How to interpret the new changes regarding related enterprises / At the ceiling of 500,000 euros, income from independent activities is also taken into account

The legislation on related enterprises was amended by the Government and thus appeared in the Official Gazette GEO 31/2024. Basically, the provisions referring to a law from 2004 (L346) were dropped and new criteria were introduced.

Fiscal consultant Adrian Bența made a brief analysis of the new Emergency Ordinance.

According to him, in the fiscal legislation applicable to the taxation of income obtained by micro-enterprises, the legislator kept the ceiling of taxable income of a micro-enterprise at the level of 500,000 euros.

A person has the right to own only one micro-enterprise, direct or indirect ownership, but when determining the ceiling of 500,000 euros, it must be taken into account that this ceiling also includes the income of some “related” companies.

GEO no. 31 of 2024 regulates the notion of “related” companies from the perspective of microenterprise income taxation.

A first clarification, he says, starts from the fact that the legislator specifies that we will analyze the revenues regulated by art. 53 of the Fiscal Code, respectively the incomes obtained by micro-enterprises, which excludes from the incomes of companies paying profit tax for which the incomes are regulated for art. 19-24 of the Fiscal Code.

The tax consultant says that companies are considered related companies for which one of the following situations is identified:

a) the Romanian legal entity that verifies the condition holds with another Romanian legal entity, directly and/or indirectly, more than 25% of the value/number of participation titles or voting rights, or it has the right to appoint or revoke the administrator / the majority of the members of the administrative, management or supervisory board of that other Romanian legal entity;

From the analysis of the normative text, we observe the existence of an affiliation relationship between two companies, and additionally the owner of the participation titles has the right to decide on the other company.

b) the Romanian legal entity that verifies the condition is owned by another Romanian legal entity, directly and/or indirectly, with more than 25% of the value/number of participation titles or voting rights, or, in the case of the Romanian legal entity that verifies the condition, this other Romanian legal person has the right to appoint or revoke the administrator/majority of the members of the board of administration, management or supervision;

From the analysis of the normative text, we retain the existence of the affiliation relationship between two companies and we retain the right of the owner of the participation titles to decide on the company where the analysis is carried out.

c) the Romanian legal entity that verifies the condition is related to another Romanian legal entity if a person holds, directly and/or indirectly, more than 25% of the value/number of participation titles or voting rights, or has the right to appoint or revoke the administrator/majority of the members of the board of administration, management or supervision both at the first legal entity and at the second legal entity. In the situation where the person holding the participation titles/voting or appointment/revocation rights is a Romanian legal entity, the Romanian legal entity that verifies the condition accumulates the income of this person;

From the analysis of the normative text, we identify an indirect affiliation relationship through a person (natural or legal) who has the right to decide in both companies.

In the situation where the owner of the participation titles is also a Romanian legal person company, within the ceiling of 500,000 euros, the income of this company will also be accumulated.

d) Romanian legal entity that verifies the condition if it has one or more shareholders/associates that hold, directly and/or indirectly, more than 25% of the value/number of shares or voting rights of this Romanian legal entity, shareholders/associates which also carries out economic activity through an authorized natural person/individual enterprises/family enterprises/other form of organization of an economic activity, without legal personality, authorized according to the laws in force. In this situation, the income recorded according to the applicable accounting regulations or the annual income norm, established/adjusted/reduced, according to the provisions of Title IV, of the authorized natural person/individual enterprise/family enterprise/other form of organization of an economic activity without personality legal entity, authorized according to the laws in force, is accumulated with those made by the Romanian legal entity/other related enterprises.

From the analysis of the normative text, we note that when determining the ceiling of 500,000 euros, in addition to the company’s income, the income from independent activities of the company’s participants, natural persons, who carry out an authorized trade or a free profession are taken into account.

These incomes represent the gross income from self-employment (receipts for those people who earn income from self-employment and keep single-entry accounting).

We give as an example an authorized tax consulting company that has as associates two authorized tax consultants, each with a percentage of 50%. This is the only company in which individuals own shares or shares. When we determine the ceiling of 500,000 euros, in addition to the company’s income, the gross income of individuals as tax consultants is also added.

The submission of declarations of mentions for the modification of the fiscal vector for the year 2024 will be made by April 15, 2024.

The legislator expressly states that these criteria will be considered for the entire fiscal year 2024, which leads to the opinion that we must perform the analysis with the data from December 31, 2023. This means that by this date it must be determined certainly both the revenues of the respective company and the revenues of the natural persons participating in the company who own more than the percentage provided for in the normative act, and they carry out independent activities.