On the background of creation of a unitary fiscal system at the European Union's level, the legislative framework in Romania on the financial-fiscal field underwent a series of amendments with a view to achieve the objectives related to the extension of the taxation basis, to taking over the directives in the field from the European Union's legislation and to improvement and simplification of the regulatory environment. Next we shall try to summarize the main legislative amendments, by type of tax and fee entered into force after 1 January 2007 that directly affect both the business environment in Romania and every single citizen

Godeanu, Ionela-Claudia

Paliu-Popa, Lucia

Munich Personal RePEc Archive

MPRA
Munich Personal RePEc Archive
Fiscal Amendments Required by
Romania’s Accession to the European
Union
Lucia Paliu-Popa and Ionela-Claudia Godeanu
University of Constantin Brancusi Targu Jiu, Romania
4. October 2007
Online at http://mpra.ub.uni-muenchen.de/12187/
MPRA Paper No. 12187, posted 16. December 2008 07:32 UTC
FISCAL AMENDMENTS REQUIRED BY ROMANIA'S 
ACCESSION TO THE EUROPEAN UNION 
Paliu -Popa Lucia1, Godeanu Ionela -Claudia2
 
Key words:  amendments, accession, European Union, fee, tax, Member State, intra-
Community acquisition, intra-Community delivery 
Abstract: On the background of creation of a unitary fiscal system at the European 
Union's level, the legislative framework in Romania on the financial-fiscal field underwent a 
series of amendments with a view to achieve the objectives related to the extension of the 
taxation basis, to taking over the directives in the field from the European Union's legislation and 
to improvement and simplification of the regulatory environment. Next we shall try to summarize 
the main legislative amendments, by type of tax and fee entered into force after 1 January 2007 
that directly affect both the business environment in Romania and every single citizen. 
 
The first fiscal harmonization measures at European level were taken in the field of 
indirect taxes, as the purpose of harmonization is more difficult to achieve in the case of direct 
taxes, because at the European Union's level there are economies under different development 
stages and with specific aspects from one state to another. 
Therefore, the most important modifications affected the economic agents registered as 
value-added tax payers. In this field, the significant measure is represented by opening of 
customs barriers between European Union Member States, by abolishing border controls within 
the EU on goods. 
The export of goods from Romania ⋅ to another European Union Member State is currently 
referred to as „intra-Community delivery of goods”, while the import of goods from another 
Member State is referred to as „intra-Community acquisition of goods”. 
 Within the Union there is a series of regulations that stipulate the conditions under which 
the Member States shall exchange information in order to avoid fiscal fraud in the field of value-
added tax. 
In this respect the specific legislation settles the binding character of submitting quarterly 
recapitulative statements regarding the intra-Community acquisitions and deliveries, in order to 
allow the Member States to control the operations performed. 
From the fiscal point of view, we cannot speak of intra-Community delivery if there is no 
intra-Community transport of the respective goods that is regulated differently than the internal 
transport of goods from the Union's Member States and third countries. 
Unlike the international transport of goods afferent to an import or export, the intra-
Community transport is not value-added tax exempted except in the case of customer's 
communication of the registration code for VAT purposes valid in the origin country.  
                                                                          
1 Paliu-Popa Lucia – "Constantin Brâncuşi" University of Târgu Jiu, univers_cont@yahoo.com
2 Godeanu Ionela-Claudia - "Constantin Brâncuşi" University of Târgu Jiu, claudiagod81@yahoo.com
 
