Law 296/2023 on some fiscal and budgetary measures to ensure Romania's long-term financial sustainability was published in the Official Gazette no. 977/27.10.2023.

I. Profit tax

1.1 Minimum tax of 1% of the turnover (for large companies)

Taxpayers who register in the previous year a turnover of over 50,000,000 euros, and who in the calculation year determine a profit tax, accumulated from the beginning of the fiscal year/amended fiscal year until the end of the quarter/calculation year, which is lower than the minimum turnover tax established according to the provisions below, are obliged to pay profit tax at the level of the minimum turnover tax.

The previous year's turnover is the difference between total revenues (VT) and revenues subtracted from total revenues (Vs).

The minimum turnover tax is determined as follows:

IMCA = 1% x (VT – Vs – I - A), where the indicators have the following meaning:

IMCA - minimum turnover tax, determined cumulatively from the beginning of the fiscal year/ amended fiscal year to the end of the quarter/calculation year.

VT - total revenues, determined cumulatively from the beginning of the fiscal year/amended fiscal year to the end of the quarter/calculation year, as the case may be;

Vs - revenues that are subtracted from total revenues, determined cumulatively from the beginning of the fiscal year/amended fiscal year to the end of the quarter/calculation year, as the case may be, representing:

1. non-taxable income;
2. revenues related to product inventory costs;
3. revenues related to the costs of services in progress;
4. revenues from the production of tangible and intangible assets, which are not contained in indicator I;
5. revenues from subsidies;
6. income from compensations, from insurance/reinsurance companies, for damages caused to goods of the nature of stocks or own tangible assets;
7. revenues representing excise duties that were simultaneously reflected in expense accounts;

I - the value of fixed assets in progress incurred by the purchase/production of assets, recorded in the accounting records starting from January 1 ^st, 2024, respectively starting from the first day of the amended fiscal year that begins in 2024;

A - accounting depreciation at the level of historical cost related to assets purchased/produced starting from January 1^st, 2024/the first day of the amended fiscal year that begins in 2024.

Effective date: January 1^st, 2024

1.2 Additional tax for credit institutions - Romanian legal entities and Romanian branches of credit institutions - foreign legal entities

1. 2%, for the period January 1^st, 2024 - December 31 ^st, 2025, inclusive;
2. 1%, starting from January 1^st, 2026.

Effective date: January 1^st, 2024

1.3 Additional tax for legal entities carrying out activities in the oil and natural gas sectors

Legal entities that carry out activities in the oil and natural gas sectors, established by order of the Minister of Finance, that register in the previous year a turnover of over 50,000,000 euros, owe in addition to the profit tax a specific tax on the turnover calculated according to the algorithm below. The turnover of the previous year represents the difference between the total revenues (VT) and the revenues that are subtracted from the total revenues (Vs).

The specific turnover tax is determined as follows:

ICAS = 0.5% x (VT - Vs - I - A), where the indicators have the following meaning:

ICAS - specific turnover tax, determined cumulatively from the beginning of the fiscal year/amended fiscal year until the end of the quarter/calculation year;

VT - total revenues, determined cumulatively from the beginning of the fiscal year/amended fiscal year until the end of the quarter/calculation year, as the case may be;

Vs - revenues that are subtracted from total revenues, determined cumulatively from the beginning of the fiscal year/amended fiscal year until the end of the quarter/calculation year, as the case may be, representing:

1. non-taxable income;
2. revenues related to product inventory costs;
3. revenues related to the costs of services in progress;
4. revenues from the production of tangible and intangible assets, which are not contained in indicator I;
5. revenues from subsidies;
6. income from compensations, from insurance/reinsurance companies, for damages caused to goods of the nature of stocks or own tangible assets;
7. revenues representing excise duties that were simultaneously reflected in expense accounts;

I - the value of fixed assets in progress incurred by the purchase/production of assets, recorded in the accounting records starting from January 1 ^st, 2024, respectively starting from the first day of the amended fiscal year that begins in 2024;

A - accounting depreciation at the level of historical cost related to assets purchased/produced starting from January 1^st, 2024/the first day of the amended fiscal year that begins in 2024. This indicator does not include the accounting depreciation of the assets included in the value of indicator I.

