corporate taxation

Micro-company tax

3% tax on revenue for micro-companies

 

According to the terms of the new tax regulations, all companies which had a turnover of less than 65,000 EUR (the equivalent of 287,866 RON) and less than 20% of their revenue from consulting activities must apply the tax regime for micro-companies as of 2013.

As a result, all micro-companies must declare and pay their taxes at the micro-company rate which is a 3% tax on the company revenue rather than the tax on profit (which is 16%).

Example :

A company earned 60,000 EUR in revenue :

  • If the activity is in the field of consulting the company will then be subject to the tax on profit (16% on profit)
  • If the activity is in the field of trade so the company will be subject to the tax regime for micro-companies (3% on micro-companies).

The micro-company tax must be paid quarterly on the 25th of the quarter's end month at the lastest.

Once a company's revenue surpasses 65,000 EUR, the company must pay the general tax on profit earned after that point (in 2013, the limit of 65,000 EUR is calculated according to the revenue earned as of February 2013).

As this measure was rather hastily passed into law in the first quarter of 2013, a transition period  was applied for the first quarter of 2013: companies affected by this measure were required to first declare tax on profits from the period between January 1, 2013 to January 31, 2013 by March 25, 2013 at the latest and then apply the micro-company tax as described beginning February 1, 2013.

Example:

A company earned 50,000 EUR in revenue (operating revenues and investment income combined) in 2012.

In January 2013, the same company earned 5,000 EUR in revenue for a profit of 2,000 EUR.

In February and March 2013, this same company earned a total revenue of 10,000 EUR for a profit of 4,000 EUR.

During Q2, Q3 and Q4 of 2013, this same company earned 15,000 EUR per quarter for a total revenue of 6,000 EUR.

In 2014, the company earned 30,000 EUR per quarter for a quarterly profit of 12,000 EUR.

How must this company declare their taxes in 2013 and 2014?

  • By March 25, 2013 the latest, the company must declare their taxes on profit for the month of January 2013 for a total of 2,000*16%= 320 EUR.
  • By April 25, the latest, the company must declare the micro-company tax for the months of February and March 2013 for a total of10,000*3%=300 EUR.
  • By July 25, the latest, the company must declare the micro-company tax for Q2, 2013 for a total of 15,000*3%=450 EUR.
  • By October 25, the latest, the company must declare the micro-company tax for Q3, 2013 for a total of 15,000*3%=450 EUR.
  • By January 25, 2014, the company must declare the micro-company tax for Q4, 2013 for a total of 15,000*3%=450 EUR.
  • By April 25, 2014, the latest, the company must declare the micro-company tax by Q1, 2014 for a total of 30,000*3%=900 EUR. 
  • By July 25, the latest, the company must declare the micro-company tax for the Q2, 2014 for a total of 30,000*3%=900 EUR. 
  • During the course of Q3, the annual revenue of the company (90,000 EUR) surpassed the ceiling for the micro-company tax. As a result the company must declare the tax on profit for Q3 2014 by October 25, the latest, for a total of 12,000*16%=1,920 EUR.