How is the financial result calculated?
The financial result is calculated as the difference between the income and expense accrued under the applicable accounting regulations, which excludes non-taxable income and tax deductions plus non-deductible expenses.
When determining the financial result, similar items of income and expenses are also taken into consideration, according to the methodological norms, as well as the tax losses that are recovered in accordance with the provisions of art. 31- Tax losses from the Fiscal Code.
The annual loss determined by the income tax return is recovered from the taxable profits earned over the next seven consecutive years. Recovery of losses shall be made in the order in which they are recorded, at each payout tax period, according to the legal provisions in force from the year of their registration.
The positive tax result is taxable profit, and the negative tax result is tax loss.
Currently, the profit tax rate is 16%. Income tax is applied as follows:
- a) In the case of Romanian legal persons, of foreign legal persons having the place of effective management in Romania, as well as of legal persons having their registered office in Romania, established according to the European legislation, on the taxable profit obtained from any source, both from Romania and abroad;
- b) In the case of foreign legal persons carrying out activity through a permanent establishment / several permanent establishments in Romania, on the taxable profit attributable to the permanent establishment, respectively on the taxable profit at the level of the permanent office designated to fulfill the tax obligations;
- c) In the case of foreign legal persons who earn income as provided in art. 12 lit. h) of the Fiscal Code, on the taxable profit for them.
When is the financial result calculated?
The financial result is calculated quarterly/yearly, cumulatively since the beginning of the fiscal year.
For determining the financial result, the errors recorded in the accounting are corrected as follows:
- a) the errors that are corrected according to the accounting regulations on the account of the retained earnings by adjusting the fiscal result of the year to which they relate and submitting an Amending Statement under the conditions provided by the Tax Procedure Code;
- b) Errors that are corrected according to the accounting regulations on the profit and loss account are taken into account for determining the tax result in the year in which the correction is made.
The accounting methods, established by the legal regulations in force, regarding the exit from inventory management are recognized in the calculation of the financial result.
In the case of taxpayers carrying out international services under the conventions to which Romania is a party, the revenues and expenses incurred for their realization are taken into account in the determination of the taxable result according to special rules established in accordance with the regulations of these conventions.
For the purpose of determining the financial result, the taxpayers are obliged to highlight in the fiscal records the taxable income registered in a fiscal year, as well as the expenses incurred for the purpose of carrying out the economic activity in the same fiscal year, including those regulated by the normative acts in force.
For further information: Law no. 227/2015 regarding the Fiscal Code