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Excise tax



Taxes

represent a form of sampling a portion of

the revenues and / or wealth of individuals

and businesses to the state to cover public

expenditure

the sampling is:

Compulsory

Irredeemable

Without direct counterprestation



Principles

neutral fiscal - different categories of

investors and shareholders, same taxes

certainty of taxation

fiscal equity - requiring most of the income

of the persons to be taxed with the same

tax rate.

efficiency - imposing long-term stability of

the provisions of the Fiscal Code



Types of taxes

DIRECT

are levied directly on

individuals and

companies aimed at existing income

or wealth

can be:

Real direct taxes - arebased on material objects

Personal direct taxes -

bear in mind the person in

connection with its wealth

and income

INDIRECT

are placed on the sale of

goods or rendering of

services. aimed at their usefulness

can be:

Consumption taxes

Customs duties;

Fiscal monopolies;

Registration fees and

stamp duties.



Excise tax

known as the special consumption tax

is an indirect tax that applies to certain

categories of goods from residence

country or from import

second place in the group of indirect

taxes, after VAT, representing 11.6% in

the state budget (september 2011)- an

increase of 25% as compared to planned

level



New legislation

Insures the complete harmonization oftaxation principles

Simplifies the authorization procedures

of the producers and importers of productssubject to excises

Simplifies the control procedures

Reconsiders the excise exemption, byharmonizating the national legislation withthe EU directives



Types of excise duties

From a fiscal point of view, excise

products may divide into two categories:

Harmonized excisable goods (products subject

to excise duty under the European directives,subject to the excise duty is compulsory in the

EU);

Non-harmonized excisable products (othercategories of products subject to excise duty

under legislation in each Member State) –

green coffee, roasted coffee, luxury products.



Applied products (1/3)

• Beer – beer and non-alchoolic beverage

– an alcoholic concentration higher than 0,5%

• Wines Quiet wines

concentration between 1.2% and 15% alcohol content in the finished product results entirely from

fermentation

Sparkling wines presented in bottles sealed with a fungus stopper-type

under pressure due carbon dioxide in solution equal to orgreater than 3 bar

alcoholic strength between 1.2% and 15%

alcohol content in the finished product results entirely fromfermentation.




• Other fermented drinks, either quited or

sparkling (with concentration higher than 1.2%

volume but not higher than 13%

• Intermediary products• Alcohol

• alcoholic strength exceeding 1.2%

•

plum brandy and fruit spirits;• any other product, solution or not, containing

spirits drinking.



• Manufactured tobacco

o Cigarettes;

o Cigarettes and cigarettes of sheets;

o Tobacco smoking.• Energy products - if they are intended for use as

heating fuel or motor fuel;

• Electricity - the product of code 2716.

• Along with these products are subject to

harmonized excise duty natural gas, coal and

coke.




Excise computation

To determine the value in lei equivalent duty

expressed in euros per unit of measure it is used

the exchange rate notified by the ECB for the

first working day of October of previous year . The same exchange rate is applied for the entire

year

Under the EU's Official Journal, the exchange

rate valid for the calculation of excise duty for

2013 is: 4,5223 RON / EUR as compared to

2012: 4,3001 RON/ EUR



Excise for beer

Rate in the case of beer is determined by the following formula:

A = K x C x R x Q

where:

K = unit rate provided according to the annual production capacity(expressed in euro per hectolitre Plato degree).C = number of Plato degrees;

R = rate of exchange ron / euroQ = quantity (in hectoliters).

Plato Degree is the weight of sugar expressed ingrams per 100 g of solution measured at 20 ° C.



Application 1

What is the excise duty for 500 bottles of beer of

0.33 liters released in March 2007 if following

data are met:

- Number of Plato degrees 8;- Unitary rate: 0748 EUR / hectolitre Plato

degree;

- The exchange rate notified by the central bank

on October 2, 2006: 1 euro = 3.5361 RON;

A = 8 x 0.748 x 3.5361 x 1.65 = 35 lei.



Small independent producers

can benefit from reduced rate if they meet thefollowing cumulative conditions: Have an annual production capacity of not more

than 200,000 hectoliters;

Traders are producers of beer, which legally andeconomically are independent from any othereconomic agent producer of beer;

Use separate physical facilities (not breweries); Use different production areas than any other

economic agent producer of beer; Does not work under the brand of another

economic agent producer of beer.



Small producers

The reduced rate of excise can be applied also forimported beers from small independent producers.

In case of increasing its production capacity through thepurchase of new capacity or expansion of existing ones: Notification in writing the tax authority to which it is

registered as authorized warehousekeeper aboutcapacity changes;

Computation and payment to the state duty of theamount corresponding to the new productioncapacity, from the month immediately following that

was put into operation again. Is exempted from excise duty the beer produced and

consumed individuals by the producer and familymembers.



Excise tax for wines

The excise duty for wines is determined by the

following formula:

A = K x R x Q

K = unit rate;R = rate of exchange leu / euro

Q = quantity (in hectoliters).

Is exempted from excise duty the wine producedby individuals and used by them and family

members.



Application 3

Determine the wine excise tax, if following dataare known :- Release for consumption: February 2007;- 10,000 bottles of the 0.7-liter;

- Alcoholic strength 13 degrees;- Unit rate: 34.05 euro per hectolitre of product;- Exchange rates applying for 2007: 1 euro =3.5361 lei.

A = 34.05 x 3.5361 x 70 = 8,428 lei.



