August 2015 Newsletter

August 17, 2015

  • Individuals Insolvency Law will come into force in December 2015
  • New deadline for the financial statements
  • Amendments to the Companies Law No. 31/1990 and Trade Register Law
  • The government wants to eliminate the stamp for companies and PFA
  • New tax breaks for SMEs
  • Support to micro and small enterprises in rural areas for the establishment and development of non-agricultural economic activities

Individuals Insolvency Law will come into force in December 2015

The intention of the legislative body is to shift the payments of the social contributions, which were in the employees’ burden, but paid by the employer, to the employee. 

On 26th of June, 2015 Law no. 151/2015 on insolvency of individuals, an absolute novelty in the Romanian legal system, was published in the Official Gazette no. 464 of 26th of June 2015 and will come into force on December 26th.

The main purpose of the law is to grant a chance to those in good faith debtors to redress their financial situation through a debt repayment plan; the liquidation of assets or through the simplified procedure.

The procedure applies to those individuals who have their domicile, residence or usual residence for at least 6 months prior to the application in Romania; have total debts more than 15 minimum wages with a due date expired for more than 90 days; have no possibility to redress financial on their own in the next 12 month after their debts became due.

Individuals who benefited in the past from the debt relief; who were dismissed disciplinary in the last 2 years; who were sentenced for tax evasion or who couldn’t prove that they couldn’t find a job cannot benefit of this law.

The authorities that will apply the insolvency proceedings are the insolvency committee, the administrator, courts and liquidator. The request for a debt repayment plan is made and supervised by the insolvency committee; the other two are judicial procedures and carried out under the supervision of a judge in court.

Unlike the insolvency of a legal person which is trialed by the Tribunal, the insolvency of individuals falls under the competence court of the first instance –Rom. “Judecatorie”, where the individual had his domicile or residence for the last six months.

Among the most important effects of the opening of insolvency, we mention: interests and other penalties cannot be calculated in the future; any judicial action or force execution on the debts are suspended; every debt becomes due.

We will return to this topic with an extensive article.

New deadline for the financial statements

On the 9th of July, 2015, the Ministry of Public Finance Order no. 773/2015 for the approval of accounting reporting system on 30th of June 2015 was published in the Official Gazette, Part I, no. 509 of 9th of July 2015.

According to the new Order, all economic operators who registered a turnover over 220.000 RON must file to the tax authorities until 17th of August, the accounting reports for the first half of the year, meaning until 30th of June. The same rules must be respected by economic operators that have a financial year different from the calendar year.

There are a few categories of companies that do not have to submit accounting reports on 30th of June 2015 if the company had no activity from its incorporation until the 30th of June 2015; has been temporarily inactive throughout the first semester of 2015; was incorporated in the year 2015; is in liquidation.

The documents shall be submitted to the territorial units of MFP, on paper and in electronic format or only in electronic format on the portal, with an attached electronic signature.

Failure to submit the documents will be sanctioned with fines up to 5.000 RON.

Amendments to the Companies Law No. 31/1990 and Trade Register Law

On July 13th, 2015 Law 152/2015 for the amendment and completion of certain normative acts in the field of registration in the trade register was published in the Romanian Official Gazette no. 519 and entered into force on 16th of July 2015. Among several amendments to the Trade Register Law 26/1990 and registration procedure Law 359/2004, it amended the Companies Law no. 31/1990 (the “Companies Law“) in the sense that it amends the conditions of dissolution and liquidation of companies.

