Last updated: 5 November 2015
Last week, we made a brief presentation of the changes brought to the New Fiscal Code by a Government Emergency Ordinance project (which was meanwhile published in the Official Journal no. 817 of 3.11.2015), regarding the taxation of revenues obtained by microenterprises and of dividends, as well as regarding the sanctions applicable to entities that fail to provide documents to the tax authorities.
This week, we tackle the changes regarding the reduction of VAT applicable to water supply, of the tax on revenues obtained in Romania by non-residents, as well as the compulsory social security contributions.
REDUCTION OF VAT FOR WATER SUPPLY
Taking into account the importance of drinkable water in household consumption, as well as the importance of irrigation water for the development of Romanian agriculture, the new legal text provides the reduction from 20% to 9%, as of January 1st 2015, of the VAT applicable to drinkable water and irrigation water supply.
Furthermore, the 9% VAT will mainly apply, as of January 1st 2016, to food product supply (including beverages, except for alcoholic beverages).
The reduction of VAT applicable to drinkable water and irrigation water for agriculture creates the basis for a uniform approach of VAT applicable to food products, as water is considered a food product.
TAX ON REVENUES OBTAINED IN ROMANIAN BY NON-RESIDENTS
In accordance with the Fiscal Code in force, the tax due by non-residents for the taxable revenues they obtain in Romania is 16% (also applicable to dividends received from a resident entity, on condition that the Double Taxation Convention does not contain more favorable provisions). Further to the new amendments, the 16% tax will be reduced to 5% from January 1st 2016, when the New Fiscal Code will become
applicable.
Please note that we covered the subject on dividends last week; however, our article only referred to the reduction of the tax, from 16% to 5%, as of January 1 st 2016, only for dividends paid by a Romanian legal person to another legal person. Nevertheless, both the Fiscal Code in force now, and the New Fiscal Code, applicable as of January 1st 2016 provide certain situations when the tax on dividends is not due (provided that certain conditions are met).
EXEMPTION FROM THE PAYMENT OF HEALTH INSURANCE
Pursuant to article 154 paragraph 2 of the New Fiscal Code (as amended by the Government Emergency Ordinance), certain persons are exempted from the payment of the health insurance contribution.
More precisely, natural persons who benefit from a valid health-maternity insurance within the social security system of another EU, EEC or Swiss Confederation member State or of States with which Romanian has concluded bilateral social security agreements containing provisions regarding the health-maternity insurance benefit from this exemption. In order to benefit from this exemption in Romania, the concerned persons must prove that they hold a valid insurance elsewhere.
We are reminding you that, in Romania, the health insurance contribution (CASS) is 5.5% of the minimum gross salary (at present, the minimum gross salary is 1,050 Lei/month).