ELKB Flat taxes for Romania’s hotel, bar and restaurant trade

Romania’s Parliament has enacted (not without much debate) Law no. 170/2016 on activity specific taxes, cracking down on Horeca tax evasion by imposing a new flat tax on bar, restaurant, catering and hotel activities. Starting January 1, 2017, such businesses will pay a tax calculated irrespective of the volume of income and expenses, but which is determined based on a mix of zoning, seasonal and surface area parameters.

The law refers to a list of eight NACE codes any of which, if mentioned in a company’s Articles of Incorporation and undertaken by a business as sole income-producing activities, will trigger an obligation of that business to start paying the flat tax.

Businesses undertaking any or all of the above activities alongside other incomegenerating activities (for example hypermarkets, fun parks, etc.) will continue to pay income tax as per the Fiscal Code. This means that the standard Romanian 16% flat-rate income tax will continue to be applied to such businesses. The exemption shall also apply to revenue from rental or joint venture agreements concluded between resort operators and other third parties (such as tour operators/event organizers).