A foreign legal entity is considered to have the place of effective management in Romania if it performs operations that correspond to economic, real and substantial purposes and if at least one of the following conditions is met:
If a foreign legal entity is considered to have the place of effective management in Romania and is considered Romanian resident, it will have, amongst others, to have accounting records in Romania, to register as a corporate income tax-payer, to maintain its residence in Romania for a period of at least one fiscal year.
The reinvested profit exempt from corporate income tax represents the cumulated gross accounting profit from the beginning of the year obtained until the quarter / year of commissioning of the eligible assets. The corporate income tax exemption related to the performed investments is granted within the limit of the cumulated corporate income tax computed from the beginning of the year until the quarter / year of putting the assets into operation.
The expenses incurred by the employer related to the telework activity of the employees who work in this regime, according to the law, are deductible expenses in the computation of the corporate income tax.
Expenses incurred as a result of transactions with a person located in a state included in the EU List of non-cooperating jurisdictions for tax purposes are non-deductible in the computation of the corporate income tax. The list can be accessed here.
Provisions that meet the mentioned conditions (e.g. the receivables are uncollected in a period exceeding 270 days from the due date) will be fully deductible in the computation of corporate income tax (now they are 30% deductible).
Note: by GEO 226 of December 31, 2020, this provision becomes applicable starting with January 1, 2022.
The fiscal group for corporate income tax purposes consists of at least two of the following entities:
The period of application of the fiscal consolidation system is of 5 fiscal years and is applied starting with the next fiscal year following the submission of the application (hence, it can be applied starting with 2022). The system is optional and is required to be communicated at least 60 days before the start of the period for which the fiscal consolidation is requested.
Certain cumulative conditions must be met, such as the fulfillment of the holding condition for an uninterrupted period of one year, prior to the beginning of the fiscal consolidation period.
A legal person will be appointed for computing the consolidated fiscal result of the fiscal group, submitting the corporate income tax return and paying the corporate income tax on behalf of the group.
Each member of the fiscal group determines the fiscal result individually, and the consolidated fiscal result of the fiscal group is determined quarterly / annually by summing the fiscal results determined individually by each member of the fiscal group. The corporate income tax is calculated by applying the rate of 16% on the positive consolidated fiscal result of the group.
The deductions / exemptions determined by each member and communicated to the responsible legal entity are taken into account when computing the corporate income tax due by the fiscal group. These amounts are deducted up to the corporate income tax due by the fiscal group.
Each member of the fiscal group has the obligation to prepare the transfer pricing file which will include both the transactions carried out with the members of the fiscal group, as well as with the affiliated entities outside the fiscal group.
Special rules are provided both for entering / leaving the fiscal group and for cases in which the group no longer meets the mandatory conditions during the 5 years.
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