T A X HOT T O P I C S

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1 Amendments to the n Fiscal Code (Government Emergency Ordinance No. 58/2010 published in Official Gazette No. 431 of and Government Emergency Ordinance No. 54/2010 published in Official Gazette No. 421 of 23 June 2010 ) The amendments introduced by Government Emergency Ordinance no. 58/2010 ( GEO 58/2010 ) to the n Fiscal Code starting 1 July 2010 refer, mainly, to the following: Fax: 48 VAT The standard VAT rate is increased to 24%. The reduced rates of 9% and 5% remain in force and continue to apply for the same transactions. Direct taxes New criteria for requalification of freelancers as dependent workers (i.e. employees of the income payer): The income beneficiary is in a subordinated relationship to the income payer; The income beneficiary uses the assets of the income payer in the course of his/her activity; The income beneficiary does not contribute with its own capital, but only intellectual or physical work; The travel expenses of the beneficiary are borne by the income payer; The income payer bears vacation or temporary disability allowance for the income beneficiary. If an activity is considered as dependent, the payer and the beneficiary are jointly liable for all taxes and social contributions normally due on salaries. The definition of copyright and related rights is introduced. The tax paid in a foreign country can be credited in only if paid in accordance with the provisions of a Double Tax Treaty concluded between and that foreign state, and the payment of the tax is certified by a document issued by the competent authority of that foreign state. Tax losses incurred starting 2010 through permanent establishments located in member states of EU, EFTA or in a state with which has concluded a Double Tax Treaty can be offset against any taxable profits of the company, from any source.

2 Direct taxes (continued) Tax on dividends paid by a n company to either a n or a foreign company increases from 10% to 16%, however the exemption for cases where the beneficiary is a company having owned at least 10% of shares in the dividend payer for a period of minimum 2 years fully lapsed at the time of the payment is preserved. Lump sum expenses deductible from gross intellectual property income are decreased to only 20%, respectively to 25% for monumental works of art. Meal and gift vouchers are subject to income tax. Based on the current wording of the law, it appears that they will not be subject to social contributions. Vacation and nursery vouchers are subject to income tax. Interest is subject to 16% tax, including interest related to: Demand deposits/current accounts; Deposits; Savings instruments; Civil contracts. The tax exemption for interest obtained from by EU resident individuals is eliminated. Capital gains derived from transfer of all securities are subject to 16% income tax, irrespective of their holding period or form of trading. Fax: 48 The calculation of the net gain from transfers of securities (other than participation titles in closed-ended companies) is the responsibility of each intermediary for each transaction. The net gain or loss is determined by the taxpayer at the end of each quarter, by cumulating all transactions from the beginning of the year. Net losses from transfer of securities may be carried forward to be offset against gains derived from trade of securities for a period of 7 years. Gains from forward forex and similar contracts are taxed at 16%. Income from gambling is taxed at a flat rate of 25%, however income below RON 600 obtained in the same day from the same organiser/payer is still tax exempt.

3 Direct taxes (continued) Income derived by non-resident individuals from dependent activities carried out in is taxed in under all circumstances (e.g. including when paid by an entity other than a n company or n permanent establishment and irrespective of the length of stay in ). Any income of a professional nature, other than salary, is subject to individual social contributions rates (i.e. pension contribution, health fund contribution, unemployment insurance contribution), but within a limit of maximum 5 gross national average salaries (as provided in the Social Security Budget Law). The amendments introduced by the Government Emergency Ordinance No. 54/2010 ( GEO 54/2010 ) to the n Fiscal Code refer, mainly, to the following: Fax: 48 VAT Setting up of a Registry of intra-community operators starting 1 August Starting 1 August 2010, taxpayers registering for VAT purposes / already registered for VAT purposes and intending to carry out intra-community transactions must apply for registration in the Registry of intra-community operators when registering for VAT purposes / before carrying out intra-community transactions. The registration procedure for the Registry of intra-community operators was introduced by Order 2101/2010 published in the Official Gazette no. 429 of 25 June 2010) and requires that the following documents be presented when applying for registration: form 095 Registration / de-registration application ; the criminal records issued by the competent n authorities of all shareholders, except for joint stock companies, and for the administrators.

4 VAT (continued) Starting from the 10 th day following the day when the Council of the European Union approves the derogation for applying this provisions and until 31 December 2011, local supplies of the following categories of goods: cereals, industrial-use plants, vegetables, fruits, meat, sugar, flower, bread and bakery products, carried out between taxable persons registered for VAT purposes will be subject to reverse charge. The Ministry of Public Finance will publish on its official website the approval of the derogation by the Council of the European Union. Excise duties The validity period of the license for fiscal warehouse keeper is of 3 years for large and medium taxpayers and of 1 year for the rest of the taxpayers. The transfer/sale of shares by an authorised warehouse keeper or a warehouse keeper which had its license cancelled/revoked must be notified to the relevant authorities at least 60 days in advance, in order for a tax audit to be performed, except when the transfer of shares occurs on a capital market. The sale of tangible assets, which directly contribute to the production and/or storage of excisable products, by an authorised warehouse keeper or a warehouse keeper which had its license cancelled/revoked can take place only after all due taxes have been paid or the new owner of the assets assume the payment obligation. The minimum excise duty for cigarettes has been increased from 91% to 96%. Fax: 48 The excise duty for Fermented beverages, other than beer and wine in the category of still beverages has increased to EUR 100/hl. The excise duty for Intermediary products has increased to EUR 165/hl. Storage warehouse licenses held by authorized warehouse keepers will cease to be valid as of 1 September 2010, except for certain categories expressly nominated under law.

5 Main amendments to the Fiscal Procedure Code introduced by Emergency Ordinance no. 54/2010 are as follows: Jointly liable persons are nominated expressly. Financial institutions are obliged to communicate, upon request of ANAF, the amounts flowing through the account of a certain taxpayer, as well as disclose information with respect to possession of safety boxes. Main amendments to the Companies Law introduced by Emergency Ordinance no. 54/2010 are as follows: Upon set up of a company, as well as upon change of registered headquarters, the following documents must also be presented: A document issued by the tax authorities certifying that the right to use the space where the headquarter is to be located has not been passed; or If the right of use the space where the headquarter is to be located has been passed, an affidavit stating that the space has been adequately separated / divided to be used as company headquarters. Fax: 48

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