This article discusses a number of theoretical and practical issues regarding the taxation of income from self-employment imposed on the basis of income rules. For the authorized natural persons who realize incomes from independent activities, other than those from liberal professions of the Fiscal Code, and which carry out activities included in the nomenclature established by the regional directorates-general of public finances, net income can be determined on the basis of annual income norms. These taxpayers have a number of reporting and payment obligations. They establish the annual tax and social contributions due through the single declaration on income tax and social contributions due by individuals. You can visit www.taxfyle.com/blog/independent-contractor-taxes for the best solutions now.
Key terms: income standard, single declaration, CANE code, income tax, social security contributions
JEL classification: K34
In accordance with law of the Fiscal Code, in the case of taxpayers who earn income from independent activities, other than income from liberal professions defined, the annual net income is determined on the basis of the income norms from the place of activity. The income norm is a fixed amount established annually by the regional directorates-general of public finances, depending on the specifics of the activity and the area in which the taxpayer operates.
Taxpayers registered in the nomenclature of independent activities for which the net income can be determined on the basis of the annual income norms, elaborated by the Ministry of Public Finance, have the following obligations:
- To establish the tax due by completing and submitting the single declaration within the legal term
- To establish the obligations regarding social contributions, based on the single declaration
- To complete only the part related to income from the Register of fiscal records, without obligations regarding the accounting records.
A taxpayer carries out an activity imposed on the basis of income norms, which consists in the maintenance and repair of motor vehicles, CAEN code 4520, the annual income norm being 59,020 lei. The starting date of the activity is April 1, 2019. The natural person is not exempted from paying social contributions. This is the only activity carried out by the taxpayer.
In the table below we present an extract from the annual income norms for 2019 for the taxpayers who realize incomes from carrying out independent activities for which the net income is determined based on the annual income norms.
Thus, according to the Methodological Norms for the application of the Fiscal Code, taxpayers can benefit from adjustments to income rules in the following situations:
When the age criterion of the taxpayer is met
It is operated starting with the year following the one in which he turned the number of years that allows him to reduce the income norm.
- In the case of those individuals who also have the quality of employee or lose this quality it is done starting with the month following the conclusion / termination of the individual employment contract.
- In case the activity starts / ceases during the fiscal year the net income is reduced proportionally with the period from the beginning of the year until the moment of authorization in the year of starting the activity or with the remaining period until the end of the fiscal year, in case of cessation of activity, upon request taxpayer.
In case of temporary interruptions of activity, accidents, hospitalizations or other objective causes, including those of force majeure, proven by supporting documents – the income rules are reduced in proportion to the period not worked.