The registration code for VAT purposes issued by Romania is made of the prefix „RO” 
followed by the unique registration code. Every contributor who wants to perform intra-
Community operations must have a valid registration code for VAT purposes issued by the 
National Agency for Fiscal Administration, with the purpose of invoicing without value-added 
tax by the service providers and application of reverse charge by the customer from another 
Member State, provided that he is also registered for VAT purposes. 
Since the beginning of this year, the utilization of fiscal invoices with special regime is no 
longer mandatory and goods circulate accompanied by invoices issued by every Member State 
which however have to be accepted in the state of the intra-Community acquisition. 
Amendments in the value-added tax also had consequences in the real estate field for the 
following reasons: 
9 the leasing of immovable property is exempt from VAT payment; 
9 deliveries of non-building land and old immovable goods are exempt from VAT 
payment, however the adjustment of the VAT deduction right exerted for the 
respective good is compulsory; 
9 change of the initial destination of the immovable property, respectively its 
utilization within a sector which gives right of deduction in a certain extent 
unlike the initial deduction shall be accompanied by the binding force to adjust 
the right of deduction within a period of adjustment which in Romania was set 
for 20 years. 
As from Romania's accession, the value-added tax exemptions that were not in line with 
the Community acquis were eliminated for: research-development activities, income obtained by 
Transferable Securities Companies for administration and deposit of shares, equity securities, 
debt securities, veterinary medical care and fee for commodity exchange transactions. 
Under these amendments came the taxable economic agents from Romania, with a 
turnover higher than the equivalent in lei of EUR 35 000, the others may request the exemption 
from VAT payment for paid delivery of goods or supply of services. 
The measures concerning the modification of the taxation basis for the calculation of the 
income tax are: 
9 extension of the taxation basis by limiting the categories of deductible  reserves 
for the banking companies, mortgage credit companies, insurance and 
reinsurance companies, credit institutions and by eliminating some fiscal 
facilities included in special regulatory actions which do not comply with EU 
principles; 
9 elimination of impediments occurred when establishing the deduction of some 
expenses for accommodation, transport, daily allowance etc,; 
9 the annual tax with anticipated quarterly payments within one year was 
introduced for the banking companies with headquarters in Romania or for the 
branch offices of foreign banks from Romania 
For a more efficient administration and clarification of the income taxation procedure the 
following amendments were made: 
9 elimination of salary tax exemption as a consequence of the programming-
informatics activity; 
9 retention of a tax during the year for income from securities transactions and 
from the forward operations of currency sale and purchase on contract basis and 
16 % tax adjustment on the basis of the annual net income; 
9 extension of the taxation basis by including in the income from agricultural 
activities and the income from capitalization of agricultural products obtained 
after harvest. 
With reference to the micro enterprises income tax its level was set to 2% for the year 
2007, expected to rise to 2,5% for the year 2008 and to3% for the year 2009. 
Firms that achieve more than 50% of the total income obtained from assistance and 
management services are no longer considered micro enterprises; this measure also applies to the 
entities that obtain income higher than EUR 100 000 in one year and that are liable for income 
tax payment by recalculation of this fiscal duty on the basis of aggregate annual income, from the 
beginning of the year. 
Significant amendments were made in the field of excise duties, among which there are: 
9 introduction of excise duties for natural gas used as fuel for heating, for 
commercial purpose; 
9 reduction of excise duties for pure alcohol; 
9 increase of excise duties for: leaded gas, fuel oil, natural gas used as fuel, 
electricity used for commercial and non-commercial purpose; 
9 exemption from excise duties payment for biocarburants; 
9 exemption from excise duties payment for engine fuels used for dredging 
operations in navigable watercourses and in harbours; 
9 exemption from excise duties payment for engine fuels used in the field of 
production, development, testing and maintenance of aircraft and ships; 
9 exemption from excise duties payment for electrical energy produced by 
renewable energy sources; 
9 elimination of excise duty for air-conditioners and reduction of those for jewels 
and coffee. 
For the calculation of excise duties expressed in euros, there shall be used the exchange 
rate communicated by the National Bank of Romania for one year, communicated in the first 
working day of October of the preceding year. 
With reference to local taxes and fees we shall remind the following amendments: 
9 the collection of local taxes and fees is made in 2 terms, in equal rates, until 31 
March and until 30 September; 
9 increase of tax on sport and pleasure boats; 
9 the tax on buildings with a surface over 150 square meters shall be increased 
with 5% for each 50 meters; 
9 higher special matriculation tax for non-Euro vehicles or for vehicles that satisfy 
the Euro 1, Euro 2 or Euro 3 emissions standards, taking into account the 
cylindrical capacity and length of service of the vehicle, however the tax level is 
maintained for the Euro 4 vehicles; 
9 the special tax shall be applied at the first matriculation in Romania of new and 
second-hand cars, as from 2007, when the vehicle  excise duties shall be 
eliminated (the special tax is higher for the new cars, on the average with about 
20% than the actual level of excise duties).  
The fiscal amendments that were made considered the similar existing regulations at the 
European Union's level, the correlation of macro-economic indicators with the requirements of 
the business environment and also the budgetary construction and their entry into force aimed to 
perform the necessary adjustments required in the field of fiscal legislation. 
 