Excise for alcohol

The excise for alcohol is determined bythe following formula

A = (C/100) x K x R x Q

C = the alcoholic strength expressed as apercentage of volume;K = the specific excise duty;R = rate of exchange leu / euro

Q = quantity (in hectoliters). Small distilleries must be authorized as

fiscal warehouse of production



In the case of alcohol produced in smalldistilleries, the level reduced excise dutiesapplies production does not exceed 10 hectoliters of pure

alcohol per year are independent legally and economically

not covered by the work product of other distilleries

Plum brandy and fruit spirits for their own

consumption of households is taxed by applying a rate of50% standard rate of excise duty applied to alcohol. up to 50 liters of product for each farm / year

alcoholic strength by 100% by volume



Application 4

Determine the excise tax on alcohol if thefollowing data are met:- Release for consumption: August 2007;- 20,000 bottles of the 0.5-liter;

- Alcoholic strength 93%;- Uniform rate: 750 euro per hectolitre degreealcoholic;- The exchange rate for 2007: 1 euro = 3.5361

lei.A = (93/100) x 750 x 3.5361 x 100 = 246,643lei.



Excise for cigars

In the case of cigars the excise duty is

determined by:

A = Q x K x R

where:Q = quantity in units of 1,000 pcs cigars;

K = unit rate;

R = rate of exchange leu / euro.



Application 5

A company imports in July 2007 a quantity

of 2000 cigars. Unit rate in their case is

41.5 euro per 1000 cigarettes. The

exchange rate applied for 2007 is 1 Euro =3.5361 lei.

Excise tax in this case is:

A = 2 x 41.5 x 3.5361 = 293 lei.



Application 6

A company imports in April 2007 a

quantity of 200 kg of tobacco for smoking.

Unit rate is 46 euro / kg. The exchange

rate applied for 2007 is 1 Euro = 3.5361lei.

Excise tax in this case is:

A = 200 x 46 x 3.5361 = 32532 lei.



Excise for oils

The unit rate for mineral oil is fixed in euro/ unit of measure of quantity (tonne, 1000liters gigajoule).

The excise duty is determined by:A = Q x K x Rwhere:Q = quantity;

K = unit rate;R = rate of exchange leu / euro.



Application 7

The excise duty for 2 tonnes of diesel, as

the unit rate is 307.59 euro and the

exchange rate taken in the calculation of

duty is 1 euro = 3.5361 lei, will be: A = 2 x 307.59 x 3.5361 = 2175 lei.



Excise duty for electricity

The unit rate for electricity is expressed ineuro / MWh, differentiated on commercialand non-commercial consumption.

The excise duty is determined by:A = Q x K x Rwhere:Q = quantity, expressed in MWh;

K = unit rate;R = rate of exchange leu / euro.

Th t d ti d il



The tax on domestic crude oil

The tax due for crude oil is 4 euro / tonne.

Taxation on oil and natural gas production

occurs at the time of delivery.

Fi l h



Fiscal warehouse

under the control of the competent tax authoritywhere excisable products are produced,processed, held, received or sent

produce and store only

alcohol and alcoholic beverages, manufactured tobacco,

energy products.

They do not include small independentproducers

The duty free shops are included in the categoryof fiscal warehouses for stores that operateunder permits duty-free

Fi l h



Fiscal warehouse

WHEN to authorize? beer - 150,000 liters;

wine and fermented beverages - 150,000 liters;

spirits - 25,000 liters of pure alcohol;

alcohol - 400,000 liters of pure alcohol;

cigarettes - a quantity whose value at the maximum price forretail >= 2.500.000 Euro;

energy products 2,500,000 kilograms. The minimum quantity isnot required for storage warehouses dedicated to supply ofaircraft, ships and boats.

HOW LONG? authorization of production is 5 years

authorization of storage is 3 years.

P t f i t th b d t



Payment of excise to the budget

Harmonized excise duty is due until the 25th, includingthe month in which they become due.

Exceptions:- for external operators, the excise duty shall be due the

working day immediately following that in which theywere received excisable products;- the authorized suppliers of electricity or natural gas must pay the excise before the 25th of the monthfollowing the one in which billing was done to the final

consumer;- In case of import of excisable product, the payment ofexcise duty must be made at the time of customsdeclaration of import.

Exemption from excise tax



Exemption from excise tax

Delivery in the context of diplomatic or consular relations;

International organizations recognized by thegovernment of Romania and members of suchorganizations;

The armed forces of any State Party to the NorthAtlantic Treaty (NATO), and the civilian staffaccompanying them or for supplying their messes orcanteens;

The subject of an agreement with non-membercountries or international organizations, provided thatsuch agreement is authorized or permitted on theexemption from value added tax.

HW



HW

A company produces in 2005 a quantity of

150 hectoliters of cognac. The alcoholic

strength of drink is 35%. Unit rate is fixed

at 280 euro per hectolitre of pure alcohol,and the exchange rate is 1 euro = .........lei.

What is the duty?

HW



HW

A company produces in 2012 a quantity of60,000 bottles of quiet wine 0.7 liters each, and

granted in the form of dividends to shareholders

500 bottles of wine to 0.7 liters each. Alcoholic

strength is 12 degrees. The exchange rate is 1

euro = .............. lei. What is the duty?

But what if it was the company also produces

and 10,000 bottles of sparkling wine to one litereach? Alcoholic strength is 15 degrees.



A company imports in 2013 a quantity of

500 barrels of 500 liters of beer each. The

alcoholic strength of beers is 5.6 degrees

and the number Plato degrees is 3. Unitrate is 0.6 euro per hectolitre and the

exchange is 1 euro = ............... lei. What is

the duty?

