Tax on meal vouchers, interest and compensations, solidarity taxes as of July 1

These are the solutions found by the executive to increase budget revenue. Intellectual property rights will also be taxed more.

Taxes on meal vouchers, on the interest for bank deposit accounts in progress, on specific compensations – are only a few of the latest changes operated on the Fiscal Code 2010 and adopted by the emergency ordinance to enter into effect on July 1, according to information posted on the website of the Ministry of Public Finance. The aim of the normative act is to ‘increase budget revenues whose level has been severely affected by the economic and financial crisis.’

Individuals who opened term deposit accounts before July 1 will only pay 16 per cent tax on the interest calculated from July 1 until maturity. After July 1, all the income from bank deposits– either time deposits or demand deposits – will be subject to 16 per cent tax.

From the draft emergency ordinance recitals we learn that the following incomes are not taxed at the moment: demand deposits, current accounts, term deposits and or savings instruments and bonified deposit interest in the collective housing saving and borrowing system. The tax on income from bank interest was exempted in 2009 and the measure was expanded to cover 2010 as well. The government expects to raise a total of RON 217 M from the new tax on bank interest.

The modifications brought to the Fiscal Code also indicate that meal, gift, nursery and holiday vouchers, as well as compensations will be taxed as of July 2010.

From the same date onwards, the quota of deductible expenses calculated for intellectual property rights will be cut to 20 per cent of the gross income as compared to the current 40 per cent. Te deductibility quota for income made from the creation of works of monumental art will be reduced from 50 per cent to 25 per cent of the gross income.

From July 1 onwards, gambling winnings will be taxed by 25 per cent applied to the net income calculated for the winnings obtained on the same day with the same organiser or payer.

Provisions in the Physical Education Law allowing professional athletes party to a civil agreement with a sporting organisation to subscribe to a public and/or private pension scheme will also be repealed.

People who own several homes that are not rented will have to pay a ‘solidarity tax’ to the local budget before September 30, in addition to the regular council tax, the amount being from 50 per cent to 200 per cent of the current tax. The state hopes to collect RON 31 bln from this measure in 2010. The tax will have to be paid to the local budget before September 30, 2010 inclusive.

The initial Fiscal Code amending draft provided for a 30 per cent council tax increase for the first home owned except the one where the person lives, of 100 per cent for the second one and of 200 per cent for the third and following ones.

On the other hand, the government expects to raise over RON 260 M from the privatisation of companies in the portfolio of the State Assets Resolution Authority (AVAS), representing over 12 times more than what AVAS raised from privatisations in 2009, according to the institution’s budget approved by the Executive.

Self-employed work taxed if income is assimilated to salary

Self-employed workers will share the burden of the social security subscriptions and taxes with the companies they work for if the money received is assimilated to income from salary, according to a draft emergency government ordinance changing the Fiscal Code.

In the case of paying companies that are insolvent or that fail to pay the subscriptions and whose assets are not enough to cover owed sums, the recipient of the money from self-employed activities also including intellectual property rights, re-considered as salary income, may be made pay the total dues that may be as high as 80 per cent of the income made. For an annual income of RON 30,000, a beneficiary may owe the state nearly RON 25,000.

Udrea: VAT and flat rate not at risk

Regional Development and Tourism Minister Elena Udrea said during a TV programme, yesterday, that the government was not considering an increase of the value-added tax or of the flat rate tax. She thinks the measures taken by the government to cut wages in the public sector by 25 per cent and pensions by 15 per cent are enough.

“If we cannot implement the measures we have taken, any other measures will have to be made by another government and not by us,” Udrea said. She denied existing discussions in the government on a new agreement with the International Monetary Fund. “When the results of the measures taken are visible, if they have the anticipated effect, we won’t need to have this discussion,” Udrea said. The minister also stated that the entire political class was responsible for the situation Romania is now in.

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