G.E.O 70/ 2020 - new tax measures on the sale of government securities
New tax measures on the sale of government securities
On 14 May 2020, Government Emergency Ordinance (GEO) no. 70, which adopted specific tax regulations to limit the deductibility of losses generated by the assignment of receivables, was published in the Official Journal of Romania. The fiscal measures set out in this new emergency ordinance exempt government securities and obligations from the provisions of Art. 25, para. (10) of the Fiscal Code on limiting the losses generated by the assignment of receivables.
GEO no. 70 introduces a new paragraph into the Fiscal Code in Art. 25, which expressly regulates the tax treatment applicable to transfers of government securities and bonds, as follows: „The provisions of par. (10) do not apply in the case of transfers of government securities, bonds and other debt instruments that give the holder a contractual right to collect in cash, the expenses recorded from these transfers being deductible when calculating the tax result.”
This ordinance is applicable from 14 May 2020, and its provisions are not retroactive. Thus we consider that for the fiscal year 2020, taxpayers will apply differentiated tax provisions on the assignment of government securities made during 2020, as follows:
- For assignments of receivables made between 1 January and 13 May 2020, the applicable tax treatment is that set out in Art. 25 para. (10) of the Fiscal Code, whereby the net loss resulting from the assignment is deductible up to 30% of its value, regardless of the type of claim (government securities, bonds or trade receivables).
- For assignments of receivables made starting 14 May 2020, the applicable tax treatment will be that introduced by the provisions of GEO 70/2020, and the expenses registered from the assignments of government securities will be fully deductible when calculating the fiscal result.
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