Update 25 May 2020
Starting with March 21st, 2020, a series of measures aimed to supporting the business community during the state of emergency declared due to Covid-19 were published in the Romanian Official Gazette. 20.
The following measures are in place so far:
1. LEGAL MEASURES
1. Loan guarantees for SMEs and entrepreneurs by Ministry of Finance
The Ministry of Finance is to guarantee up to 80% of the value of financing granted to SMEs (or 90% in the case of small businesses and micro-enterprises).
The maximum value of the credits to be awarded for the financing of working capital cannot exceed average expenditure on working capital for the last two fiscal years and is capped at RON 5 million (or RON 500,000 or RON 1 million for micro-enterprises and small businesses, respectively). For investment loans, the maximum value of financing will be RON 10 million.
The loan guarantee period for working capital is to be set at 36 months (extendable by a further 36 months), while for investments it will be 120 months.
The Ministry of Public Finance will waive the interest accrued on the loans to be guaranteed, valid from the moment the loan is granted until March 31st, 2021 (or later in the case of extension).
All outstanding fiscal obligations and other debts to the state budget will be paid from the working capital loans granted under this program.
2. Deferment of loan repayments for 9 months
Emergency Ordinance no. 37/2020 stipulates the following regarding loans granted by financial institutions:
The obligation to make repayments (including interest and commission) on loans granted to borrowers prior to
March 30th, 2020 (the date of entry into force of Emergency Ordinance no. 37/2020) may be suspended, upon request by the debtor, for a period of up to 9 months, albeit without exceeding the date of December 31st, 2020.
This facility is available to debtors (natural persons, self-employed, small and medium-sized enterprises, etc.) whose loans have not matured and for which the creditor has not provided an expected maturity date by March 30th, 2020.
It will be granted in the case of
- loans that did not have any arrears on the date the state of emergency was declared; and
- borrowers whose incomes have been directly or indirectly affected by the Covid-19 pandemic.
The amount of interest due and deferred by debtors will be capitalized on the balance of credit remaining
at the end of the deferment period.
SMEs can benefit from this facility provided
- they interrupt or reduce their activity and do not have the financial capacity to pay their
employees’ wages (in accordance with GEO no. 30/2020); and
- they are not insolvent as at the date on which they apply for deferment.
The rules of implementation for the aforementioned provisions will be drawn up within 15 days of their
entry into force.
3. State of emergency certificate for enterprises
During the state of emergency, all small and medium-sized enterprises in possession of a state of emergency certificate issued by the Ministry of Economy, Energy and Business Environment will benefit from the deferred payment facility for utilities and rent services (under certain conditions).
The state of emergency certificate (CSU) is an act issued to all eligible economic operators in accordance with the emergency state ordinances and military orders. The CSU allows them to take advantage of the economic, fiscal and social emergency measures made available by the Government of Romania and to use in commercial relations with third parties.
Two different types of certificates will be issued to eligible economic operators:
- TYPE 1 (blue) – in the case of a total or partial interruption of activity during the period of the state of emergency
- TYPE 2 (yellow) – in the case of a decrease in collections for March 2020 of at least 25% compared with the average level of collections for the period January to February 2020.
Further details on the emergency certificate
- State of emergency certificates can be obtained exclusively online, free of charge via the http://prevenire.gov.ro platform.
- The identification data for the economic operator and a statutory declaration completed by the legal representative is to be uploaded using an electronic signature. The declaration must certify that all the information and documents submitted are truthful and comply with the legislation in force as regards the type of certificate being requested.
- Warning! Applicants not registered with the Trade Register Office must submit additional documentation regarding the authorization of their activity.
- The certificates will be issued automatically, in electronic format, after validation of the system request and only during the state of emergency currently declared in Romania.
- Each economic operator can only obtain one type of certificate.
- The certificates are valid without a signature or stamp, with authentication possible via the platform based on series and number.
4. Postponement of payment of rent and utilities for registered headquarters and secondary offices
During the state of emergency, small and medium-sized enterprises (as defined by law) that have interrupted their activity in whole or in part based on the decisions issued by the competent public authorities and who hold the certificate for emergency situation issued by the Ministry of Economy are granted the postponement of payment for utilities services – electricity, natural gas, water,
telephone and Internet services, as well as the postponement of payment of the rent for the registered headquarters and secondary offices.