 
Bibliography: 
1.    ***    – LAW NO. 571/2003 ON THE FISCAL CODE, with its subsequent amendments 
and completions 


Fiscal Amendments Required by Romania's Accession to the European Union

Munich RePEc Personal Archive

MPRAMunich Personal RePEc ArchiveFiscal Amendments Required byRomania’s Accession to the EuropeanUnionLucia Paliu-Popa and Ionela-Claudia GodeanuUniversity of Constantin Brancusi Targu Jiu, Romania4. October 2007Online at http://mpra.ub.uni-muenchen.de/12187/MPRA Paper No. 12187, posted 16. December 2008 07:32 UTCFISCAL AMENDMENTS REQUIRED BY ROMANIA'S ACCESSION TO THE EUROPEAN UNION Paliu -Popa Lucia1, Godeanu Ionela -Claudia2 Key words:  amendments, accession, European Union, fee, tax, Member State, intra-Community acquisition, intra-Community delivery Abstract: On the background of creation of a unitary fiscal system at the European Union's level, the legislative framework in Romania on the financial-fiscal field underwent a series of amendments with a view to achieve the objectives related to the extension of the taxation basis, to taking over the directives in the field from the European Union's legislation and to improvement and simplification of the regulatory environment. Next we shall try to summarize the main legislative amendments, by type of tax and fee entered into force after 1 January 2007 that directly affect both the business environment in Romania and every single citizen.  The first fiscal harmonization measures at European level were taken in the field of indirect taxes, as the purpose of harmonization is more difficult to achieve in the case of direct taxes, because at the European Union's level there are economies under different development stages and with specific aspects from one state to another. Therefore, the most important modifications affected the economic agents registered as value-added tax payers. In this field, the significant measure is represented by opening of customs barriers between European Union Member States, by abolishing border controls within the EU on goods. The export of goods from Romania ⋅ to another European Union Member State is currently referred to as „intra-Community delivery of goods”, while the import of goods from another Member State is referred to as „intra-Community acquisition of goods”.  Within the Union there is a series of regulations that stipulate the conditions under which the Member States shall exchange information in order to avoid fiscal fraud in the field of value-added tax. In this respect the specific legislation settles the binding character of submitting quarterly recapitulative statements regarding the intra-Community acquisitions and deliveries, in order to allow the Member States to control the operations performed. From the fiscal point of view, we cannot speak of intra-Community delivery if there is no intra-Community transport of the respective goods that is regulated differently than the internal transport of goods from the Union's Member States and third countries. Unlike the international transport of goods afferent to an import or export, the intra-Community transport is not value-added tax exempted except in the case of customer's communication of the registration code for VAT purposes valid in the origin country.                                                                            1 Paliu-Popa Lucia – "Constantin Brâncuşi" University of Târgu Jiu, univers_cont@yahoo.com2 Godeanu Ionela-Claudia - "Constantin Brâncuşi" University of Târgu Jiu, claudiagod81@yahoo.com The registration code for VAT purposes issued by Romania is made of the prefix „RO” followed by the unique registration code. Every contributor who wants to perform intra-Community operations must have a valid registration code for VAT purposes issued by the National Agency for Fiscal Administration, with the purpose of invoicing without value-added tax by the service providers and application of reverse charge by the customer from another Member State, provided that he is also registered for VAT purposes. Since the beginning of this year, the utilization of fiscal invoices with special regime is no longer mandatory and goods circulate accompanied by invoices issued by every Member State which however have to be accepted in the state of the intra-Community acquisition. Amendments in the value-added tax also had consequences in the real estate field for the following reasons: 9 the leasing of immovable property is exempt from VAT payment; 9 deliveries of non-building land and old immovable goods are exempt from VAT payment, however the adjustment of the VAT deduction right exerted for the respective good is compulsory; 9 change of the initial destination of the immovable property, respectively its utilization within a sector which gives right of deduction in a certain extent unlike the initial deduction shall be accompanied by the binding force to adjust the right of deduction within a period of adjustment which in Romania was set for 20 years. As from Romania's accession, the value-added tax exemptions that were not in line with the Community acquis were eliminated for: research-development