Amendments to the Fiscal Code – construction companies and the treatment of value tickets

Starting with January 2019, Government Emergency Ordinance 114/2018 has brought several amendments to the Fiscal Code, out of which the most important concern the construction companies and the treatment of value tickets.

1. Changes regarding the taxation of construction companies

The following fiscal incentives are valid for the period 2019-2028 for employees of construction companies / such companies:

– salary tax exemption

– reduced social contribution from 25% to 21.25% (the published legislation does not mention explicitly the reduction, so a rectification should be expected)

– exemption from health contribution – the employees are insured for health services without the payment of the contribution

– the employers are exempted for social contribution for particular working conditions, respectively special working conditions

– reduced work insurance contribution from 2.25% to 0.3375%.

The conditions to be fulfilled by these employees / employers for the application of the incentives are:

a) the employers carry out activities in the construction sector which include:

(i) construction activity defined by NACE code 41.42.43 – section F – Construction;

(ii) production of building materials, defined by the following NACE codes: 2312 – Processing and shaping of flat glass; 2331 – Manufacture of ceramic tiles and slabs; 2332 – Manufacture of bricks, tiles and other construction products of burned clay; 2361 – Manufacture of concrete products for construction; 2362 – Manufacture of plaster products for construction; 2363 – Manufacture of concrete; 2364 – Manufacture of mortar; 2369 – Manufacture of other articles of concrete, cement and plaster; 2370 – Cutting, shaping and finishing of stone; 2223 – Manufacture of articles of plastics for construction; 1623 – Manufacture of other builders’ carpentry; 2512 – Manufacture of metal doors and windows; 2511 – Manufacture of metal structures and parts of metal structures; 0811 – Extraction of ornamental and building stone, extraction of limestone, gypsum, chalk and slate; 0812 – Gravel and sand extraction; 711 – Architectural, engineering and technical consultancy services;

b) the employers achieve the turnover from the above activities within the limit of at least 80% of the total turnover, calculated cumulatively from the beginning of the year, including the month in which the exemption applies;

c) the salary monthly gross incomes are between 3,000 and 30,000 lei per month inclusive and are obtained on the basis of the individual labor agreement;

d) the exemption is applicable on the basis of further instructions (to be issued) and Declaration 112 represents a declaration on own responsibility for the fulfillment of the above conditions.

Separately, for the period 01.01 – 31.12.2019, the minimum gross monthly salary for construction workers (for the above-mentioned areas of activity) is of RON 3,000, regardless of the positions held by the respective employees (e.g. accountant or secretary), the new legislation making no restrictions in this regard.

2. The taxation of value tickets

The fiscal treatment of the value tickets granted to employees has been unified, so that gift tickets, meal tickets, holiday vouchers, nursery vouchers and cultural vouchers are subject to 10% income tax, but they are not included in the computation of social contributions.

3. Extension of the validity of VAT simplification measures

The application of VAT simplification measures was extended until June 30, 2022 for certain operations (such as cereal delivery), as the supplier issues the invoice without VAT, whereas the buyer registers the VAT through the reverse charge mechanism.

4. Separately from the above modifications of the Fiscal Code, the electrical energy license holders will owe a contribution of 2% from their turnover.

5. Also in addition to the fiscal modifications, the banking institutions will owe  a tax on their financial assets in case the quarterly ROBOR (Romanian inter-banking interest rate) will exceed 2%. The tax on the financial assets will be computed by applying quarterly a rate to the financial assets of the banking institution as follows: a rate of 0.1 % if the quarterly ROBOR is between 2% and 2.5%; a rate of 0.2 % if the quarterly ROBOR is between 2.5% and 3%; a rate of 0.3 % if the quarterly ROBOR is between 3% and 3.5%; a rate of 0.4 % if the quarterly ROBOR is between 3.5% and 4%; a rate of 0.5 % if the quarterly ROBOR is above 4%.