The same facilities related to postponing the payment of utilities and rent are also provided for professions that perform services of public interest (notaries public, lawyers, court bailiffs). Also the same facilities are provided for the family doctors and the dental offices for the spaces where in any form, maximum 20 persons carry their activity, which activity is directly affected by the measures ordered by public authorities for the prevention and control of the Covid-19 pandemic. The criteria for selecting the beneficiaries of this measure will be detailed in a subsequent government decision.
5. Postponement of submission of the declaration regarding the real beneficiary
The deadline for submitting the declaration regarding the real beneficiary, provided by Law no. 129/2019 for the prevention and combating of money laundering is extended by 3 months from the date of termination of the state of emergency; also filing of the declaration during the state of emergency is suspended.
6. Request of application of force majeure in ongoing contracts of small and medium-sized enterprises
In ongoing contracts (other than rent and utilities) concluded by small or medium-sized enterprises (as defined by law) the force majeure can be invoked against them only after the attempt to renegotiate the contract, to adapt their clauses due to the state of emergency.
Force majeure, within the meaning of the present emergency ordinance, is presumed to be the unpredictable, absolutely invincible and inevitable circumstance that results from an action of the authorities in applying the measures imposed by the prevention and control of the Covid-19 pandemic, which affected the activity of the small and medium enterprise, as such will be attested by the certificate for emergency situation issued by the Ministry of Economy. The presumption may be overturned by the interested party by any means of evidence. The unpredictable character shall be assessed by reference to the moment when the affected legal relationship began.
The measures taken by the authorities in accordance with the normative act establishing the state of emergency will not be deemed unpredictable.
1. Fiscal obligations
For fiscal obligations due as of the date of entry into force of the emergency ordinance (through which all these measures were implemented) and still unpaid upon cessation of the measures in force during the state of emergency, no late payment interest and penalties due as per the Fiscal Procedure Code will be enforced.
This incentive will be maintained for a further 30 days after the state of emergency comes is declared over.
2. Determination of corporate tax advance payments
Corporate taxpayers which apply the annual computation system, and hence perform quarterly advance payments based on prior year’s profits, may pay corporate tax determined based on the taxable profit actually computed for each quarter in 2020. This applies irrespective of whether the fiscal year matches
the calendar year.
3. Incentives for payment of corporate tax and microenterprise tax
Taxpayers subject to the corporate tax regime will benefit from reductions in the amount of tax due for
the first quarter of the year, provided they pay by April 25th, 2020, as follows:
- large taxpayers: 5 %
- small and medium-sized taxpayers: 10 %
This incentive is also available to:
- taxpayers whose tax year differs from the calendar year, provided they pay their tax by the
deadline falling during the period between April 25th and June 25th, 2020; and
- taxpayers who pay corporate tax for specific activities pertaining to the first quarter of 2020.
Taxpayers subject to the microenterprise tax will benefit from a 10% reduction in the amount of tax due
for the first quarter, provided it is paid within the legal deadline (i.e. by April 25th, 2020).
4. Extension of payment deadline for local taxes
Extension of the payment deadline for local taxes on buildings, land and vehicles from 31 March to 30 June 2020 (n.b. the bonuses awarded by the authorities remain in place).
5. Extension for submitting notifications
The deadlines for submitting notifications and requests vis-à-vis the implementation of the restructuring of debts towards the state budget have been postponed until July 31st and October 30th, 2020, respectively.
As a short reminder, taxpayers (i.e. legal entities, with certain exceptions) may benefit from a restructuring of their debts towards the state budget (both principal amounts and late payment interest and penalties) outstanding as of December 31st, 2018, where these were not paid by the date of issue of the tax certificate and where they amount to RON 1 million or more.
6. Measures relating to the rescheduling of tax liabilities
With respect to rescheduled tax obligations, late payment interest and penalties will not be due and the conditions for maintaining the validity of tax instalments are suspended until 30 days after the state of emergency comes to an end.