Effective date: January 1^st, 2024

I. Tax on the income of micro-enterprises

2.1 There are 2 tax rates:

a) 1%, for micro-enterprises that achieve revenues that do not exceed 60,000 euros inclusive and that do not carry out the activities provided for in letter b) point 2;

b) 3%, for micro-enterprises that:

1. obtain revenues over 60,000 euros
   or
2. carry out activities, main or secondary, corresponding to the NACE codes: 5821 - Computer game publishing activities, 5829 - Other software product publishing activities, 6201 – Computer programming activities (customer-oriented software), 6209 - Other information technology service activities, 5510 - Hotels and other similar accommodation facilities, 5520 - Holiday and short-stay accommodation facilities, 5530 – Camping grounds, recreational vehicle parks and trailer parks, 5590 - Other accommodation services, 5610 - Restaurants, 5621 - Food activities (catering) for events, 5629 - Other food services activities, 5630 - Bars and other beverage serving activities, 6910 - Legal activities - only for companies with legal personality that are not fiscally transparent entities, constituted by lawyers according to the law, 8621 - General medical practice activities, 8622 - Specialized medical assistance activities, 8623 - Dental assistance activities, 8690 - Other activities related to human health."

2.2 Taxation rules

• In the event that, during the fiscal year, the revenues achieved by a micro-enterprise exceed the level of 60,000 euros, or the micro-enterprise begins to carry out the activities provided for in letter b above, starting with the quarter in which such situations are recorded, the tax rate of 3% is applicable.
• In the situation where, during the fiscal year, a micro-enterprise no longer carries out the activities provided for in letter b and the revenues do not exceed the level of 60,000 euros, starting with the quarter in which such situations are recorded, the tax rate of 1% is applicable.
• In the event that Romanian legal entities carrying out activities corresponding to NACE codes provided in point 2 above also obtain income from other activities apart from those corresponding to these NACE codes, the 3% tax rate is also applied to income from these other activities.

Micro-enterprises that become payers of profit tax as a result of not fulfilling the conditions set out in the Fiscal Code or as a result of exercising the option, notify the competent tax authorities of the exit from the taxation system on the income of micro- enterprises, by March 31^st of the following fiscal year inclusive.

Effective date: January 1 ^st, 2024

II. Income tax

3.1 The income tax exemption for natural persons, for the income made from wages and salaries as a result of the activity of creating computer programs applies until December 31^st, 2028, inclusive.

The exemption applies to the place where the basic function is located, for monthly gross incomes of up to 10,000 lei inclusive, obtained from wages and salaries made by the natural person based on an individual employment contract, service report, delegation or secondment act or of a special statute provided by law, as the case may be. The part of the monthly gross income that exceeds 10,000 lei does not benefit from tax benefits.

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

3.2 The income tax exemption for natural persons, for the incomes made from wages and salaries as a result of carrying out activities in the construction sector is applied to the place where the basic function is located, for the monthly gross incomes from wages and salaries up to 10,000 lei inclusive, made by the individual on the basis of an individual employment contract, full-time or part-time, as the case may be. The part of the monthly gross income that exceeds 10,000 lei does not benefit from tax facilities.

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

Effective date: November 1, 2023, and applies starting with the income related to November 2023.

3.4 Tax for income from independent activities based on sports activity contracts

The tax is calculated by applying the 10% rate on the gross income from which the social health insurance contribution due and withheld at source is deducted according to the provisions of Title V - Mandatory social contributions. Income tax is withheld at source by income payers at the time of payment of income.

Date of entry into force: starting with revenues related to the year 2024.

3.5 Taxation of income whose source has not been identified

Any revenues ascertained by the fiscal bodies, under the terms of the Fiscal Procedure Code, the source of which has not been identified, are imposed with a rate of 70% applied to the adjusted taxable base. Through the tax decision, the tax authorities will establish the amount of the tax and the accessories.

Date of entry into force: July 1^st, 2024, and applies to taxation decisions issued by tax authorities starting from the same date.

In the case of income from independent activities, the annual net taxable income is determined by summing up all the annual net income, recalculated, from which the social insurance contribution and the social health insurance contribution due according to the provisions of Title V - Mandatory social contributions (with one exception) are deducted.

Date of entry into force: starting with revenues related to the year 2024.

Social contributions

4.1. For natural persons who earn income from wages and salaries on the basis of individual employment contracts concluded with employers who carry out activities in the construction sector and fall under the conditions provided for in art. 60 point 5, the share of the social insurance contribution provided for in art. 138 letter a) is reduced by the percentage points corresponding to the contribution rate to the privately administered pension fund. The provision applies until December 31^st, 2028.

