Only 20% of Tourism Companies Will Pay the Specific Tax
The specific tax will increase budget revenues from the tourism industry nearly sevenfold, stated Nicolae Istrate, Vice President of the FPTR (Federation of Romanian Tourism Employers). The FPTR representative explained how this tax is applied and why only 20% of companies with specific tourism activities will pay it.
„In 2017, budget revenues from the tourism industry will increase nearly sevenfold through the application of the specific tax. However, for about 80% of companies with specific tourism activities, the specific tax does not apply; instead, the income tax applies because they do not have a turnover exceeding 500,000 EUR,” stated Nicolae Istrate.
Nicolae Istrate specified that in the case of hotels that also own other spaces, such as shops, barbershops, etc., a 16% profit tax will be paid for these activities. For activities found in the CAEN codes of Law 170, profit tax will be paid if they have a turnover of over 500,000 EUR, and if they have a lower turnover, they will pay the specific tax. The tax will apply to all commercial companies with activities falling under the eight CAEN codes provided in Law 170, not just tourism companies.
As a novelty, the new version of the lump-sum tax law refers only to eight specific tourism activities, whose CAEN codes are found in the first article of Law 170: hotels and other similar accommodation facilities, holiday and short-stay accommodation facilities, trailer parks, campsites and camps, other accommodation services, restaurants, event catering activities, other food services, bars, and other beverage serving activities.
The FPTR Vice President explains that this tax will be paid by all commercial companies that, as of January 1, 2017, are 16% profit tax payers according to Title II of the Fiscal Code, regardless of whether they record a profit or not.
Title II includes commercial companies that qualify for profit tax payment, while Title III includes those that qualify for income tax.
Istrate specified that in 2017, the threshold for commercial companies paying income tax increased from 100,000 EUR to 500,000 EUR, and they must pay 1% of the revenue obtained.
Depending on the category of the tourist reception structure, there are mandatory criteria in the legislation for ensuring tourism services.
The novelty of this law is the distinction made between integrated public catering units and independent ones, which are not linked to the activity of any hotel. In the case of integrated public catering units, tax is only paid on the accommodation places. However, one of the criteria is that the number of seats in the integrated catering unit must be equal to the number of accommodation places.
In the case of seasonal hotels, they will pay a specific tax based on the operating period resulting from the functioning permit issued by the town hall, but for no less than 153 days per year.
To apply the specific tax, the Ministry of Tourism has modified the classification norms so that the commercial areas, the number of seats, and whether the catering units are integrated or independent are specified in the annexes to the classification certificate of both the hotel and the catering unit.
The application norms for Law 170 have been published on the Ministry of Finance website and have been put up for public debate.
Source: Mediafax
Frequently Asked Questions
What is the specific tax in the Romanian tourism sector?
The specific tax is a fixed tax regime applicable to companies operating in tourism and public catering (based on 8 specific CAEN codes) that have a turnover exceeding €500,000.
Why do only 20% of tourism companies pay this specific tax?
Approximately 80% of companies in the sector fall below the €500,000 turnover threshold, meaning they qualify as micro-enterprises and pay a 1% income tax instead of the specific tax.
How is the specific tax calculated for seasonal hotels?
Seasonal hotels pay the tax based on their actual operating period as stated in their functioning permit, provided it is at least 153 days per year.