7. Suspension or non-commencement of the measures of enforced collection
The enforced collection of budgetary receivables, performed by garnishment, summons and by sale of goods at auction, is suspended until 30 days after the state of emergency comes to an end.
8. Payment of VAT at customs on sanitary equipment
Taxpayers performing imports of sanitary goods (including (i) denatured ethanol used in the production of disinfectants and imported by importers in possession of end-used authorisations; and (ii) machines used in the manufacture of protective masks) related to Covid-19 during the state of emergency,
as well as for a period of 30 days after it is declared over, will not pay VAT at customs.
The tax will be included in the VAT return as both input and output VAT.
Separately, holders of fiscal warehouses authorised to produce alcoholic beverages are now allowed to denature ethanol. This is valid for a period ending 15 days after the end of the state of emergency and provided certain conditions are met (e.g. submission of an application to the customs authority).
9. Reimbursement of VAT with subsequent tax audits
During the state of emergency and for a further 30 days after it comes to an end, VAT is to be reimbursed by the authorities with the subsequent performance of tax audits based on risk assessments. There are, however, certain circumstances in which this measure does not apply, as follows:
- Tax audits were initiated prior to 16 April 2020 further to the filing of a VAT reimbursement request by the taxpayer
- The taxpayer’s tax records include actions punishable as crimes
- The tax authorities believe there is a risk of VAT being unduly refunded
- Voluntary liquidation or insolvency procedures were initiated (with the exception of cases where a reorganisation plan has been approved)
- Taxpayers (other than large and medium taxpayers) are requesting either (i) a refund of VAT deriving from a period of more than 12 months; or (ii) a refund of VAT based on their first VAT return filed after registering for VAT purposes.
10. Deadline for submission of 2019 annual financial statements extended to 31 July 2020.
11. Sponsorship by microenterprises
Microenterprises which sponsor public institutions or other bodies of the public authorities may deduct the corresponding amounts from their tax bills, within the legal limitations, even if the beneficiary does not feature on the Register of entities/religious organisations for which tax deductions can be granted.
12.Tax on specific activities
Taxpayers (in possession of a state of emergency certificate and not subject to insolvency procedures) which suspend their business activity either totally or partially during the state of emergency are exempt from the tax on specific activities.
13. Taxation of technical unemployment and childcare allowances
Throughout the state of emergency, the allowances for technical unemployment and for childcare relating to periods when schools are closed are not subject to the tax incentives provided for under the Fiscal Code.
This means, for example, that the salary income tax exemption specific to the construction sector, programming and research & development is no longer available. In addition, exemptions from health insurance contributions and the reduction in pension insurance contributions are no longer granted to employees working in the construction sector. This applies to allowances paid out of the unemployment budget or the state budget as of April 2020.
14. Suspension of statute of limitation period
The statute of limitation period is suspended or not begun until 30 days after the end of the state of emergency with respect to (i) the rights of the tax authorities to impose taxes and to request the enforced collection of taxes; and (ii) the right of taxpayers to request the reimbursement of tax receivables.
15. Tax exemptions for certain benefits in kind
Benefits in kind awarded to individuals who obtain income from salaries as a result of occupying positions essential to the performance of their employer’s field of activity and who are in preventive isolation at work are not subject to income tax and social contributions.
16. Measures relating to gambling
Payment obligations relating to traditional gambling licenses are suspended for the duration of the state of emergency. If payment is made within 30 working days of the end date of the state of emergency, no penalties will be incurred. In addition, applications for a re-authorisation of activity should be submitted within 90 days of the end date of the state of emergency.
17. Increase in maximum value of meal vouchers
Starting from April 1st, 2020, the maximum value of meal vouchers will be increased from RON 15.18 to RON 20.
1. Special measures in the event of temporary interruption or reduction of the employers’ activity.
According to the Labour Code, the employer has the possibility to temporary interrupt or reduce its activity, for economic, technological, structural or other related reasons.
A temporary interruption or reduction of activity at the initiative of the employer results in the suspension
of individual employment contracts without the approval of employees and without terminating employment relations.
During the current state of emergency, for the duration of the suspension of individual employment contracts at the initiative of the employer in case of a temporary interruption of activity, the allowances granted to employees are established to 75% of the basic salary for the position in question and will be paid out from the state budget for unemployment aid, within the limit of 75% of the average national gross salary (i.e. RON 5,429 for 2020).