HW



HW

A company is economic small independent producer andhad an early 2005 production capacity of 80,000hectoliters in June and put into operation a newproduction capacity reaching a total production capacityof 280,000 hectoliters. In June he produces a quantity of

35,000 hectoliters and in July a quantity of 90,000hectoliters. Uniform rate is 0.38 euro per hectolitredegree Plato in the case of a production capacity of up to200,000 hectoliters and 0.6 euro per hectolitre degreePlato, for a production capacity exceeding 200,000hectoliters. Number of Plato is 3 degrees, and theexchange rate is 1 euro = ........... lei. What will be theduty due in June and will be duty due in July?



INCOME TAX FOR

MICROENTERPRISES

Requirements for a micro-enterprise



Requirements for a micro enterprise

• Annual Turnover <= 100 000 EUR

• Less than 50% of the Turnover should be

coming from other activities than

management consultancy

• No stakeholders of a microenterprise should

be Public Institutions or Companies with more

than 250 employees.



• Exceptions: Banking, Insurance, casinos,

gambling

• Level :

– For 2008, the level of Income tax for

microenterprises is of 2.5% out of Turnover,

– For 2009 it raised up to 3% out of Turnover.



• If the Company does not any longer fulfill the requirementsin order to be considered a Microenterprise, there isapplied a Profit Tax of 16% out of the Gross Result.

• If Turnover > 100000 EUR, starting with the next trimester

16% of Gross result will be applied.• For all the other requirements, the following year 16% of

the Gross result will be applied.

•

Once a micro-enterprise failed to fulfill one requirementand became a Profit tax (and not an income tax), thecompany cannot become again a micro-enterprise.



• Gross Result = Total Revenues –

Total Expenses –

Non Taxable Revenues + Non Deductible

Expenses

• Non Taxable Revenues are considered:

– Revenues from inventories variation

– Revenues from provisions

– Situations when receiving annual subsidies – Insurance claims

– All revenues from production of fix assets

Application



Application

• A COMPANY REGISTERED IN 2011 IN THE FIRSTTRIMESTER A TURNOVER OF 100 000 RON AND ANUMBER OF 2 EMPLOYEES, FOR THE SECONDTRIMESTER THE LEVEL OF TURNOVER IS ALSO OF

100 000 RON, BUT THERE ARE HIRED 3 MOREEMPLOYEES. THE LEVEL OF EXPENSES FOR FIRSTAND SECOND TRIMESTER IS A SUM OF 110 000RON. TURNOVER FOR THE THIRD TRIMESTER ISOF 330 000 RON WHILE THE EXPENSESREPRESENT 120 000 RON. FIND OUT THE TAXPAID IF THE LEVEL OF INCOME TAX IS OF 2.5%AND THE EXCHANGE RATE IS 1EUR=4.2 LEI.



Tax for the First Trimester: Taking into account the fact that we have a Turnover of 100.000 RON and a

number of 2 employees, we apply the Income Tax for micro-enterprises:

Income Tax = 2% * Turnover

Income Tax = 2% * 100.000 RON = 0.02 * 100.000 RON = 2000 RON

Tax for the second trimester:

Taking into account the fact that we have a turnover of 100.000 RON and 5employees, we apply again the Income Tax:

Income Tax = 2% * 100.000 RON = 0.02 * 100.000 RON = 2000 RON

Tax for the third trimester:

Taking into account the fact that we have a turnover greater than 100.000 EUR (100000+100000+220000> 350000 lei) , we apply the Profit Tax:

Profit Tax = 16 % *( ∑ revenues - ∑ expenses)Profit Tax = 16% * (220.000 RON – 120.000 RON) = 0.16 * 100.000 RON = 16.000

RON



Corporate tax

Payers of co rpo rate tax



y p

• The following persons have to pay corporate tax: – Romanian legal persons – for the profits from any

activity, in Romania and abroad;

– Foreign legal persons – for the taxable profit of the

permanent headquarters in Romania

– Foreign legal persons and non-resident natural

persons that have a business in Romania as

associates without legal power

– Foreign legal persons – for the revenues from real

estates in Romania or from financial titles at a

Romanian company

Except ions from paying the

corporate tax



corporate tax

• The state treasury• The public institutions for public funds

• The Romanian legal persons that are paying income taxfor micro-enterprises

• The Romanian foundations – law 26/2000

• The religious cults – for revenues from economicactivities used for charitable endeavors; revenues fromselling religious products and services; revenues fromrents

• The particular teaching institutions

• The owners’ associations and the inhabitantsassociations – for the revenues used for improving theutilities and efficiency of the building; for maintaining andrepairing the building - ex 1

Application



• AN OWNERS ASSOCIATION OBTAINSREVENUES FROM 5000 LEI FROM AN

ADVERTISING CONTRACT FOR ADVERTISING PANELS PUT ON THE FAÇADE

OF THE BLOCK. THIS AMOUNT IS TO BEUSED AS: 3500 LEI FOR CHANGING THEWINDOWS FROM COMMON PROPERTYWITH TERMOPAN AND 1500 LEI FOR PAYING

THE UTILITIES EXPENSES. THECORPORATE TAX WILL BE PAID ON ……(1500 LEI)

Except ions from paying the

corporate tax



corporate tax

• Banking deposits guarantying fund• National bank of Romania

• Private pension guarantying fund

• Non-profit organizations, syndicates – for revenues fromactivities other than economic: contributions fees,

enrolment fees, taxes for registration, revenues fromvisas, sport taxes and penalties, donations, revenuesfrom sport competitions, dividends and interests fromcash obtained from exempted revenues, resources frompublic funds or non-returnable funds, revenues from

special events (conferences, funds raising events),exceptional revenues from ceded assets, revenues fromadvertising and publicity. For revenues from economicactivities up to 15000 euro, but no more than 10% of thetotal revenues exempted from corporate tax.

