The legislation on related enterprises has been amended by the Government and thus appeared in the Official Gazette GEO 31/2024. Essentially, the provisions that refer to the 2004 Act (L346) have been repealed and new criteria introduced.

Fiscal consultant Adrian Benza provided a brief analysis of the new emergency order.

According to him, in the fiscal legislation applicable to the taxation of the income received by micro-enterprises, the legislator left the upper limit of the taxable income of a micro-enterprise at the level of 500,000 euros.

A person has the right to own only one micro-enterprise, in direct or indirect ownership, but when determining the ceiling of 500,000 euros, it must be taken into account that this ceiling also includes the income of some “related” companies.

No. GEO 31 of 2024 regulates the concept of “related” companies from the point of view of taxation of income of micro-enterprises.

The first clarification, he says, begins with the fact that the legislator indicates that we will analyze the income regulated by Art. 53 of the Tax Code, respectively, the income received by micro-enterprises, which excludes from the income of companies paying income tax, the income of which is regulated by Art. 19-24 of the Tax Code.

The tax consultant says that related companies are considered to be in one of the following situations:

a) the Romanian legal entity confirming the condition has, together with another Romanian legal entity, directly and/or indirectly, more than 25% of the value/quantity of participation rights or voting rights, or it has the right to appoint or remove the administrator / majority of the members of the administrative, management or the supervisory board of another Romanian legal entity;

From the analysis of the regulatory text, we can see the presence of affiliated relations between the two companies, and, in addition, the owner of participation rights has the right to make decisions about the other company.

b) the Romanian legal entity confirming the condition is owned by another Romanian legal entity, directly and/or indirectly, with more than 25% of the value/quantity of participation rights or voting rights, or, in the case of a Romanian legal entity, the person verifying the conditions, this other Romanian legal entity has the right to appoint or remove the administrator/majority of the members of the administrative, management or supervisory board;

From the analysis of the regulatory text, we retain the existence of an affiliated relationship between the two companies and reserve the right of the owner of participation rights to decide the company where the analysis will be conducted.

c) a Romanian legal entity confirming a condition related to another Romanian legal entity, if the person owns, directly and/or indirectly, more than 25% of the value/quantity of participation rights or voting rights, or has the right to appoint or remove an administrator/ the majority of members of the administrative, directorate or supervisory board both in the first legal entity and in the second legal entity. In a situation where the person holding participation/voting or appointment/revocation rights is a Romanian legal entity, the Romanian legal entity verifying the condition accrues the income of that person;

From the analysis of the regulatory text, we find an indirect connection through a person (individual or legal entity) who has the right to make decisions in both companies.

In a situation where the owner of the right to participate is also a Romanian legal entity, within the limits of EUR 500,000, the income of this company will also accumulate.

d) A Romanian legal entity that confirms the condition if it has one or more shareholders/associated persons holding, directly and/or indirectly, more than 25% of the value/number of shares or voting rights of this Romanian legal entity, shareholders/associated persons that also carries out economic activity through an authorized natural person/individual enterprise/family enterprise/other form of economic activity organization without the status of a legal entity, authorized in accordance with current legislation. In this situation, the income registered in accordance with the current accounting provisions, or the annual rate of income established/adjusted/reduced in accordance with the provisions of Section IV, of an authorized natural person/individual enterprise/family enterprise/other form of economic activity without a subject legal entity , authorized in accordance with the current legislation, accumulates with the activities of the Romanian legal entity/other related enterprises.

From the analysis of the regulatory text, we note that when determining the maximum amount of 500,000 euros, in addition to the income of the company, the income from the independent activities of the members of the company – natural persons who carry out authorized trade or independent professions are taken into account.

These earnings represent gross self-employment income (income for those individuals who receive income from self-employment and keep single records).

As an example, we cite an authorized tax consulting company that has two authorized tax consultants as associates, each with a 50% interest. This is the only company in which shares or units are owned by natural persons. When we determine the €500,000 ceiling, in addition to the company’s income, the gross income of individuals as tax consultants is also added.

Submission of reimbursement declarations for changing the fiscal vector for 2024 will be made by April 15, 2024.

The Legislature expressly states that these criteria will be considered throughout fiscal year 2024, leading us to believe that we must perform the analysis with data from December 31, 2023. This means that by this date it must be determined as the income of the relevant company and the income of individual members of the company who own more than the percentage provided for by the regulatory act and conduct independent activities.