23
Apr2020

New financial-fiscal measures during the state of emergency

In the classic style of a football team under construction, the Romanian Government continues to adjust the financial-fiscal measures introduced mainly by O.U.G. no. 30/2020. The most such changes were introduced by O.U.G. no. 53/2020 regarding the amendment and completion of some normative acts regarding social protection measures determined by the spread of the SARS-CoV-2 coronavirus (published in the Official Gazette no. 325 of April 21, 2020). The lawyers of the civil society Costaș, Negru & Asociații consider some comments on these normative changes to be useful.

Formalizing a reality. Formal extension of support measures to lawyers

Conditions for granting support measures

In a previous post, we explained quite clearly that the support measures provided by art. XV of O.U.G. no. 30/2020 also applied to lawyers, this being the logical interpretation of the legal texts. The legal provisions were not properly applied only due to some administrative reflexes, more precisely due to the refusal of the officials of the County Paying and Social Inspection Agencies to comply with the law. With a preference for over-regulation, as an alternative to issuing administrative instructions, the Government considered it necessary to develop a “special” regulation to clarify the legal regime of support measures for lawyers. At the same time, more strict conditions have been set for lawyers’ access to these support measures.

In concreto, the relevant text is that of art. XV alin. (11) of the O.U.G. no. 30/2020, according to which:

– Lawyers benefit from the support allowance provided by art. XV alin. (1) of the O.U.G. no. 30/2020;

– The conditions for lawyers to receive the support allowance are as follows:

a) for the month for which the indemnity is requested, the lawyers made revenues with at least 25% lower than the monthly average for 2019;

b) the monthly receipts do not exceed the value of the average gross salary for 2020 (ie the amount of 5,429 lei).

In relation to the form of the text in force, we consider that lawyers will be able to request the support allowance, like the rest of the beneficiaries, only during the state of emergency, namely for the period 16.03.2020 – 14.04.2020 (under the rule of the President of Romania no. 195 / 16.03.2020) and respectively for the period 15.04.2020 – 14.05.2020 (under the rule of the Decree of the President of Romania no. 240 / 14.04.2020). Therefore, lawyers will have to keep a record of receipts strictly for these periods and not months (March, April, May 2020). We made this specification precisely in order to make clear the distinction between the monthly receipts (gross incomes) that are taken into account when establishing the social insurance contribution to the lawyers’ own social insurance system and the receipts referred to in art. 15 paragraph (11) of O.U.G. no. 30/2020, in the form acquired as a result of the appearance of O.U.G. no. 53/2020.

It must also be said that, if we refer to art. V of O.U.G. no. 53/2020, we can reach another conclusion. Specifically, the legislator extended, by 5 working days, the deadline for submitting documents, in order to claim the compensation for March 2020. Therefore, it would result that lawyers should in fact submit three documented requests: for the period 16.03.2020 – 31.03. 2020; for the period 1.04.2020 – 30.04.2020; for the period 1.05.2020 – 14.05.2020. This complies with both the legal requirement that the support allowance is paid only during the state of emergency and the administrative requirement that the support allowance shall be requested and received on a monthly basis. To give a simple example, a lawyer who considers that he could benefit from the support measures should carry out at least the following operations:

– To calculate the monthly receipts related to 2019 (say, for ease of calculations, average receipts of 6,000 lei / month);

– To verify the fulfillment of the legal conditions for the granting of the support allowance, at the level of March 2020. In this sense, in this example, a decrease of 25% means receipts of maximum 4,500 lei / month.  Also, in the chosen example, the condition that the receipts do not exceed the threshold of 5,429 lei / month is met.

– Obviously, if the legal conditions were met in March 2020, the lawyer is entitled to request the payment of the support allowance, for the period 16 – 31.03.2020, and can prepare without risk the statement on his own responsibility provided by law.

We will note that in order to benefit from the support measures, lawyers will have to make efforts to quantify the receipts for 2019, given that the vast majority of lawyers and taxpayers have not yet submitted the Single Declaration for 2019. Procedure for granting support measures

In the sense of the final sentence of art. 15 paragraph (11) of O.U.G. no. 30/2020, the allowance will be paid (from the state budget), by the County Agencies for Payments and Social Inspection. For this purpose, the lawyers will submit, on a nominal basis, statements on their own responsibility regarding the fulfilment of the conditions for granting the support allowance.