As for the novelties, the main amendments are:

Companies Law

The cases of dissolution of companies will be modified and it will give the right to every interested person to ask for the dissolution if the company:

  • has not filed annual financial statements and, where appropriate, annual consolidated financial statements and accounting reports to the territorial units of the Ministry of Finance, within the period provided by law, if the delay period exceeds 60 days;
  • the company has not submitted to the territorial units of the Ministry of Finance, within the period provided by law, the statement that it had no activity from the constitution if the period of delay exceeds 60 days;
  • the list of companies for which the National Trade Register Office will formulate actions for dissolution which will be displayed on its website or online service portal at least 15 calendar days before it will be sent to the Ministry of Finance – National Agency for Fiscal Administration;
  • any interested person may only appeal against the decision of dissolution within 30 days of the publication of the decision in the Official Gazette of Romania, Part IV;
  • after the court decision becomes final, the company goes into liquidation and as a novelty the liquidator will be named by the Trade Register and not by the Court with a fixed budget of 1000 RON per month.  
  • within 30 days of the publication of the decision in the Official Gazette of Romania, Part IV any interested person can appeal the decision of liquidation;
  • The liquidation must be completed in one year; at the request of the liquidator, the Trade Registry Office may extend this period by another year, but not more than twice. The old provision stated that only the Court can extend the deadline.

In conclusion, the new provisions serve to relieve the insolvency courts and enhance the prerogatives of the Trade Register.

Trade Register Law 26/1990

Most of the novelties aim to create the legal background for the connection of the national Trade Register to the European platform:

  • The new changes serve to connect the European and national trade registers through the European portal, e-Justice;
  • For identification, including communication between Trade register in Member States through the system of interconnection, natural and legal persons registered in the trade register will also have a unique identifier at European level (EUID), which includes the identification of Romania, the identification of national registry, number of the person in that register and, if necessary, other features to avoid identification errors. EUID will apply starting 2017;
  • Romanian legal entities which open branches abroad have the obligation of mentioning them in the Trade Register Office of Romania, after their registration in those countries.

The government wants to eliminate the stamp for companies and PFA

On July 15th, 2015 Ministry of Finance released for public debate the draft ordinance OG no. 17/2015 regulating certain fiscal measures and amending and supplementing certain acts.

Through this project, the Government proposes eliminating the compulsory application of the stamp on declarations, applications and other documents filed by individuals or private legal persons and by entities without legal personality at institutions or public authorities or other documents issued between those entities or persons.

The Ordinance is necessary to clarify the legal obligation on using the stamp. Although the primary legislation does not impose the stamp, the use of it became a common use at the national level and a mandatory request by the authorities.

However, this does not apply to legal entities of public law that will stamp the documents issued by them under the rules currently applicable.

New tax breaks for SMEs

On July 17th, 2015 law no. 120/2015 regarding the stimulation of individual investors – business angels came into force. The new law applies only for individuals that will invest in small and micro enterprises; based on their investment, they will receive tax concessions.

To become a business angel, among other conditions, an individual must:

  • invest between 3.000 EUR and 200.000 EUR;
  • become a shareholder in the company but no more than 49%;
  • invests only in SRLs (limited liability company) or independent companies provided by law no. 346/2004;
  • shall not sell his shares for the next three years;
  • the company must not be in insolvency or bankruptcy;
  • the investor must sign a contribution agreement that mentions the capital increase by issuing shares and registers it at the competent Trade Register, where he has also to mention its quality as a business angel.

The law does not cover the investments in companies operating in the following areas:

  • bank, insurance and reinsurance, capital market, financial, or any other financial activities;
  • real estate, renting real estate, real estate brokerage, real estate development;
  • gambling and betting;
  • steel production or marketing, production or marketing of coal;
  • construction of ships and cargo;
  • production or marketing of weapons, ammunition, explosives, tobacco, alcohol, substances under national control, plants, narcotics and psychotropic substances and preparations;
  • consultancy in any field.

Tax breaks will be given in the form of exemption from tax on dividends in the next three years after the investment and in the form of tax exemption for gains from transfer of shares if the transfer of shares will take place after a period of at least 3 years after the acquisition. If more individuals become business angels, fiscal facilities may be granted for a maximum of 49% of the share capital of the company in proportion to the percentage of shares held by each.

The total, cumulative amounts that apply to facilities granted may not exceed the investment made by all individual investors, the business angels.