Taxab le period



• The taxable period in Romania is the fiscalyear.

• If a payer terminates the activity before the

end of the year, he will pay the corporatetax for the period the activity existed, from

the moment the company is erased from

the trade ledger.

The quotas



• The corporate tax quota is 16%.• In the case of night clubs, night bars, discos, casinos or

sportsbets, the corporate tax is: – 16% of the taxable profit if the corporate tax is bigger or equal

than 5% of the revenues obtained from these activities

– 5% of the revenues, otherwise

• The accounting for these activities must be keptseparately, in order to stress out the expenses andrevenues.corresponding to these activities. In case of

overheads (management and administration), these willbe taken into consideration as weight the total revenues.

Application



• A COMPANY HAS TWO ACTIVITIESGENERATING REVENUES: A SHOP AND ANIGHT CLUB. IT HAS TO HAVE A DISTINCT

ACCOUNTING FOR EACH ACTIVITY. FROMTHE RECORDS, THE TOTAL REVENUES ARE6000 LEI, FROM WHICH 4000 LEICORRESPONDS TO THE SHOP AND 2000 LEIFROM THE NIGHT CLUB. THE TOTALEXPENSES ARE 3000 LEI, FROM WHICH 1500

LEI ARE CORRESPONDING TO THE SHOP,1200 LEI FOR THE NIGHT CLUB AND 300 LEI ARE GENERAL OVERHEADS. SO….THECORPORATE TAX IS….

Establ ish ing the taxable resu l t



• There is a difference between the accounting result andthe fiscal result.

• Accounting result = total revenues – total expenses(including the corporate tax)

• Fiscal result (taxable result) = total revenues – totalexpenses - non-taxable revenues + non-deductibleexpenses

!!!! We may have an accounting loss but a fiscal profit.

Taxable profit = accounting result – non-taxable revenues +

non-deductible expenses –

deductions ( fiscalamortization, interest expenses, legal deductible reserve

and others) – fiscal loss from previous years

Application



• AT THE END OF n, THE COMPANY HAS THEFOLLOWING SITUATION: TOTAL REVENUES300000 LEI, TOTAL EXPENSES 400000 LEI,NON-TAXABLE REVENUES 10000 LEI AND

NON-DEDUCTIBLE 150000 LEI. ACCOUNTING RESULT = -100000 LEI

(LOSS)

• FISCAL RESULT = -100000+150000-10000 =

40000 LEI (PROFIT)• CORPORATE TAX = 16%*40000 = 6400 LEI

Non-taxable revenues



• Dividends from a Romanian legal person• Favorable differences of financial titles (incorporation of

reserves, shares)

• Non-taxable revenues stressed out in memorandumsand agreements

• Dividends received by a Romanian legal person from itssubsidiary situated in an EU member state or from thepermanent headquarter situated in an EU member state,if the Romanian legal person : – Pays corporate tax, without any options or exemptions

– Owns min 10% of the social capital of the legal person from EUmember state

– Is shareholder for min 2 years

Application



• A COMPANY REGISTERS A TOTAL REVENUE OF5000 RON OUT OF WHICH 1000 RON REPRESENTDIVIDENDS FROM A ROMANIAN LEGAL ENTITY. THETOTAL EXPENSES ARE 3500 RON OUT OF WHICH150 ARE NON DEDUCTIBLE. COMPUTE THE

CORPORATE TAX.• SOLUTION:

CORPORATE TAX = 16% * (TOTAL REVENUES – DEDUCTIBLE EXPENSES – NON TAXABLE

REVENUES + NON DEDUCTIBLE EXPENSES)CORPORATE TAX = 16% * (5000 RON – 3350 RON –

1000 RON + 150 RON) = 0.16 * 650 RON = 104 RON

TYPES OF EXPENSES:



1. Deductible (the majority!!! with theexception of limited deductibility or no

deductibility)

2. Non Deductible Expenses:1. Fees

2. Penalties established be Legal Courts

3. Limited Deductible

Protocol Expenses



• 2% [Revenues –

(Total Expenses –

Accounting Profit tax – Protocol Expenses)]

A COMPANY REGISTERS THE FOLLOWING

DATA :• TOTAL REVENUES OF 300.000 RON,

• TOTAL EXPENSES OF 175.000 RON,

• ACCOUNTING PROFIT TAX OF 25.000 RON,

• PROTOCOL EXPENSES OF 20.000 RON.COMPUTE THE LEVEL OF DEDUCTIBLE

PROTOCOL EXPENSES.

Travelling Expenses



2.5% * daily travelling expenses offered bypublic institutions (in 2012: 13 lei/day)

• A COMPANY SENDS ITS REPRESENTATIVES

IN 3 CITIES OF ROMANIA FOR 20

TRAVELLING DAYS. IT IS OFFERING 600 LEI

AS TRAVELLING EXPENSES. COMPUTE THE

LEVEL OF NON DEDUCTIBLE TRAVELLING

EXPENSES.

