Romania austerity measures: fiscal facelift comes into force July 1

Incomes from interest, gambling, meal tickets, holiday, currency trading are undergoing changes in Romania starting July 1 following an emergency ordinance adopted last week modifying the Fiscal Code. According to the document, taxes will be applied on compensation payments while flat rates on annual intellectual property net incomes will be cut from 40% to 20%.

Among the changes coming into force today:

• a new 24% VAT
• taxation on gambling winnings will be consolidated to 25%. So far, gambling incomes of under 10,000 lei were taxed 20%, while those above the threshold – 25%.
• all incomes from bank account interests will be taxed 16%
• changes also apply to earnings from contract-based currency trading and any other such operations which will see a consolidated tax of 16%.
• In welfare contributions, in the case of non-salary incomes from professional activities only the employee ‘s health and social contribution, welfare contributions and unemployed fund contribution will be paid.
• meal and holiday tickets will be taxed 16%

The total impact on budget in the field of direct taxation is estimated to some 600 million lei by the end of 2010 and 1.327 billion lei in 2011.