Accounting For Interim Distributed Dividends In Romania

Starting July 15, 2018, in Romania was regulated the possibility for private entities to divide dividends on a quarterly basis, in addition to the annual distribution as it was before. From an accounting point of view, the quarterly distribution brings novelties compared to the annual distribution, both by introducing a new account, namely account 463 “Receivables representing dividends distributed during the financial year” and by introducing new correspondence, respectively instead of account 457 “Dividends payment” using, perhaps surprisingly, the account 456 “Settlements with shareholders / capital associations”. Irrespective of the number of quarterly dividend distributions (between one for 2018 and three options starting with 2019), regularization of possible dividends arising from the distribution of dividends during the year will necessarily be made through the annual financial statements. It is believed that the new method of dividing dividends distributed quarterly will allow for the adjustment of possible dividends arising from the distribution of dividends during the year as the result of the exercise may be higher or lower than the amount of interim dividends. From a tax point of view, the quarterly distribution has not news from the annual one. As with the annual distribution of dividends, the quarterly one is conditional on the preparation and submission of interim financial statements before the actual distribution. By analyzing, by comparison, the two annual and quarterly distributions, regulated from the accounting point of view in Romania, we conclude by establishing the advantages and disadvantages of the quarterly distribution. At the same time, we propose a new way of reflecting these distributions compared to the currently regulated accounting model of quarterly distributions, and also its advantages.