The Romanian Government has issued an ordinance concerning the taxation of revenues received by Romanian representative offices. In future the revenues of representative office would be taxed at 38%.
According to the decision, the revenues of representative offices are "the differences between the commissions received by the representative offices from the companies they represent in Romania and the expenses incurred in their usual activities (salaries, rent, utilities, phones, fax, maintenance, and others)". It would appear therefore that as regards the calculation of the taxable income, the new ordinance does not technically change anything.
However, Ordinance 26 significantly increases the minimum annual taxable revenue for the representative offices. The new minimum revenues are as follows (together with corresponding tax liability):
Number of employees Annual taxable revenue Profit tax ( @38%) 1 -2 14,800,000 5,624,000 3- 5 45,800,000 17,404,000 6 -8 89,700,000 34,086,000 over 8 182,200,000 69,239,000
Secretaries, drivers, qualified workers, typists and others are not included in this calculation.
Profit tax returns should be submitted by 20 January of each fiscal year. Profit tax is prepaid based on previous year profit tax liability. The profit tax should be paid in four equal installments, by 28 (29) February, 15 May, 15 August and 15 November.
The representative offices authorised during the year have the obligation to submit the first tax return within 15 days from the date the authorisation is issued.
Penalties and fines are imposed for late submission of return and late payment of profit tax, as follows:
- 1% of the tax owed, for delays in submitting the profit tax return of up to 30 days;
- 2% of the tax owed for delays in submitting the profits tax return for more than 30 days;
- 3% fine for partial payment of the tax;
- 0.12% penalties for each day of delay of payment.
For detailed information please contact:
Ron Barden or Anca Troaca-Dragoman Price Waterhouse Romania Strada Vasile Conta nr 3-5 Scara C Etaj 3 Apt 72 Bucuresti 2 Romania Telephone: 40-1-311-2455 Fax: 40-1-613-4174
DISCLAIMER
The above information represents a brief summary of the legislation mentioned therein and is not intended to be advice on any particular matter. Price Waterhouse expressly disclaims any liability towards any person in respect of any action or omission in reliance of the contents of this publication.
