There is no specific tax legislation for culture, but special provisions for the cultural and creative sectors may be found in the general legislation framework, which is the Fiscal Code of Romania (Law no. 227/2015, amended and modified).
As of the 1st of January 2018, the income tax has been reduced from 16% to 10%. For employees and civil servants, income tax is calculated and paid directly by the employer. Self-employed persons have an obligation to calculate and pay their income tax directly. Independent artists and any other person that derives an income from the capitalisation of their author’s rights or neighbouring rights, can opt for a minimum mandatory tax payment (by the “employer”) of 7% upon receiving the respective tax-subjected income (with an obligation to directly pay the remainder of the tax annually) or for a final tax payment by the “employer” of 10%. As described in paragraph above the lump sum deduction of 40% is automatically applied to the gross income before calculating the tax income.
Law No. 32/1994 on sponsorship, modified, constitutes the general legal framework for private corporate support in various domains, including creative and cultural sectors, but the fiscal regime applicable is set forth in the Fiscal Code. The recipients of sponsorship agreements, the sums or goods received are not subject to taxation. For the sponsors, their sponsorship expenditures are tax deductible up to a certain limit:
- Annual value of sponsorships (including the value of goods) cannot exceed 20% of the profit tax.
- Annual value of sponsorships (including the value of goods) cannot exceed 0.5% of the annual turnover.
In compliance with the Fiscal Code, self-employed persons may offer sponsorships for no more than 5% of their net income.
Private citizens may redirect 2% of the value of their income tax to support, at their discretion, not-for-profit organisations or activities, including those in the cultural and creative sectors. It should be noted that 3.5% of the income tax may be redirected only to not-for-profit and religious entities that provide accredited social services. This applies to employees, retired people and self-employed persons, as well as to independent artists for the income derived from the monetization of their works/performances.
The profit tax rate is 16%. A reduced rate of 5% profit tax is applicable to nightclubs and night bars, discotheques and casinos. For private educational institutions, revenues from their main activity are not subject to profit taxation. Cultural institutions are not subject to profit taxation with the exception of commercial activities. In the case of not-for-profit organisations, the Fiscal Code, in article 15 paragraphs 2 and 3, lists the various categories of revenues which are non-taxable.
There are several VAT rates in Romania:
- Standard rate of 19%, applicable for the majority of goods and services (since the 1st of January 2017).
- Reduced rate of 9%, which does not apply to cultural goods or services.
- Reduced rate of 5%, applicable to school textbooks, books, newspapers and magazines; services of access to museums, historical monuments, archaeological sites, fairs, exhibitions, cultural events and cinema halls with the exception of those exempted from VAT.
- Exemption from VAT, applicable to educational services, services of adult professional training, cultural services supplied by public cultural institutions or by not-for-profit cultural organisations recognized by the Ministry of Culture, specific activities of public service broadcasters, other than of commercial nature etc.