Calculation of income tax and social security contributions
The allowance is subject to income tax and social security contributions, with the exception of the work insurance contribution (2.25%).
This relief measure covers the following employers and employees, provided they interrupt their activities during the established state of emergency:
- Persons operating a business,
- Persons who have concluded individual conventions of work according to the Law of cooperation,
- Persons falling within the scope of Law of physical education and sport no. 69/2000,
- Natural persons who obtain income exclusively from copyright and related rights,
- Persons employed by another method provided by law than the individual employment contract.
- an employee with several individual employment contracts, and at least one full-time contract being
in force during the period of the state of emergency, is not covered by the above mentioned relief measure.
- an employee with several individual employment contracts, all of which are suspended as a consequence of the state of emergency, is covered by the above mentioned relief measure and is granted in such a case in connection to the individual employment contract with the most advantageous salary rights.
- For the above mentioned beneficiaries, the compensation paid from the state budget is 75% of the gross average wage.
- The procedure for obtaining allowances from the state budget involves the submitting of the following documents by the employer, by email, to the employment agency for the county in which they have their registered offices:
– a signed and dated application by the legal representative;
– an affidavit signed by the legal representative;
– a list of the persons who will benefit from the allowances, undertaken by the legal representative of the employer.
- The payment of the compensation has to be made to the employer’s bank accounts, no later than 15 days from the date of submission of the documentation and the employees are going to receive the payments within a maximum of 3 working days from the date of money transfers on the bank accounts.
2. Special measures provided by Law no. 19/2020 regarding the granting of days off work to parents
Law no. 19/2020 regarding the granting of days off work to parents, in order to allow them to look after their children in the event of the temporary closure of educational establishments, entered into force on March 17th, 2020.
The circumstances under which parents can benefit from days off work include severe weather conditions and other extreme situations as declared by the competent authorities.
These days off will be granted either to only one of the parents or to the sole parent in a single-parent family, the person designated to exercise parental rights or the parent or legal representative of an adult person with disabilities enrolled at an educational establishment, on the basis of justifying documents.
During the present state of emergency, the number of paid days off work granted to one of the parents is equal to the number of working days left until the declared state of emergency comes to an end, with the exception of working days that fall during school holidays, including the working days during school holidays. Pre-school educational centres also fall under the category of educational establishments.
Parents will be able to benefit from these days off work for the entire period for which the authorities decide to keep educational establishments closed, provided the following conditions are cumulatively met:
- They have children of up to 12 years of age, or children with disabilities of up to 18 years of age, enrolled at an educational establishment.
- Their particular job does not allow for homeworking or teleworking.
The provisions of the present Law do not apply to parents where they benefit from other prior disposed social protection measures:
- the parent is on
- childcare leave or
- vacation or unpaid leave
- legal guardians of disabled children
- his/her employment agreement is suspended during the temporary interruption of the activity of the employer
- his/her spouse finds him or herself in any of the aforementioned situations
- the other parent does not earn income subject to income tax according to the Fiscal Code.
These provisions apply to all employees, from both the public and private sector, with the exception of certain sectors (energy, nuclear, sanitary and social assistance centres, telecommunications, radio, public television, public transport, sanitation, and domestic gas, electricity, heat and water supplies), in which case days off work can only be granted with the agreement of the employer.
- The amount of the allowance granted for each day off is the equivalent of 75% of the salary paid for one working day, but no more than the daily equivalent of 75% of the average gross salary in Romania (RON 5,429 for 2020), being subject to income tax and social contributions.
- The allowance is to be paid first by the employer and the net amount received by the parent will then be reimbursed to the employer subsequently (for the period during the closure of educational establishments only) from the Guarantee Fund of the State Budget.
- In order to obtain the reimbursement of amounts paid in the form of allowances, the employer must submit, by email or other means of communication, the application to its local unemployment agency, accompanied by documents, as required by law, within 30 days after the date of payment of the contributions and taxes relating to the allowance.
- The amounts in question shall be reimbursed to the employers within 60 calendar days after the date of submission of the documents.
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