The term for submitting the payment requests, drawn up by the supporting documents, was extended by art. V of O.U.G. no. 53/2020, with 5 working days. It is relevant for lawyers that, within the meaning of art. V alin. (2) of O.U.G. no. 53/2020, this term is 10 working days from the date of entry into force of O.U.G. no. 53/2020 (21 April 2020). For the following months, the application deadlines will be until the 10th of the month for the previous month (for example, until May 10 inclusive for April 2020).

We remind you that the term for payment of the support allowance is 10 days from the submission of the documents, according to art. V alin. (2) of the O.U.G. no. 32/2020.

As indicated by art. XV alin. (1) of O.U.G. no. 30/2020, the amount of the support allowance is 75% of the average gross salary of 5,429 lei, ie 4,072 lei per month. But, taking into account the above considerations and the fact that the lawyers – like the other beneficiaries – will submit the payment requests only for the period 16 – 31.03.2020 in a first phase, it results that the support allowance that can be paid for this period in March has the total value of 2,102 lei.

Taxation of support allowance paid to lawyers

In relation to the form they acquired, as a result of the changes brought by O.U.G. no. 53/2020, the provisions of art. XV alin. (5), (6), (7) and (8) of O.U.G. no. 30/2020, a legitimate question arises: are the indemnities subject to the social insurance contributions provided by the Fiscal Code or to the social insurance contribution from the lawyers’ own system and to the social health insurance contribution from the public system?

Although the texts introduced by O.U.G. no. 53/2020 are insufficiently clear, we appreciate that a constructive approach and a logical interpretation can be provided, as follows:

– From reading art. XV alin. (8) of O.U.G. no. 30/2020 it becomes certain that lawyers will not withhold and will not immediately pay any taxes and any mandatory social contributions. The income statement and the proper application of the income tax and compulsory social contribution (social health insurance contribution) will be reflected only in the Single Declaration on Income Achieved in 2020, which will have to be submitted by March 15, 2021.

– Regarding the compulsory social contributions, our conclusions are twofold. On one hand, lawyers will not be able to deduct receipts from the state budget (as support allowance) from their own social security system. Therefore, a lawyer who will receive for April 2020 a support allowance of 4,072 lei has the obligation to contribute to his own health insurance system with 11% of this amount (448 lei). On the other hand, for the same indemnity, the lawyer has the obligation to pay the social health insurance contribution of 10% of the gross income, at the maximum level of 235 lei / month.

– In their own accounts and then in the annual tax return, lawyers will individualize these amounts. Thus, the support allowance is included in the calculation of gross income for 2020, the payment of the compulsory social contribution to the own system exempts lawyers from paying the social insurance contribution from the public system, and the health insurance contribution is determined by applying a percentage of 10% of rough income (maximum 235 lei / month or maximum 2,820 lei / year).

Obviously, the provisions of art. XV paragraph (5) of O.U.G. no. 30/2020 are applicable to other categories of beneficiaries, who do not have their own social insurance system. In the case of lawyers, these provisions cannot be applied because they would ignore the existence of their own social security system and would lead to the stupid situation in which a lawyer would generally be a contributor to their own social security system, but during the state of would lose this quality and become a contributor to the public social security system.

That is why, in our opinion, it was wanted an intervention of the legislator to clarify this issue. Clarifications on the possible accumulation of income In accordance with Art. XV2 alin. (2) of O.U.G. no. 30/2020, two categories of persons may benefit from the support measures provided by art. XV paragraph (1) even if it generates revenues from other sources, respectively:

– persons who are entitled to a pension (for example, a self-employed person which, at the same time, receives a pension);

– persons with a degree of disability (and who receive an allowance according to the degree of disability in which they are fitted).

Other measures introduced by O.U.G. no. 53/2020

In the context of extending the state of emergency at least until 14.05.2020, by the Decree of the President of Romania no. 240 / 14.04.2020, the protection measures designed by the legislator in financial-fiscal matters were extended. The relevant provision, as amended by O.U.G. no. 53/2020, is that of art. XVIII alin. (1) of the O.U.G. no. 30/2020. Thus, any measures of forced execution of a budgetary, financial, fiscal or commercial nature of the amounts paid by the territorial or sectoral pension funds remain prohibited.

This material was prepared for the Blog of the civil society of lawyers Costaș, Negru & Asociații, by the Managing Partner – Dr. Cosmin Flavius ​​Costaș (Arad Bar Association).

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