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

4.2 For natural persons who earn income from wages and salaries on the basis of individual employment contracts concluded with employers who carry out activities in the agricultural sector and in the food industry and fall under the conditions provided for in art. 60 point 7, the share of the social insurance contribution provided for in art. 138 letter a) is reduced by the percentage points corresponding to the contribution rate to the privately administered pension fund. The provision applies until December 31^st, 2028.

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

4.4 For employers in the construction sector, agriculture and the food industry, the exemption from paying the social insurance contribution (public pension system) for special working conditions is eliminated.

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

4.5 The exemption from paying CASS (contribution to health insurance) for employers in the construction sector, agriculture and the food industry is eliminated

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

4.6 The amounts representing the nominal value of the vouchers in the form of meal vouchers and holiday vouchers are included in the basis for calculating the health contribution (CASS),

Effective date: starting with revenues related to January 2024;

4.7 The CASS regime for natural persons who obtain income from intellectual property rights, investments, agricultural activities, from associations and from other sources.

The annual basis for calculating the social health insurance contribution is represented by:

1. the level of 6 gross minimum wages per country, in force at the time of submission of the single estimate declaration, in the case of income between 6 gross minimum wages per country inclusive and 12 gross minimum wages per country;
2. the level of 12 gross minimum wages per country, in force at the time of submission of the single estimate declaration, in the case of income between 12 gross minimum wages per country inclusive and 24 gross minimum wages per country;
3. the level of 24 gross minimum wages per country, in force at the time of submission of the single estimate declaration, in the case of income at least equal to 24 gross minimum wages per country.

Effective date: starting with revenues related to 2024;

4.8 CASS regime for natural persons who obtain income from independent activities

Natural persons owe the social health insurance contribution on an annual basis of calculation equal to the net annual realized/gross income or the annual income norm, respectively the adjusted annual income norm, as the case may be, which cannot be higher than that corresponding to an annual basis of calculation equal to the level of 60 minimum gross salaries per country in force at the time of submission of the single estimated declaration.

Date of entry into force: starting with revenues related to 2024.

4.9 The work insurance contribution rate is 2.25% also for employers in the construction and agricultural sectors (the rate is no longer reduced).

Effective date: November 1^st, 2023, and applies starting with the income related to November 2023.

III. Value added tax

5.1 Changes regarding the 9% VAT rate

The reduced rate of 9% is applied to the tax base for the following services and/or supplies of goods:

(...)

- delivery of the following goods: food, including beverages, intended for human and animal consumption, live animals and birds of domestic species, seeds, plants and ingredients used in the preparation of food, products used to supplement or replace food, whose CN codes are established by methodological norms, except:

1. alcoholic beverages;
2. non-alcoholic beverages falling under NC code 2202;
3. foods with added sugar, whose total sugar content is at least 10g/100g product, other than cakes and biscuits.

- restaurant and catering services, with the exception of alcoholic beverages, as well as non-alcoholic beverages that fall under NC code 2202;

Effective date: January 1 ^st, 2024

5.2 Changes regarding the reduced rate of VAT (5%)

The reduced rate of 5% is applied to the tax base for the following supplies of goods and services:

- services consisting of allowing access to castles, museums, memorial houses, historical monuments, architectural and archaeological monuments, zoological and botanical gardens; There are removed from this rate the services consisting in allowing access to the malls, amusement parks and recreational parks whose activities are included in the NACE codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events (move to the 9% quota).

- the delivery to natural persons of firewood, in the form of trunks, stumps, twigs, branches or in similar forms, which fall under CN codes 4401 11 00 and 4401 12 00, and of sawdust, waste and wood scraps agglomerated under in the form of wood pellets, wood briquettes or in similar forms, falling under CN codes 4401 31 00 and 4401 32 00; the delivery for use as heating fuel of sawdust, waste and non- agglomerated wood scraps, which fall under CN codes 4401 41 00 and 4401 49 00, made to natural persons as end users, based on an affidavit of the beneficiary;

