Since the Ministry of Finance came up with tax changes, subsequently approved by the Government, which came into force this year, some things are open to interpretation, and tax consultants are trying to find out what the official understanding of the institution is. In the field of micro-enterprises, important clarifications are needed, and since the beginning of the year, the ministry has not provided details.

Regarding the question of married people or relatives who have firms, I dealt with it on Tuesday.

In a letter sent to the Ministry of Finance, the Chamber of Fiscal Consultants draws attention to several things.

Why do they need to be found out recently? Since, taking into account the new regulations, according to which taxpayers are obliged to establish the taxation regime of their own companies / in which they have participation rights / voting rights (payers of micro-enterprise tax or income tax) by March 31, 2024, it is necessary to introduce some differences clarification of at least the following legislative provisions – either through public clarifications of official clarifications, or through the inclusion of details and examples in the methodological norms by which the aspects are divided.

The ownership condition, namely the issue of 25% of the shares, has two interpretations

According to the CCF:

1. We understand that under the new provisions from January 1, 2024, an associated person/shareholder may own, directly or indirectly, more than 25% of the value/number of shares or voting rights in a single microenterprise income tax payer company and we also understand that the new paragraph (4) of Art. 47 also serves as a transitional provision for actual situations recorded on December 31, 2023.

Thus, if the same partner owned (directly or indirectly) as of December 31, 2023, more than 25% in two or three micro-enterprises, by March 31, 2024, only one of the enterprises must be created, which will remain a micro-enterprise income tax payer , the rest will be subject to income tax, including for the 1st quarter of 2024.

In other words, the possibility of designating one company for the application of the tax regime for micro-enterprises in 2024 does not depend on the transfer of holdings to other companies until December 31, 2023, but no later than the first quarter. 2024, since the goal of the regulation on the application of the micro-enterprise taxation regime by only one such company has been achieved.

2. The second problem of interpretation and, accordingly, the need for clarification is related to point h) of Art. 47 par. (1) and, taking into account the fact that letter h) is one of the conditions that must be met collectively for the application of the micro-enterprise regime, it refers to the ownership by associated persons/shareholders of more than 25% of the shares, the value/number of participation securities or voting rights :

“(1) For the purposes of this section, a micro-enterprise is a Romanian legal entity that, as of December 31 of the previous fiscal year, collectively meets the following conditions:

[…]

h) has associated companies/shareholders who own, directly or indirectly, more than 25% of the value/quantity of participation rights or voting rights, and is the only legal entity established by the associated persons/shareholders for the application of the provisions of this title;”

In the spirit of the law, as it follows from the will of the legislator, expressed in the explanatory note, making changes to item h) of Art. 47 par. (1) situations where the ownership percentage of 25% of the value/number of shares or voting rights is exceeded (directly or indirectly), in which case the number of micro-enterprises owned by such shareholder/associate is limited/reduced to apply this taxation system to an individual micro-enterprise.

In our opinion, this was not taken into consideration while adopting GEO no. 115/2023 and an amendment to the micro-enterprise taxation rules in a situation where the company is owned only by shareholders/associates holding less than 25% of the value/quantity of participation rights or voting rights (eg 5 associated companies with 20% each), although the usual reading the text of the law can easily lead you to such a conclusion because of the less successful form in which it is drafted.

Therefore, our belief remains that such a company, which exists on 12/31/2023 or is newly established during 2024, can apply the micro-business regime under the conditions in which other conditions provided for in Art. 47 par. (1) are performed.

We show that such an interpretation is clearly consistent with the stated purpose of the amendments made by GEO no. 115/2023, as follows from the explanatory note.

Regarding this aspect, the CCF is contained in the submitted document with more detailed information and questions of interpretation.

In view of the new changes, there are also problems with the inclusion in the maximum limit of €500,000 of income received on December 31 of the previous financial year

We reproduce the CCF sheet below:

Taking into account that a new provision has entered into force on January 1, 2024, which establishes the accumulation of income of a micro-enterprise with the income of enterprises related to it (clause (11), we understand that this method of calculation can be applied starting from this date, therefore for calculation by accumulation of income received by the micro-enterprise and related enterprises in 2024 and subsequent years in which the provision remains in force.

So, we understand that in order to check the condition provided by Art. 47 par. (1) lit. c) “received income that does not exceed the equivalent of 500,000 euros in lei” on December 31 of the previous fiscal year, i.e. December 31, 2023, the provision on the method of determining the income received by a micro-enterprise, valid until December 31, applies until 2023, i.e. excluding income , received in 2023 by related enterprises, since GEO No. 115/2023, which changed the calculation formula, does not contain transitional provisions that establish a rule other than that based on the principle of applying the new provisions over time, respectively, starting from the date their entry into force.

In the event that you believe that our understanding set forth above is not correct with respect to applicable law and/or legislative intent, as well as the provisions of para. (11) should be applied retroactively, and for the cumulative calculation of the income received in 2023 by related companies, we also believe that urgent clarifications issued by the Ministry of Finance are necessary for a good understanding and correct application of the law.

Problems are also related to the concept of “Enterprise” and the indirect phrase “related enterprises”. Does this also include PFA?

According to the CCF, in the sense of Law No. 346/2004, “enterprise” does not mean only companies defined by Law No. 31/1990 on companies, as well as authorized natural persons, individual enterprises, individual offices (medical, notary, legal, consulting, etc.), associations and foundations, permanent offices, etc.

Therefore, it seems that the first definition of related enterprises, with the income of which must be the accumulated income of the micro-enterprise, starting from January 1, 2024, in order to be able to check the inclusion of the maximum amount of 500,000 euros, it is necessary to take into account all these other categories of entities as well management, including the type of independent individuals with whom the microenterprise may be directly or indirectly related.

In addition, as follows from the provisions of Art. 52 par. (51), if the company is considered related through the prism of Law no. 346/2014 with an authorized natural person, or with a separate enterprise, or with a separate office, etc., when the maximum amount of 500,000 euros is established, the income of the previously mentioned persons will also be accumulated.

But in the case of authorized natural persons, separate enterprises, separate offices, there are issued invoices, collected revenues, as well as net revenues (defined by Article 68, paragraph (1), section IV of Law No. 227/2015) and in this case the question arises , which of these categories of income of authorized individuals, individual enterprises, individual offices will accumulate with the income of related companies?

The tax authority should also clarify whether income from intellectual property rights is considered income of related enterprises or not.

See the full letter with a list of questions sent by the Chamber of Tax Consultants to the Ministry of Finance