Newsletter no.5/2019

COMPANIES ARE OBLIGED TO SUBMIT A DECLARATION CONCERNING THE BENEFICIAL OWNER TO THE COMMERCIAL REGISTER (LAW ON COMBATING MONEY LAUNDERING AND TERRORIST FINANCING NO. 129/2019 OF 18 JULY 2019).

 

Law No 129/2019 provides for several additional obligations for companies to disclose information about the beneficial owner of their activities.

 

Accordingly, legal persons subject to the obligation to be registered in the Commercial register, with the exception of autonomous bodies, national companies and companies in which the State holds a majority or all of the capital, must submit a declaration concerning the beneficial owner at the time of registration, annually or at any time when a change is made, which will be recorded in the register of beneficial owners of companies. The annual declaration shall be submitted to the competent commercial register within 15 days of the approval of the annual accounts; in the case of a change in the identification data of the beneficial owner, the declaration shall be submitted within 15 days of the occurrence of the change.
Companies already registered in the Commercial Register when this Act comes into force, with the exception of national companies, and companies with all or the majority of state capital, must submit a declaration of beneficial ownership to the Commercial Register within 12 months of the Act coming into force (by 20 July 2020).
The State sworn declaration of the legal representative of the legal entity contains the identification data of the beneficial owners and the manner in which control is exercised over the legal entity. The identification data of the beneficial owner are: Surname, first name, date of birth, personal identification number, series and number of the identity card, nationality, domicile or place of residence. The declaration may be made before the representative of the Commercial Register or in authentic form, in person or by an authorised representative. Failure to submit the declaration is a criminal offence and is punishable by a fine of 5,000 lei to 10,000 lei.

If the legal representative of the legal entity fails to submit the declaration within 30 days from the date of the imposition of the fine, the competent court may, upon application of the National Commercial Register Office, dissolve the company. With regard to the obligation to make a declaration on behalf of the beneficial owner, we would like to point out that this also applies to associations and foundations registered in the Register of Associations and Foundations, which is located at the District Court of the seat of the association or foundation. Associations and foundations already registered must also make a declaration on oath within 12 months of the entry into force of the law (by 20 July 2020). After the deadline has expired, the associations and foundations which have not complied with the obligation to pay the tax will be dissolved by court order at the request of the public prosecutor or another interested person. The registers of beneficial owners will be operational within 120 days of the entry into force of Act No. 129/2019.

A beneficial owner is any natural person who ultimately owns or controls the contracting party and/or the natural persons at whose instigation a transaction is ultimately carried out or a business relationship is ultimately established. Further information on the definition of beneficial owners can be found here.

 

BEARER SHARES ARE PROHIBITED (LAW ON THE FIGHT AGAINST MONEY LAUNDERING AND TERRORIST FINANCING NO. 129/2019 OF 18 JULY 2019)

Another provision of Law 129/2019 is the abolition of the bearer action. Holders of bearer shares are obliged to hand them over to the company within 18 months so that they can be converted by the company. Bearer shares that have not been delivered will be cancelled. If bearer shares have been surrendered but not converted by the company on time, they are threatened with cancellation.

 

SPONSORING: THE VALUE OF DEDUCTIBILITY IS INCREASED FROM 0.5% TO 0.75% OF REVENUE (ACT 156/2019).

Taxpayers who pay donations and / or assume patronage or private scholarships as required by law may reduce the income tax liability up to the level of any of the minimum limits set out below:

  • 0.75% of revenues (so far the upper limit has been 0.5%);
  • 20% of income tax owed

This provision applies from the calculation of the profit tax for the III quarter of 2019 (calendar year is the same fiscal year) and applies only to the profit tax payer.

All the other regulations regarding sponsoring remain unchanged.

 

CHANGES IN THE WORKING LAW BOOK (LAW No. 93 of 6 May 2019)
The main amendments to the Labour Code are:

  • Employees can now opt to extend their employment relationship with their employer even after reaching the standard retirement age until they reach the age of 65. In this sense, the employee will submit an application to the employer. The application must be submitted no later than 30 calendar days before reaching the standard retirement age and the minimum contribution period (the standard retirement age for women is 63 years and the minimum contribution period must be at least 15 years).
  • Employees can continue their work even after reaching the standard age limit, for a maximum period of three years, with the employer’s approval. The extension takes place annually.

Granting of the reduction for electronic transmission of the income tax return for 2018 (REGULATION No. 1.369/2019)

The procedure for granting the reduction for the transfer of the declaration of income tax and social security contributions as well as the advance payments 2018 by electronic means through the income tax return has been approved.
The most important provisions of the above mentioned regulation are:

  • The procedure for granting the reduction to taxpayers who submitted their income tax return by electronic means in 2018 and paid the advance payments (by 15 December 2018) for the income specified in 2018 was approved;
  • Decisions on granting the reduction will be issued by the tax authorities after 31 July 2019 on the basis of the information available in the internal computer application;
  • Taxpayers who have paid the entire tax debt without deducting the reduction may request reimbursement of the excess amount paid by submitting a reimbursement request.

 

THE GUARANTEED LANDESBRUTTOMINDESTLOHN – of 3,000 lei per month in the construction sector – extended provision also after 1 January 2020

The new Emergency Ordinance 43 of 12 June 2019 brings two major changes for construction companies:

  • The gross minimum wage of 3,000 lei for the planned areas is valid until 2028, inclusive.
  • The list of planned areas will be supplemented by three areas of activity (code CAEN):

 

  • 2351-Manufacture of cement,
  • 2352-Lime and gypsum production,
  • 2399-Manufacture of other non-metallic mineral products (bitumen, tar, etc.). Under certain conditions, these sectors are also granted reductions in taxes and non-wage labour costs.

Urgency Decree No. 43/2019 requires certain conditions to be met in order to grant these benefits: employers must carry out construction activities and obtain at least 80% of the total income from specific construction activities.
Emergency Ordinance No. 43/2019 provides that companies are divided into two categories in relation to these conditions: newly established companies and companies existing on 1 January 2019.

For companies newly incorporated after 1 January 2019 and registered in the Commercial Register:

  • Sales revenues are calculated cumulatively from the beginning of the year, including the month to which the benefit applies. If the sales revenues from construction activities amount to at least 80% of the total sales revenues, the benefits apply from the corresponding month.

The following applies to companies existing on 1 January 2019:

  • If the company cumulatively generated more than 80% of the total revenues from construction activities in the previous financial year, the benefits are valid for the whole year.
  • If the company did not achieve a cumulative share of more than 80% of the total proceeds from construction activities in the previous financial year, the preferential treatment applies if the conditions for newly established companies are fulfilled.