- the delivery to legal persons or other entities, regardless of their legal form of organization, including schools, hospitals, medical dispensaries and social assistance units, of firewood, in the form of logs, stumps, logs, branches or in similar forms, falling under CN codes 4401 11 00 and 4401 12 00, and sawdust, wood waste and scrap, agglomerated in the form of wood pellets, wood briquettes or similar forms, falling under CN codes 4401 31 00 and 4401 32 00; the delivery for use as heating fuel of sawdust, waste and non-agglomerated wood scraps, which fall under CN codes 4401 41 00 and 4401 49 00, made to legal persons or other entities, regardless of their legal form of organization, including schools , hospitals, medical dispensaries and social assistance units, as end users, based on an affidavit of the beneficiary;"

Effective date: January 1^st, 2024

5.3 The VAT rate is increased from 5% to 9% for the following operations:

- the delivery of dwellings as part of the social policy, including the land on which they are built. The land on which the house is built includes the footprint of the house. For the purposes of this title, dwelling delivered as part of the social policy means:

1. the delivery of buildings, including the land on which they are built, intended to be used as homes for the elderly and pensioners;

1. the delivery of buildings, including the land on which they are built, intended to be used as children's homes and recovery and rehabilitation centers for disabled minors;
2. the delivery of dwellings that have a useful surface of a maximum of 120 sqm, excluding household annexes, the value of which, including the land on which they are built, does not exceed the amount of 600,000 lei, excluding the value added tax, purchased by natural persons individually or jointly with another natural person/s. The usable area of the house is defined by Law no. 114/1996, republished, with subsequent amendments and additions.
3. the delivery of buildings, including the land on which they are built, to the mayors in order to assign them with subsidized rent to persons or families whose economic situation does not allow them access to a home in ownership or to rent a home under market conditions;

The reduced rate applies only to dwellings that, at the time of delivery, can be lived in as such.

The homes that, at the time of delivery, can be lived in as such, in the sense of the reduced VAT rate (9%), represent the homes that, on the date of delivery, cumulatively meet the following conditions:

1. individual free access to the living space, without disturbing the possession and exclusive use of the space owned by another person or family;
2. access to electricity and potable water, controlled disposal of waste water and household waste;
3. they consist of at least one space for rest, one space for food preparation and a sanitary group;
4. exterior finishes include at least: roof if, depending on the type of construction, this constructive element is provided, windows, entrance door;
5. interior finishes include at least: walls finished with paint, wallpaper, tiles or other elements used for finishing, floors finished with tiles, parquet or other elements used for finishing, interior doors, depending on the project;
6. sanitary installations and sanitary objects, respectively toilet bowl, sink and bathtub, with the related batteries;
7. electrical installations, including panels, sockets, switches and sockets."

Any natural person can purchase, starting from January 1^st, 2024, individually or jointly with another natural person/other natural persons, a single house whose value does not exceed the amount of 600,000 lei, exclusive of VAT, with a reduced rate of 9 %;

Note: Between January 1^st and December 31^st, 2024, a reduced VAT rate of 5% is applied for the delivery of homes that have a maximum usable area of 120 sqm, excluding the household annexes, the value of which, including the land on which they are built, does not exceed the amount of 600,000 lei, exclusive of value added tax, purchased by natural persons individually or jointly with another natural person/other natural persons, if they concluded between January 1^st and December 31^st, 2023, legal acts inter vivos having as object the advance payment for the purchase of such a dwelling.

The natural person can purchase, between January 1^st and December 31^st, 2024, individually or jointly with another natural person/other natural persons, a single home with a reduced VAT rate of 5% or 9%.

The reduced VAT rate of 5% applies only to homes that, at the time of delivery, can be lived in as such, according to the legal conditions in force at the time of the conclusion of the legal acts inter vivos, having as object the advance payment for the purchase of such a home.

- the delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems that fall within the reference values for particle emissions, intended for homes, including installation kits, such as and all necessary components purchased separately;

- the delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems that fall within the reference values for particulate emissions, including installation kits, as well as all necessary components purchased separately, intended for central or local public administration buildings, buildings of entities under their coordination/subordination, with the exception of commercial companies;

- services consisting in allowing access to fairs, amusement parks and recreational parks whose activities are included in NACE codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events, other than those exempt from tax

- services consisting in allowing access to sports events.

- the delivery of high-quality food, namely mountain, eco, traditional products, authorized by the Ministry of Agriculture and Rural Development.