Other types



• Social Expenses (special events: marriage, funerals,birth, vouchers, bonuses) – should not surpass 2% out of the salary expenses

• Food vouchers (9.00lei/day)

• Reserves and provisions – Legal Reserves less than 5% out of the Gross Profit

• Expenses without supporting documents unless they arebelow 100 RON

• Optional occupational pension scheme, within the limit of

400 euros per year for every employee;• Private health insurance premiums, within the limit of

250 euros per year for every employee;

Other types



• Interest expenses can be deducted by aCompany as follows:

• The Bank interest expenses are deductible 100%

• The non-commercial loans – expenses with the interest willbe deducted up to the level of quarterly interest established

by NBR (National Bank of Romania). The exceeding amountover the NBR’s rate will be considered Non Deductible.

– Financial Leverage = (Long Term Debt 0 + Long Term Debt 1) /(Owners Equity 0 + Owners Equity 1)

– Conditions of deduction for the Financial Leverage:

• If 0 <= Financial Leverage <= 3 →deduct now • If Financial Leverage < 0 → deduct next year

• If Financial Leverage > 3 → deduct next year

HW 1



• A COMPANY RECORDS A TOTAL OF 70.000 RONREVENUES FROM WHICH 2000 RON AREREVENUES FROM DIVIDENDS AT A ROMANIANCOMPANY. THE RECORDED EXPENSES: RAWMATERIALS 52.152 RON, PAID CORPORATE TAX4000 RON; SALARY EXPENSES 10.000 RON,EXPENSES WITHOUT SUPPORTING DOCUMENTS1200 RON. INTEREST EXPENSES FOR A BANKINGLOAN OF 2000 RON CONTRACTED AT A RATE OF5%. INTEREST EXPENSES FOR A COMMERCIALLOAN OF 5000 RON AT A CONTRACTING INTEREST

RATE OF 8%. DEPRECIATION EXPENSES ARE OF1000 RON. TAKING INTO CONSIDERATION THATTHE NBR’S QUARTERLY INTEREST RATE WAS OF4%, COMPUTE THE CORPORATE TAX. THEFINANCIAL LEVERAGE IS OF 0.9.

HW2



• A Company registers Total taxable Revenues of25.200 RON and the following expenses: 2500

RON raw materials, 200 RON insurance

premiums, expenses without supporting

documents 43 RON, travelling expenses for 6days 220 RON, salary expenses 1000 RON,

social expenses 270 RON, protocol expenses

1200 RON, advertising expenses 180 RON, paid

corporate tax 120 RON. Compute the Paid

Corporate tax.

HW3



• A legal entity presents the following statement for thefiscal year 2009: – taxable incomes: 250.000 lei;

– dividends received from a foreign legal person, to whom it heldfor an uninterrupted period (since the year 2005), 7% of the

participation titles: 15.000 euros; – personnel expenses: 100.000 lei;

– fiscal depreciation 2.700 lei;

– deductible protocol expenses 580 lei;

– legal reserve 4.200 lei;

– ancillary deductible expenses 17.580 lei.• Compute the corporation tax, taking into consideration

that the owners’ equity is 50.000 lei.



Custom dutiesCustom duties

Like mothers, taxes are oftenLike mothers, taxes are often

misunderstood, but seldom forgottenmisunderstood, but seldom forgotten

Lord BramwellLord Bramwell



CustomsCustoms -- First cousins of the revenue, soFirst cousins of the revenue, so--

called because of their strange habits.called because of their strange habits.



Final custom regimeFinal custom regime



g

Include:Include:

– – ImportsImports – – ExportsExports

– – Introduction or exit of goods belonging toIntroduction or exit of goods belonging to

travelers or to other natural persons, nontravelers or to other natural persons, non--comercial agentscomercial agents

Import custom dutyImport custom duty



Import custom duty is established through lawImport custom duty is established through law

– – Expressed as percentageExpressed as percentage

– – Applies to the customs value (in RON) Applies to the customs value (in RON)

Customs value = the external price amount ofCustoms value = the external price amount of

the merchandisethe merchandise – – It can include also:It can include also:

Transportation expenses up to the Romanian borderTransportation expenses up to the Romanian border

Loading and unloading and manipulating expenses duringLoading and unloading and manipulating expenses duringexternal transportationexternal transportation

Insurance cost during external transportationInsurance cost during external transportation

Import custom dutyImport custom duty



Is expressed in RON at the exchange rateIs expressed in RON at the exchange rateestablished by NBR for the entire week established by NBR for the entire week

Is calculated by the importer based on aIs calculated by the importer based on astatement in which the customs value is beingstatement in which the customs value is beingestablished and declared.established and declared.

Some products can be taxed on a preferentialSome products can be taxed on a preferentialregime ( a reduction or an exception from theregime ( a reduction or an exception from thecustom taxation)custom taxation)

The products sold in foreign currency, throughThe products sold in foreign currency, through “ “duty freeduty free” ” shops, as well as the shops forshops, as well as the shops fordiplomatic entities and their personneldiplomatic entities and their personnel arearebeing excepted from the customs taxationbeing excepted from the customs taxation

Application Application



An agent import 1000 kg of X product. An agent import 1000 kg of X product.The custom price is 100 usd/kg. BesidesThe custom price is 100 usd/kg. Besides

the customs price the invoice includes alsothe customs price the invoice includes alsoexternal transportation expenses ( 500external transportation expenses ( 500

usd). The custom duty quota is 35%, andusd). The custom duty quota is 35%, andthe exchange rate is 3,30 lei/usd.the exchange rate is 3,30 lei/usd.

