On 2 March 2022, the Chamber of Deputies, as the decision-making chamber, adopted Law no. 583/2021 on the cancellation of certain tax obligations and on the amendment of certain regulatory acts (the “Law“).
The Law was promulgated by the President of Romania on 30 March 2022 and will be published immediately in the Official Gazette, after which it will become generally binding.
The Law is extremely relevant in the context of the controversies generated by the tax inspections that resulted in the reclassification of secondment allowances paid for the employees who are working abroad (per diems) as salary income, with the consequence of applying the taxation regime for such revenues and puts an end to many tax disputes involving considerable amounts.
Below are the main changes and relevant aspects concerning the scope of the Law
- The main changes proposed: (i) the impossibility of reclassifying allowances/daily allowances as salary income during tax inspections and therefore the impossibility of issuing a tax decision for these amounts and (ii) the annulment of tax decisions reclassifying allowances/daily allowances, with the consequence of refunding the amounts collected from taxpayers following the issuing of tax decisions (principal and interest).
- Scope in time of the Act: Allowances paid starting from 1st of July 2015 until the date of entry into force of the Law.
- Subjective scope of the Law: general, with amendments being made to the Tax Code and not to a law governing a particular field of activity.
Pursuant to the explanatory memorandum of the Law, the amendments have a particular impact on the following categories of companies:
- Providers of construction services, assembly, technical assistance, etc., who send their employees to various construction sites in Member States or third countries to provide services in accordance with contracts concluded with various beneficiaries;
- Temporary employment agencies in Romania that recruit people and then place them at the disposal of user companies in EU Member States or third countries.
- International carriers, for allowances granted to employees directly involved in transport operations.
In the end, it is worth noting that the implementation of the Law will require the approval of a procedure by order of the President of the National Agency for Tax Administration. This order will have to be issued within 30 days from the date of entry into force of the Law.