Support to micro and small enterprises in rural areas for the establishment and development of non-agricultural economic activities

On  17th  of July, 2015 Ministry of Agriculture and Rural Development Order no. 17/2015 on the establishment of the de minimis scheme “Support to micro and small enterprises in rural areas for the establishment and development of non-agricultural economic activities” was published in the Official Gazette, Part I, no. 534.

The de minimis aid under this scheme shall be fully complying with the criteria on de minimis aid under Regulation (EU) no. 1.407 / 2013 of the Commission of 18th of December 2013.

The aim of this scheme is to provide support for the establishment of enterprises in rural areas for non-farm activities performed for the first time (start-up) on the basis of a business plan, and for existing companies, in the development and diversification of non-agricultural activities in rural areas. The law provides exactly the type of activities for which a person can claim the aid, for example, tourism activities or crafts activities, delivering services – construction, reconstruction and/or modernization of spaces and develop activities related areas; medical and veterinary activities.

In order to be eligible the applicant shall:

  • be a micro or small enterprise, farmers or members of farming households.  Individuals who do not fit into the category of beneficiaries eligible under the de minimis scheme:
  • not to be considered a farm in difficulty;
  • not to be in foreclosure procedure for payment of tax and non-tax debt;
  • not to  be in insolvency
  • have the de minimis aid amount received in a period of 3 fiscal years (2 years plus the current fiscal year) not to exceed the equivalent of EUR 200.000 in RON or EUR 100.000 for the road transport activity;
  • operating in rural areas in Romania;
  • are not companies that have received rescue aid and not yet repaid the loan or guarantee or stopped receiving restructuring aid and are still subject to a restructuring plan;
  • Depending on the type of investment / project, the applicant must prove ownership of the land on which the investment has been achieved or, where appropriate, usage rights for at least 10 years.

Maximum amount of support is:

– 70.000 EUR / project for productive activities, health, veterinary and agro-tourism (agrotourism accommodation services, leisure travel and catering);

– 50.000 EUR / project for other non-agricultural activities.

This scheme will apply from the date of its adoption until 31st of December 2020.

The new Fiscal Procedure Code and the Tax amnesty law no. 209/2015 have been published

On July 20th, 2015 President Iohannis signed the promulgation of the new Fiscal Procedural Code, which will come into force starting January 1st, 2016. The promulgation came after the President rejected on Friday, 17th, the New Fiscal Code which was sent back to the Parliament.

Among the novelties the new procedural code foresees:

  • the increase of the VAT refund from 45 days to 90 days;
  • a tax decision issued by a tax organ without jurisdiction is not considered void if it is confirmed by the competent tax authority;
  • the penalty for concealing tax receivables administered by tax authorities cannot be higher than 100.000 RON
  • suspension of force execution if the debtor submits a letter of guarantee / insurance policy;
  • banking secrecy is limited in the sense that tax authorities can ask for information about any operation higher than 5.000 EUR;
  • tax inspection procedure changed.

Regarding the Tax amnesty law no. 209/2015. Starting with the 23rd of July, unpaid tax obligations until 1st of July 2015, will be cancelled automatically in case of several taxpayers.

Type of taxes which will be cancelled:

  • tax obligations which were established by the tax authorities through tax decision issued and communicated to the taxpayers as a result of the reconsideration / reappointment of an activity as dependent type, for the fiscal periods before 1st of July 2015 and not paid until the entry into force of the law;
  • taxes from differences in value added tax on the income from intellectual property rights;
  • taxes as a result of the reconsideration of amounts representing salary received during the delegation of employees who have been operating on foreign soil, due to fiscal periods until 1st of  July 2015;
  • CASS due by persons for which the monthly calculation base of CASS is less than the minimum gross salary or who have no income.

Cancellation of all tax obligations mentioned above is to be made ex officio by the competent tax authority by issuing a decision to cancel the tax obligations of the taxpayer.

The law was necessary because of several legislative ambiguities which led to unreasonably high taxes. ANAF is due to publish by the end of August the exact methodology application.

Author: Mag. Mihaila Raluca,
For further information on this aspect and any other questions please feel free to contact: Mag. Raluca Mihaila L.L.M.

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