tax are entitled to a tax incentive (reduction of taxes). The amount of such incentive and the deadlines for advance payments are set by the annual law on the State budget.
The incentive is determined by the taxpayer and it will be deduced from the payable tax. The incentive will be filled-in separately on the unique declaration regarding the income tax and social security contributions payable by natural persons, subject to subsequent verification.
Transitory Provisions for 2018
As an exception, the deadline for filing the unique declaration concerning the tax and social security contributions payable by natural persons for the income earned in 2017 and the estimated income for 2018 is 15 July 2018 included.
Also as an exception, for income earned in 2017, the tax authority establishes the annual tax due by issuing a tax ruling, based on the unique declaration regarding the tax and social security contributions due by natural persons for the income earned in 2017.
For 2018, the incentives are expressly stipulated in Emergency Ordinance no. 18/2018, as follows:
• 10% - if the unique declaration is filed electronically until 15 July 2018 (included) and the estimated income tax is fully paid until 15 December 2018 (included);
• 5% - if the unique declaration is filed electronically until 15 July 2018 (included) and the estimated income tax is fully paid until 15 March 2018 (included);
• 5% - if the unique declaration is filed on paper until 15 July 2018 (included) and the estimated income tax is fully paid until 15 December 2018 (included).
Individual taxpayers who have filed their declaration regarding the income earned in Romania (Form 200) or the declaration concerning the income earned abroad (Form 201) with the Tax Authority until 23 March 2018 have no obligation to file the unique declaration concerning the income tax and social security contributions due by natural persons for the income earned in 2017. If, despite everything, taxpayers also file the unique declaration, the tax authority uses the information provided in the unique declaration.
Even though they have already been filed until 23 March 2018, the declaration regarding the estimated income/income standard (Form 220), the declaration of income earned from agricultural activities taxable based on the income standard (Form 221), the declaration concerning the income for which the social security contribution is due (the famous Form 600) will be replaced by the unique declaration regarding the income tax and the social security contributions payable by natural persons, which must be filed until 15 July 2018 at the latest.
Payment of the Contributions to the Retirement fund and to the Health Fund
The categories of natural persons mentioned by the law (in particular natural persons who carry out independent activities, those who obtain income from intellectual property rights etc.) have to pay the contribution to the retirement fund and the contribution to the health fund if they estimate - for the current year - a net income of at least 12 gross minimum wages at the national level, in effect on the date of the unique declaration. We hereby remind you that the current gross minimum wage at the national level is 1,900 lei per month (equivalent to about 413 Euros per month).
Individuals who are insured under a specific social insurance system and who are not required to insure themselves in the public retirement system do not owe the contribution to the retirement fund for the income obtained from independent activities and intellectual property rights.
Natural persons may also be granted incentives if the contributions to the retirement fund and the health fund are paid in advance, in accordance with the deadlines provided by the law.
Emergency Ordinance no. 18/2018 expressly provides the incentives granted for the social security contributions payable for 2018, which are the same as those provided for the estimated annual income tax.
Apparently, the intentions are good... the authorities are trying to simplify things: fewer forms, the possibility for individuals to file their declarations electronically, to calculate their taxes and social security contributions by themselves, but let us see how these measures will actually be implemented!