The customs duty = customs value *The customs duty = customs value *

custom quota = (1000*100 +500) *3,30custom quota = (1000*100 +500) *3,30*35% = 116077,50 lei*35% = 116077,50 lei

Export custom dutyExport custom duty



The export activity does NOT support customThe export activity does NOT support customduties.duties.

The products meant for export are free to exitThe products meant for export are free to exitthe country if they are in the same state asthe country if they are in the same state asmentioned in the export statement.mentioned in the export statement.

There are also:There are also: – – Prohibited productsProhibited products – – they are forbidden through lawthey are forbidden through law

– – Restricted productsRestricted products – – the export must fullfil certainthe export must fullfil certainconditionsconditions

The export licence is nominalThe export licence is nominal – – it cannot beit cannot betransferedtransfered

Custom duties for travelers andCustom duties for travelers and



other natural personsother natural persons Travelers or other natural persons can bring in or take out prodTravelers or other natural persons can bring in or take out productsuctsfrom their residence country without being subject to custom dutfrom their residence country without being subject to custom duties,ies,in the limits and conditions established through law.in the limits and conditions established through law.

ForFor exemptedexempted exceeding the quantity or value stipulated throughexceeding the quantity or value stipulated throughlaw, for the customs value, it is being applied the normal imporlaw, for the customs value, it is being applied the normal importtcustom duty and a standard 20% export custom quotacustom duty and a standard 20% export custom quota

Some products are from custom duties:Some products are from custom duties: – – personal effects and medicationspersonal effects and medications

– – jewelry for personal use jewelry for personal use for persons older than 16 years (1 wedding band of gold and onefor persons older than 16 years (1 wedding band of gold and one silver, twosilver, two

rings, a watch, two medalionae with chain, two pairs of earringsrings, a watch, two medalionae with chain, two pairs of earrings, two pairs, two pairsof cufflinks, a pin, a necklace, a penof cufflinks, a pin, a necklace, a pen--pencil kit, two pairs of glasses)pencil kit, two pairs of glasses)

for persons younger than 16 years (one ring, a watch, one medalifor persons younger than 16 years (one ring, a watch, one medalion withon with

chain, one pair of earrings, a bracelet)chain, one pair of earrings, a bracelet) – – books, records of any kindbooks, records of any kind

– – prize goods, distinctionsprize goods, distinctions

– – alcoholic drinks, cigarettes, cigars, tabacco (2 liters of alcohalcoholic drinks, cigarettes, cigars, tabacco (2 liters of alcohol of 22%ol of 22%strenght), 4 liters of wine or beer, 200 cigarettes, 50 cigars astrenght), 4 liters of wine or beer, 200 cigarettes, 50 cigars and 250nd 250

grams of tabacco.grams of tabacco.

Suspensive custom regimeSuspensive custom regime



Refer to operations with temporary feature, that will suspend thRefer to operations with temporary feature, that will suspend theecustom duties.custom duties.

It must be asked by the owner of the goods for the period ofIt must be asked by the owner of the goods for the period of

obtaining a new custom regime.obtaining a new custom regime. Products may be subject to the regime, no matter the quantity, tProducts may be subject to the regime, no matter the quantity, thehe

value, their origin or destinationvalue, their origin or destination

It cannot be subject to suspensive custom regime the products thIt cannot be subject to suspensive custom regime the products thatatare restricted or prohibited on a moral,health, environmentalare restricted or prohibited on a moral,health, environmentalprotection reasonsprotection reasons

It can be applied to:It can be applied to: – – transit of goodstransit of goods

– – warehousing of goodswarehousing of goods

– – inward processing of goodsinward processing of goods – – processing under customs control of goodsprocessing under customs control of goods

– – temporary admission of goodstemporary admission of goods

– – outward processing of goodsoutward processing of goods

Transit of goodsTransit of goods



Transportation of foreing goods from oneTransportation of foreing goods from one

custom office to another, without beingcustom office to another, without being

subject to import dutiessubject to import duties

It ends when the goods arrive at theIt ends when the goods arrive at the

destination customs office, but no moredestination customs office, but no morethan 45 days.than 45 days.

– – For land transportationFor land transportation – – 8 days8 days – – For railway transportationFor railway transportation – – 20 days20 days

Warehousing of goodsWarehousing of goods



Customs warehouseCustoms warehouse = approved warehouse by customs authority= approved warehouse by customs authority, under its control, in which the products are kept for a pre, under its control, in which the products are kept for a pre--determined period of time in which a new regime must be obtaineddetermined period of time in which a new regime must be obtained..

Before entering a warehouse, the goods will NOT be subject toBefore entering a warehouse, the goods will NOT be subject to

import/export duties.import/export duties. The warehouse can beThe warehouse can be publicpublic ( for anyones( for anyones’ ’ goods to be stored) orgoods to be stored) or

privateprivate (just for the owner of the warehouse(just for the owner of the warehouse’ ’ s products to bes products to bestored).stored).

The warehouse can be founded only by Romanian legal persons.The warehouse can be founded only by Romanian legal persons. During warehousing, the only operations allowed are:During warehousing, the only operations allowed are: packing, packing,labelling, testing for selling of products labelling, testing for selling of products ..

!!! The expenses with warehousing (including conservation) are N!!! The expenses with warehousing (including conservation) are NOTOTtaken into consideration for customs value of the products.taken into consideration for customs value of the products.

