Introduction To Fiscal Law

Fiscal law regulates legal relations arising in the administration of taxes and fees
from individuals or legal entities which obtain income, hold taxable goods or who
make expenditures that fall within the scope of tax.
Principles of fiscal law
1. The neutrality of taxation
Through the principle of neutrality of taxation we understand the equal treatment
of taxpayers in terms of proper regulation, both in terms of immediate effects
and those which may occur in the long term. An application of this principle can
be found in art. 110-111 TFEU showing that an EU member state cannot apply
directly or indirectly to the products of other Member States any internal taxation
of any kind in excess of that imposed directly or indirectly on similar domestic
products.
2. The certainty of taxation
The certainty of taxation is achieved by establishing clear legal norms that do not
lead to arbitrary interpretations and the deadlines, methods or the amount of
payment which have to be precisely set for each payer. Certainty in tax matters
implies the opportunity for the taxpayer to predict with a reasonable time in
advance what will be the tax burden on his income and its business in general.
Certainty means also the simplicity of the fiscal legal norm that enables
taxpayers to understand the tax rules and all the implications and the effects it
may have on their business.
3. Fair taxation
The principle of fair taxation is regulated by the Fiscal Code and it refers only to
individuals, thus expresing differentiated income taxation according to their size.
4. The efficiency of taxation
Through this principle, the Tax Code understands to ensure the long term stability
of the tax code so that these provisions do not lead to adverse retroactive effect
which may affect natural or legal persons in relation to taxation on the date of
adoption of their decisions.
The sources of the fiscal law
1. Primary sources:

The Constitution

The Fiscal Code

The Fiscal Procedural Code

Orders of Finance Ministry

2. Secondary sources:
Secondary normative acts of enforcement of fiscal codes are: methodological
rules, orders, instructions and decisions.
Tax legal relation

Tax legal relations consist of taxation relations that arise:

when declaring taxes,

from their establishment

from collection of tax obligations by the methods established by the

legislator

The subjects of tax legal relations are on the one hand the state by tax
authorities invested with specific achievement of tax revenue and on the other
hand taxpayers represented by legal or natural persons obliged to pay taxes and
other revenues of the state budget.
The content of tax legal relation
The rights and obligations of subjects participating in tax legal relations form the
content of tax legal relation. The rights of the subjects represent tax receivables
and the obligations of the subjects represent tax liabilities.
The subject matter of tax legal relations
The subject matter of tax legal relations is established and collected at the
consolidated general budget taxes and other contributions owed by the debtors.
The administrative act
The administrative act is the act issued by the competent tax authority in the
enforcement of legislation on the establishment, modification or termination of
rights and tax obligations. It shall only be issued in writing.
The taxes covered by the fiscal code are the following
1. Corporate tax
The profit is a form of income derived from running economic activities as a result
of a capital investment. The condition that the income can be regarded as profit
is that the economic activity to be conducted in order to get a benefit.
The standard rate of corporate tax is 16%.
2. Tax on income
The income tax applies to the following income:
a) in the case of Romanian natural persons resident, domiciled in Romania, to the
income derived from any source, both from Romania and from abroad;
b) in the case of resident individuals, other than those referred to a),to the
income derived from any source, both from Romania and from abroad, starting
with January 1 of year following the year in which they are resident in Romania;
c) in the case of non-resident individuals, self-employed through a permanent
establishment in Romania, to the net income attributable to the permanent
establishment;
d) in the case of non-resident individuals that carry out dependent activities in
Romania, to the net salary income from these dependent activities;

e) in the case of non-resident individuals who receive income under Art. 39 d))
From the Fiscal Code, to the income determined under the rules provided in this
title, which correspond to the respective category of income.
The categories of income, subject to income tax are:
a) income from independent activities;
b) income from wages;
c) revenues from rental and leasing;
d) Income from investments;
e) retirement income;
f) income from agriculture, forestry and fisheries;
g) income from prizes and gambling;
h) income from transfer of property;
i) income from other sources.
The tax rate is 16%.
3. Tax on microentreprise
A microenterprise is a Romanian legal entity which meets the following
conditions:

derives income

earned income that does not exceed the equivalent in RON of EUR 65,000

its share capital is held by persons other than state and local authorities.

It is not in the procedure of dissolution or in liquidation, registered in the

trade register or to the courts, according to the law.

This type of income is mandatory. The tax rate is 3%.

4. Tax incomes obtained from Romania by non-residents

Non-residents who derive taxable income from Romania have the obligation to
pay tax.
5. VAT
Value added tax is an indirect tax owed to the state budget. VAT is a tax that is
calculated monthly based on the difference between the VAT on taxable
transactions and VAT on purchases of goods and services by the person who
owes VAT.
VAT tax period is the calendar month. The legal principle is that the chargeable
event occurs and the tax becomes chargeable on the date of delivery of goods or
rendering of services. Chargeable event and chargeability are simultaneous, but
there are exceptions as well.

The standard rate of value added tax is 24%. The reduced rate of value added
tax is 9% and is applicable as an exception to different categories of goods. VAT
is due with the submission of monthly VAT statement, until the 25th of the month
following the month for which the VAT was calculated. Any person liable to pay
value added tax is responsible for the correct calculation and payment at the
legal term of value added tax to the state budget and for submission at the legal
term of the returns of VAT to the tax authorities.
6. Excise
Excise duties are consume taxes applied to production and marketing of certain
products. There are 3 categories of taxes:

harmonized excises special consume taxes that are payable to the state
budget for these products from domestic production or import: alcohol and
alcoholic beverages, tobacco, energy products and electricity

excise tax payable to the following products: coffee, natural fur

garments, crystal items, jewelry of gold and / or platinum, perfumery,
hunting guns and weapons of individual use, yachts and boats with or
without engine for pleasure etc

tax on crude oil from domestic production. For crude oil from domestic
production, economic operators authorized by law owes tax to state
budget at the time of delivery. Tax due for oil is 4 euros / tonne.

7. Local taxes and fees

The local taxes and fees are the following:

Tax on buildings

tax on land

fees on vehicles

fees for the issuance of certificates, permits and authorizations

Fees for using means of advertising and publicity

tax on shows

hotel fee

special fees

other local fees.