Fiscal Code brings European taxesPublish date: 03-01-2007
The Fiscal Code, came into effect starting January 1, brings tax increase for big houses, local taxes exemption for certain companies and taxation of building transactions on total value, not on profit.
The companies that make investments over EUR 500,000 might be exempted from paying the tax on building and land, owed to local councils, for a period up to five years. The revenues from interests obtained by foreign companies for the loans given to companies from Romania where they hold at least 25 per cent of the shares, for two years at least, will be taxed 10 per cent for three years after the accession, as Romania obtained from EU a derogation from European stipulations, which mention the non-taxation of revenues obtained from loans between parent companies and subsidiaries.
Increase in electricity, fuels, tobacco and alcohol excises
The prices for electricity, leaded petrol, crude oil and natural gas used as engine fuels go up with the increase of excises. The electricity excises are increased over 30 per cent, and in the case of the leaded petrol the tax will increase 6.6 per cent. Concerning the electricity used for commercial purposes, the excise increases from EUR 0.19/MWh to EUR 0.26/MWh, and the tax on electricity destined to non-commercial sectors goes up from EUR 0.39/MWh to EUR 0.52/MWh. For leaded petrol, the excises will be increased from EUR 523/ton to EUR 548/ton. All drinks producers will pay excises as of 2007, no matter if the drink is produced for commercial purpose or not, according to the new Fiscal Code. Cigarettes will have the same excises in the first half, namely EUR 16.28 for 1,000 pieces, a sum that will be added 29 per cent of the maximum selling price. Regarding the cigars, the excise will be maintained at EUR 34.5/1,000 pieces, but it will increase from July 1 to EUR 41.5.
Higher taxes on large homes and land
Homes that exceed 150 sq m will be levied taxes higher than until now, up 5 pc for each 50 sq m or a fraction of that surface. Private individuals will pay two kinds of tax quotas for real estate revenues, depending on the property value and the interval during which the property is held. Local councils are allowed to charge local taxes of up to 20 pc higher than those stipulated by the Tax Code. From January 1, 2007, all Romanians must insure their homes. The insurance premiums will range between EUR 10 and 20, and the insurance value will be of EUR 20,000 for homes in buildings made of reinforced concrete or metal or with exterior walls made up of bricks, and EUR 10,000 for constructions with exterior walls of wood, stone or any other materials that underwent no chemical or thermal treatment.
Higher taxes on vehicles, new matriculation tax
Local taxes on vehicles with an engine capacity of lower than 1.6 litres will be doubled, and the owners of more powerful vehicles will pay a tax of a minimum of RON 1,800. A new matriculation tax will also be charged. The special matriculation tax will not apply to lease agreements prior to January 1, 2007, which are due after that date.
Dividends and gains from hard currency transactions to be levied 16 pc tax
Stock owners will pay a tax of 16 pc on dividends cashed, a level to also be charged to gains from interest and hard currency sales and purchases. Earnings from stock exchange transactions will continue being taxed differently, 1 and 16 pc respectively, depending on how long the stock was held. The 1pc tax is applied to holdings older than one year, those kept for less than one year being charged a tax of 16 pc.
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