Products taken from vessel wrecked or damaged in the national oProducts taken from vessel wrecked or damaged in the national orrterritorial waters of Romania are considered to be subject toterritorial waters of Romania are considered to be subject tosuspensive regime of warehousingsuspensive regime of warehousing

Inward processingInward processing



It is applied to:It is applied to: – – Foreing goods destined for reexport as compensatory productsForeing goods destined for reexport as compensatory products

– – Imported goods, introduced in Romania, in order to be exportedImported goods, introduced in Romania, in order to be exported

as compensatory products. The import custom duties are beingas compensatory products. The import custom duties are beingcashed and then paid back at exportcashed and then paid back at export

Allowed operations: Allowed operations: – – Merchandise manufacturing (assembling, adaptation)Merchandise manufacturing (assembling, adaptation)

– – TransformingTransforming – – RepairingRepairing

– – Utilizing other products that permit getting the compensatoryUtilizing other products that permit getting the compensatoryproducts.products.

Compensatory products = the result of perfectioningCompensatory products = the result of perfectioningprocess.process.

Equivalent products = romanian products used inEquivalent products = romanian products used inexchange of foreing products for the fabrication of theexchange of foreing products for the fabrication of thecompensatory productscompensatory products

Inward processingInward processing



Rate of return = percentage of compensatoryRate of return = percentage of compensatoryproducts obtained through active perfectioningproducts obtained through active perfectioning

of import productsof import products They cannot be subject to inward processing:They cannot be subject to inward processing:

– – Mineral oils, energy sources, other than the productsMineral oils, energy sources, other than the products

used for obtaining compensatory products or forused for obtaining compensatory products or fortesting import products needing repairing.testing import products needing repairing.

– – Equipments and tools.Equipments and tools.

The custom duties are being computed through:The custom duties are being computed through: – – Method of quantitative key;Method of quantitative key;

– – Method of valoric key.Method of valoric key.

Method of quantitative keyMethod of quantitative key



A . One compensatory product from one A . One compensatory product from one

foreign goodforeign good quantity of foreignquantity of foreign

product * rate between the importedproduct * rate between the imported

compensatory products and total amountcompensatory products and total amount

of compensatory products, according toof compensatory products, according toreturn rate.return rate.




Compensatory products as a result ofCompensatory products as a result ofinward processing = 150 kginward processing = 150 kg

Foreign good A = 75kgForeign good A = 75kg

Return rate : 75 kg of A = 150 kg ofReturn rate : 75 kg of A = 150 kg of

compensatory productscompensatory products imported compensatory products= 140 kgimported compensatory products= 140 kg

the quantity of foreign productsthe quantity of foreign productsbecoming part of the compensatorybecoming part of the compensatory

products is: 75 kg * 140/150 = 70 kgproducts is: 75 kg * 140/150 = 70 kg




B. One compensatory product from moreB. One compensatory product from more

foreign goodsforeign goods for each foreign good *for each foreign good *

rate between the imported compensatoryrate between the imported compensatory

products and total compensatoryproducts and total compensatory

products, according to return rate.products, according to return rate.




Compensatory products as result ofCompensatory products as result of

inward processing= 500kginward processing= 500kg

Foreing good A = 200 kgForeing good A = 200 kg

Foreing good B = 150 kgForeing good B = 150 kg

Imported compensatory products = 400kgImported compensatory products = 400kg

foreign goods for compensatoryforeign goods for compensatory

products: A = 200 *400/500 = 160 kg; Bproducts: A = 200 *400/500 = 160 kg; B= 150 * 400/500 = 120 kg= 150 * 400/500 = 120 kg




C. More compensatory products from one foreignC. More compensatory products from one foreigngoodsgoods

Distribution rate = foreign good * rate betweenDistribution rate = foreign good * rate betweenquantity of good in total compensatory productsquantity of good in total compensatory productsand total quantity of foreing good forand total quantity of foreing good forcompensatory product, less the losses fromcompensatory product, less the losses fromperfectioning processperfectioning process

Distribution rate * rate between the importedDistribution rate * rate between the importedcompensatory products and total compensatorycompensatory products and total compensatoryproducts, according to return rate.products, according to return rate.




Foreign good A = 200 kgForeign good A = 200 kg

Compensatory products: Y = 250 kg; X = 80 kgCompensatory products: Y = 250 kg; X = 80 kg

Foreign good A for Y = 150 kg and for X = 30 kgForeign good A for Y = 150 kg and for X = 30 kg Imported compensatory products = 200 kg Y and 50 kgImported compensatory products = 200 kg Y and 50 kg

X.X.

total foreing good in compensatory products = 150total foreing good in compensatory products = 150+30 = 180 kg+30 = 180 kg

– – Distribution rate Y = 200 * 150/180 = 166,67 kg of A Distribution rate Y = 200 * 150/180 = 166,67 kg of A

– – Distribution rate X = 200 * 30/180 = 33,33 kg of A Distribution rate X = 200 * 30/180 = 33,33 kg of A

Quantity of A for customs purposes = 154,16 kgQuantity of A for customs purposes = 154,16 kg – – Y: 166,67 * 200/250 = 133,33kg Y: 166,67 * 200/250 = 133,33kg

– – X: 33,33 * 50/80= 20,83 kgX: 33,33 * 50/80= 20,83 kg



Foreign good A = 500 kgForeign good A = 500 kg

Foreign good B = 300 kgForeign good B = 300 kg

Compensatory products X = 600Compensatory products X = 600kg and Y = 200 kgkg and Y = 200 kg

qA in X = 390 kg, qA in Y = 80kgqA in X = 390 kg, qA in Y = 80kg

qB in X= 180kg, qB in Y = 90 kgqB in X= 180kg, qB in Y = 90 kg

Imported X = 500 kg, imported YImported X = 500 kg, imported Y= 150kg= 150kg

Distribution rate for A:Distribution rate for A: – – In X = 500 * 390/(390+80) =In X = 500 * 390/(390+80) =