Effective date: January 1^st, 2024

5.4 The VAT rate is increased from 5% to 19% for the following services:

- the right to use sports facilities whose activities are included in NACE codes 9311 and 9313, for the purpose of practicing sports and physical education, other than those exempted;

- the transport of people with trains or historic vehicles with steam traction on narrow lines for touristic or recreational purposes;

- the transport of people using cable transport installations - cable cars, ski lifts - for tourist or leisure purposes;

- the transport of people with animal-drawn vehicles, used for tourist or leisure purposes;

- the transport of people with boats used for tourist or leisure purposes. Effective date: January 1^st, 2024

5.5. The VAT exemption for certain operations carried out to hospital units in the state network is removed, but the exemptions for operations provided to non-profit entities are maintained, under the conditions below:

1. the construction, rehabilitation, modernization services of hospital units provided to non-profit entities registered in the Public Register organized by A.N.A.F., if they are intended for hospital units owned and operated by the non-profit entity or those from the state public network, as the case may be;
2. deliveries of medical equipment, devices, apparatus, articles, accessories and protective equipment, materials and consumables for sanitary use, normally intended for use in the field of health care or for use by disabled persons, essential goods for compensation and overcoming disabilities, as well as the adaptation, repair, rental and leasing of such goods, carried out to non-profit entities registered in the Public Register organized by A.N.A.F., if they are intended for hospital units owned and operated by the non-profit entity or those in the state public network, as the case may be;".

Effective date: January 1^st, 2024.

5.6 For the operations carried out between taxable persons established in Romania, only invoices that meet the conditions provided by the Government Emergency Ordinance no. 120/2021 (electronic invoices sent through the RO e FACTURA system) are considered.

Effective date: July 1^st, 2024.

VI . Excise duty

6.1 Non-harmonized excise duties

Non-harmonized excise duties were introduced (special taxes levied on the following products with low risk potential):

1. products containing tobacco, intended for inhalation without burning, with tariff classification CN 2404 11 00, including those contained in supplies delivered together with electronic cigarettes and other similar personal electric vaporization devices from CN code 8543 40 00;
2. liquids with or without nicotine, intended for inhalation without burning, with tariff classification CN 2404 12 00, 2404 19 90, including those contained in reserves delivered together with electronic cigarettes and other similar personal electric vaporization devices from CN code 8543 40 00;
3. products intended for inhalation without burning, containing tobacco substitutes, with or without nicotine with tariff classification CN 2404 12 00, 2404 19 10, including those contained in supplies delivered together with electronic cigarettes and other similar personal electric vaporization devices from CN code 8543 40 00;
4. non-alcoholic drinks with added sugar for which the total sugar level is between 5g - 8g/100ml;
5. non-alcoholic beverages with added sugar for which the total sugar level is over 8 g/100 ml.

Added sugar means cane sugar, brown sugar, crystalline sucrose, invert sugar, dextrose, molasses, honey sugars, molasses and syrups such as malt syrup, fruit syrup, rice malt syrup, corn syrup, high fructose corn syrup, maple syrup, glucose syrup, glucose-fructose, fructose, sucrose, glucose, lactose, hydrolyzed lactose and galactose added as ingredients, sugars in nectars such as coconut flower nectar, nectar of dates, agave nectar, sugars from unsweetened fruit juices, fruit juice concentrate, sugars from fruit purees and jam.

Effective date: January 1^st, 2024.

6.2 The appendices on excises and other special taxes are replaced (the level of excises for alcohol, alcoholic beverages and processed tobacco increases from January 1^st, 2024)

In the period January 1^st, 2024 - March 31^st, 2024, inclusive, the specific excise tax for cigarettes is 540.938 lei/1,000 cigarettes.

Effective date: January 1^st, 2024.

6.3 The contravention sanctions regime in the field of excise duties is amended/completed.

Effective date: November 11^th.

VII. New tax - The special tax on immovable and movable assets of high value

The following persons, hereinafter referred to as taxpayers, are obliged to pay the special tax on immovable and movable assets of high value, established according to this title:

1. natural persons who, on December 31^st of the previous fiscal year, own/jointly own residential buildings located in Romania, if the taxable value of the building exceeds 2,500,000 lei;
2. individuals and legal entities that own cars registered in Romania whose individual purchase value exceeds 375,000 lei. The tax is due for a period of 5 years starting from the fiscal year in which the handover-acceptance of the car takes place or for the fraction of years remaining until the completion of the 5-year period from this date for those in which the handover-acceptance of the car took place previously.