TAXATION AND ACCOUNTING OF DIVIDENDS IN ROMANIA

Firms that obtain and report profits have the possibility to remunerate their owners (shareholders or associates) by distributing to them some parts of the profit - the dividends. After a long period in which, in Romania, the company law allowed the payment of dividends only after the financial year was closed, in order to be sure that they are not paid out of fictitious profits, the legislator modified the rules, establishing the legal framework for granting interim dividends, quarterly, but with the fulfilment of the formal obligations to prepare and report the related interim financial statements approved by the general meeting of the shareholders. Listed companies that reported profits in 2007-2018 paid cumulative dividends of 44% of declared net profits, while state-owned companies with profits exceed 60%. From a fiscal point of view, the tax on dividends brings to the budget, on average, more money than the tax on the revenues of micro-enterprises; for the period 2000-2018, this average was 0.22% of GDP. The taxation of dividends paid to the shareholders has evolved, from a rate of 10% (1992-2009), to 16% (in the period 2010-2015), to reach 5%, starting with 2016. The application of this rate is accompanied, starting with 2007, by specifications according to which the payer does not withhold any tax on dividends if the shareholder is a legal person and hold more than a certain percentage of the capital (10% at present) and for more than a certain period (1 year, at present). In the case of dividends paid to non-residents, the tax conventions for avoiding double taxation are involved, which, for Romania, have relatively common provisions, but with the most diverse rates. Dividends paid to individuals are incomes whose tax regime is more favourable than that applied to income from dependent or independent activities.