Smart Update: New Tax Developments Regarding Early Education Expenses

What are the changes?

Starting from April 21, expenses for early education incurred between November 2020 and March 2021 that exceed the corporate tax due can be deducted, according to the provisions of Article 25, paragraph (4), letter i2) of the Fiscal Code. These expenses are deducted in the following order: from the wage tax withheld by the taxpayer for employees, from the VAT due, or from the excise duties owed, based on a regularization statement, which must be submitted by April 25, 2021, inclusive.

What regulates the new fiscal measure?

The new fiscal measure is regulated by Emergency Ordinance no. 30/2021, published in the Official Gazette, Part I no. 423 on April 21, 2021. The regularization statement 711 is regulated by Order no. 653/2021 for the approval of the model and the method of submission and management of form 711 “Regularization statement for early education expenses,” effective from April 23, 2021, published in the Official Gazette, Part I no. 429 on April 23, 2021.

What types of taxpayers are exceptions?

a) Taxpayers subject to the provisions of Article 16, paragraph (5) of the Fiscal Code. For them, the declaration must be submitted at each corporate tax declaration deadline, according to Articles 41 and 42 of the same law, but no later than August 25, 2021, or the 25th day of the sixth month from the end of the modified fiscal year, as applicable.

b) Taxpayers applying the annual corporate tax declaration and payment system, according to Articles 41 and 42 of the Fiscal Code. For them, the declaration must be submitted by March 25, 2022, inclusive, or June 25, 2022, inclusive, as applicable.

How are the amounts deducted?

The previously mentioned amount is deducted, in order, from the wage tax withheld by the taxpayer for employees, from the VAT due, or from the excise duties owed, by the due date of these obligations, declared in the Declaration regarding the payment obligations of social contributions, income tax, and the nominal record of insured persons, in the VAT return, or in the declaration regarding the payment obligations to the state budget, which have the same submission deadline as the declaration through which these expenses were deducted from the corporate tax due.

If the submission deadline of the declaration through which the early education expenses were deducted from the corporate tax due coincides with the quarterly submission deadline of the Declaration regarding the payment obligations of social contributions, income tax, and the nominal record of insured persons, the amount exceeding the corporate tax due is deducted from the wage tax for the last month of the quarter.

How to access the Regularization Statement 711

To access the Regularization Statement 711 and the completion instructions, download Smart Update April no. 1, 2021, and share it with your colleagues!

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