414,89 kg414,89 kg

– – In Y = 500 * 80/(390+80)= 85,11In Y = 500 * 80/(390+80)= 85,11kgkg

Distribution rate for B:Distribution rate for B: – – In X = 300 *180 / (180+90) =In X = 300 *180 / (180+90) =200 kg200 kg

– – In Y = 300*90/(180+90)=100 kgIn Y = 300*90/(180+90)=100 kg

qA for customs: 388,57kgqA for customs: 388,57kg – – In X = 414,89 *In X = 414,89 *

500/600=324,74kg500/600=324,74kg

– – In Y = 85,11 * 150/200 =In Y = 85,11 * 150/200 =

63,83kg63,83kg qB for customs: 241,67kgqB for customs: 241,67kg

– – In X = 200 * 500/600 = 166,67kgIn X = 200 * 500/600 = 166,67kg

– – In Y = 100*150/600=75kgIn Y = 100*150/600=75kg

Processing under customs controlProcessing under customs control



Allows using foreing goods for transformation on the Allows using foreing goods for transformation on theRomanian territory without subjecting them to importRomanian territory without subjecting them to importcustom dutiescustom duties

For the part of the goods that remain untransformed aFor the part of the goods that remain untransformed afinal custom regime is appliedfinal custom regime is applied

The transformed products will be subjected to a certainThe transformed products will be subjected to a certaincustoms regime.customs regime.

The transformation license can be given for at most 2The transformation license can be given for at most 2yearsyears

The customs value of these products will be:The customs value of these products will be:

– – The selling price;The selling price; – – The customs value when entering the customs + transformationThe customs value when entering the customs + transformation

expensesexpenses

Temporary admissionTemporary admission



For foreing products destined to reexportFor foreing products destined to reexport

Usually a 3% of the import custom duties is beingUsually a 3% of the import custom duties is being

established and paid for these products for each monthestablished and paid for these products for each monthof this status (up to 100% of the customs duties ifof this status (up to 100% of the customs duties ifproducts were to be imported).products were to be imported).

Is applied to packings, films, information support, lifeIs applied to packings, films, information support, life

animals, goods from EU financinganimals, goods from EU financing--projects.projects. Is applied only if:Is applied only if:

– – Goods are imported by authorized institutionsGoods are imported by authorized institutions

– – Goods are used for nonGoods are used for non--commercial purposes;commercial purposes; – – Are owned by a foreigner. Are owned by a foreigner.

Outward processingOutward processing



For temporary export of Romanian goodsFor temporary export of Romanian goods

outside, that are to be part of aoutside, that are to be part of a

transformation or manufacturing.transformation or manufacturing.

Concepts:Concepts:

– – Compensatory products,Compensatory products,

– – Return rateReturn rate




An economic import perfumes worth 5,000 euros. Knowing the An economic import perfumes worth 5,000 euros. Knowing thecustoms duties are 10%, the customs commission 0.5%, the excisecustoms duties are 10%, the customs commission 0.5%, the exciseduty on perfumery is 20% and transport costs and handling duringduty on perfumery is 20% and transport costs and handling duringthe external transportation is 1000 euro , calculate tax and custhe external transportation is 1000 euro , calculate tax and customstomsduty due. The exchange rate is 4,10 lei / euro.duty due. The exchange rate is 4,10 lei / euro.

Customs value = price x foreign exchange rate + expenses duringCustoms value = price x foreign exchange rate + expenses duringforeign exchange rate = 5000*4,10+1000*4,10 = 24600 leiforeign exchange rate = 5000*4,10+1000*4,10 = 24600 lei

Customs duty = customs value x customs quota =Customs duty = customs value x customs quota =

24600 *10% = 2460 lei24600 *10% = 2460 lei Customs commission = customs value x customs commission quotaCustoms commission = customs value x customs commission quota

= 24600 * 0,5%=123 lei= 24600 * 0,5%=123 lei

Excise duty = (customs value + customs duty + customsExcise duty = (customs value + customs duty + customscommission) x excise duty = (24600+2460+123) *20% = 27183 leicommission) x excise duty = (24600+2460+123) *20% = 27183 lei



VAT VAT



783. The Devil's number (including VAT).783. The Devil's number (including VAT).

Where there's a will there's a tax shelter.Where there's a will there's a tax shelter.

VAT VAT



The standard V.A.T. rate in Romania is 19%.The standard V.A.T. rate in Romania is 19%.

There is a reduced V.A.T. rate of 9%There is a reduced V.A.T. rate of 9%-- applies to hotelapplies to hotel

services, books ,newspapers and medicines.services, books ,newspapers and medicines. Insurance companies, banks and financial services inInsurance companies, banks and financial services in

Romania are exempt.Romania are exempt.

The fiscal period for V.A.T is the calendar quarter.The fiscal period for V.A.T is the calendar quarter.

The V.A.T return has to be filed by the 25th of theThe V.A.T return has to be filed by the 25th of themonth following the quarter.month following the quarter.

V.A.T registration is compulsory when the annual V.A.T registration is compulsory when the annual

turnover for the previous year was above EUR 100,000.turnover for the previous year was above EUR 100,000.

VAT VAT



From accounting point of view, 4 types:From accounting point of view, 4 types:

– – CollectibleCollectible

– – DeductibleDeductible

– – PayablePayable

– – RecoveredRecovered

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