activities, income obtained by Transferable Securities Companies for administration and deposit of shares, equity securities, debt securities, veterinary medical care and fee for commodity exchange transactions. Under these amendments came the taxable economic agents from Romania, with a turnover higher than the equivalent in lei of EUR 35 000, the others may request the exemption from VAT payment for paid delivery of goods or supply of services. The measures concerning the modification of the taxation basis for the calculation of the income tax are: 9 extension of the taxation basis by limiting the categories of deductible  reserves for the banking companies, mortgage credit companies, insurance and reinsurance companies, credit institutions and by eliminating some fiscal facilities included in special regulatory actions which do not comply with EU principles; 9 elimination of impediments occurred when establishing the deduction of some expenses for accommodation, transport, daily allowance etc,; 9 the annual tax with anticipated quarterly payments within one year was introduced for the banking companies with headquarters in Romania or for the branch offices of foreign banks from Romania For a more efficient administration and clarification of the income taxation procedure the following amendments were made: 9 elimination of salary tax exemption as a consequence of the programming-informatics activity; 9 retention of a tax during the year for income from securities transactions and from the forward operations of currency sale and purchase on contract basis and 16 % tax adjustment on the basis of the annual net income; 9 extension of the taxation basis by including in the income from agricultural activities and the income from capitalization of agricultural products obtained after harvest. With reference to the micro enterprises income tax its level was set to 2% for the year 2007, expected to rise to 2,5% for the year 2008 and to3% for the year 2009. Firms that achieve more than 50% of the total income obtained from assistance and management services are no longer considered micro enterprises; this measure also applies to the entities that obtain income higher than EUR 100 000 in one year and that are liable for income tax payment by recalculation of this fiscal duty on the basis of aggregate annual income, from the beginning of the year. Significant amendments were made in the field of excise duties, among which there are: 9 introduction of excise duties for natural gas used as fuel for heating, for commercial purpose; 9 reduction of excise duties for pure alcohol; 9 increase of excise duties for: leaded gas, fuel oil, natural gas used as fuel, electricity used for commercial and non-commercial purpose; 9 exemption from excise duties payment for biocarburants; 9 exemption from excise duties payment for engine fuels used for dredging operations in navigable watercourses and in harbours; 9 exemption from excise duties payment for engine fuels used in the field of production, development, testing and maintenance of aircraft and ships; 9 exemption from excise duties payment for electrical energy produced by renewable energy sources; 9 elimination of excise duty for air-conditioners and reduction of those for jewels and coffee. For the calculation of excise duties expressed in euros, there shall be used the exchange rate communicated by the National Bank of Romania for one year, communicated in the first working day of October of the preceding year. With reference to local taxes and fees we shall remind the following amendments: 9 the collection of local taxes and fees is made in 2 terms, in equal rates, until 31 March and until 30 September; 9 increase of tax on sport and pleasure boats; 9 the tax on buildings with a surface over 150 square meters shall be increased with 5% for each 50 meters; 9 higher special matriculation tax for non-Euro vehicles or for vehicles that satisfy the Euro 1, Euro 2 or Euro 3 emissions standards, taking into account the cylindrical capacity and length of service of the vehicle, however the tax level is maintained for the Euro 4 vehicles; 9 the special tax shall be applied at the first matriculation in Romania of new and second-hand cars, as from 2007, when the vehicle  excise duties shall be eliminated (the special tax is higher for the new cars, on the average with about 20% than the actual level of excise duties).  The fiscal amendments that were made considered the similar existing regulations at the European Union's level, the correlation of macro-economic indicators with the requirements of the business environment and also the budgetary construction and their entry into force aimed to perform the necessary adjustments required in the field of fiscal legislation.   Bibliography: 1.    ***    – LAW NO. 571/2003 ON THE FISCAL CODE, with its subsequent amendments and completions 

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https://mpra.ub.uni-muenchen.de/12187/1/MPRA_paper_12187.pdf

Fiscal Amendments Required by Romania's Accession to the European Union

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