Real estate developers and individual agricultural producers to benefit from tax amnesty
Real estate developers to benefit from tax amnesty
The main beneficiaries of the tax amnesty recently passed into legislation by the Romanian Parliament are individuals who have obtained revenues from the transfer of real estate properties for tax periods up to 1 June 2017, if their income was or could have been requalified for tax purposes as income obtained from independent activities (hence requiring the payment of income tax and social security contributions).
All individuals who have carried out agricultural production activities for tax periods up to 31 December 2016 will also benefit from this amnesty, if they have been (or could be) required to pay VAT due to exceeding the exemption threshold stated in the Fiscal Code.
Law 29/2018 on the cancellation of certain fiscal obligations, was published in the Official Journal of Romania (no.52), on 18 January 2018. The law is a parliamentary initiative, on which the Ministry of Public Finance has expressed a negative opinion, which it has maintained throughout the whole legislative process. The law took effect on 21 January 2018. The application norms will be issued within 30 days of the date when the law entered into force, by an order of the ANAF President.
What is the reason for the law?
The explanatory memorandum states that the reason for the tax amnesty is the need to correct situations which have arisen in practice, due to the non-uniform application of the relevant legislation by the tax authorities. Contradictions in the interpretation and application of tax law have also had the effect of double taxation.
Who are the beneficiaries of the tax amnesty?
The following categories of taxpayers benefit from the amnesty:
- Individuals who have obtained income from the transfer of real estate properties throughout all fiscal periods until 1 June 2017 - generally referred to as "Real Estate Developers".
- Individuals, authorized individuals, individual enterprises and family businesses which have carried out agricultural production activities for tax periods up to 31 December 2016 - hereinafter referred to as "Individual agricultural producers".
What tax obligations are being cancelled?
- In the case of real estate developers, the income tax and social contributions, as well as related interest and late payment penalties, set by the tax authority as a result of requalification as income from self-employed income, are cancelled. For periods prior to June 1, 2017, the tax authorities lose the right to tax this income.
- In the case of individual agricultural producers, overdue VAT and the related interest and late payment penalties, established by the tax authorities as a result of the taxpayer exceeding the exemption threshold, are cancelled. For periods prior to 31 December 2016, the tax authorities lose the right to tax this income.
- Both for real estate developers and for individual agricultural producers, tax decisions which have already been issued are automatically cancelled. Decisions which have been issued, but which have not yet been notified to taxpayers at the time of the entry into force of the law will no longer be sent. Taxpayers who benefit from this amnesty, and which have already made payments, will have the right to reimbursement.
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