Investors in Romania benefit from a number of incentives as well as an attractive and low taxation regime when they choose to open a company in the country. In this article, our lawyers in Romania highlight some of the most important issues concerning business investment incentives.
If you are looking for personalized assistance for starting a business, please feel free to contact the company formation experts at our law firm in Romania.
Table of Contents
Question: What are the Biggest Investment Incentives in Romania?
Answer: Romania clearly delivers solid opportunities for various kinds of investments covering quite an impressive spectrum. Despite its economic inconsistencies, this territory reveals a set of privileges which, in the end, generally proves beneficial.
Probably the essential condition to planning a secure investment in this area relates to the importance of being familiar with the overall legal background. Being aware of this particular detail right from the beginning, directly influences the financial certitude of a 100% successful business.
The most important and relevant positive realities that undoubtedly convince investors are related to three key aspects: the resource advantage, the market advantage and the location advantage. Our lawyers in Romania can present these advantages in more detail, if you are interested. Romania possesses great natural resources, top educated labor force and a great potential for tourism. It is one of the largest markets in Central and Eastern Europe and it represents a crucial turning point for the entire European continent.
Since Romania’s accession to the European Union, the country benefits from financial assistance provided through structural funds and cohesion funds offered for a period of five consecutive years (2007 – 2013). EU funds can be provided for companies involved in industrial research and precompetitive development activities able to deliver final results of great economic importance. The team of experts at our law firm in Romania can assist those who are interested in knowing more about EU funds.
One of the conditions for encouraging the research and development area regards the possibility to transform the research studies into new products, innovative technologies or services. Should you wish to open a company in Romania that has these characteristics, you can reach out to our Romanian law firm.
Question: What are the state aids for investments in Romania? Can your Romanian lawyers help me apply?
Answer: The legal framework concerning the encouraging measures taken by the Romanian State provided to support investments is represented by the Government Emergency Ordinance (GEO) No. 85/2008 concerning investments including subsequent amendments and additions. The normative act establishes the principles which support the encouraging measures, the domains which are taken into consideration, all types of incentives provided, the general conditions needed to benefit from these exemptions.
The entities that benefit from the state aid for investments in Romania include corporate companies, small and medium enterprises and micro-companies as well. Each type of investment shall be treated uniquely according to the domain it represents and the corresponding support scheme. Our Romanian lawyers can help investors apply for investment aid.
Question: What are the main conditions to be met when applying for investments incentives in Romania?
Answer: The main goal taken into consideration when supporting investments brings to attention several general principles referring to the development of the primary sectors, in connection with the economic and social development policies. All these investments must fall within one of the following categories: regional and development cohesion, environmental protection and preservation, improving energy efficiency using alternative renewable resources, improving the research and developments processes, increasing job opportunities, introducing new technologies and applying research proven studies, developing new infrastructures intended for tourism.
The main domains eligible to receive these incentives comprise: agro-processing industries, process industries, electric and thermal energy generation and supply, producing equipments used for exploitation of renewable resources, encouraging the usage of alternative energy resources in order to produce electricity and thermal energy, environmental protection and preservation, water supply, sanitation, waste management, IT and communication services, employment services. Our attorneys in Romania can provide more details about each of these business fields.
There are two types of conditions to be fulfilled in order to benefit from these investment incentives in Romania: the first category concerns the nature of the investment and the second one regards the traits of the investor.
These aids are provided to investors and for investments answering to the following requests: main activities conducted are according to stipulations, there are no debts to budgets part of the general consolidated budget, investors did not request to the Ministry of Finance and Economy the falling due payment for internal/external loans contracted with state guarantee and risk fund, there are no writs of execution, there is no insolvency case.
Question: Can I apply for tax exemptions depending on the business I run in Romania? Is this one of the investment incentives offered by the state?
Answer: Concerning the corporate tax, one of the incentives scheme refers to the accelerated depreciation of licenses and of some other technological equipments such as machines, tools, installation works, computers and adjacent peripheral equipments. This method supposes a deduction of maximum 50 % from the assets’ fiscal value, for the first year of usage and, for the next years, the straight line depreciation method must be used.
Some other fiscal investment incentives in Romania are stipulated for encouraging the research and development activities, by providing to companies which conduct such activities certain supplemental deductions when calculating the gross profit with 20% of eligible expenses. The tax experts at our Romanian law firm can provide more details about taxation.
In order to encourage the establishment and the development of industrial parks (especially science and technology parks), tax exemptions are granted for activities conducted within the limits of the parks, for reduced taxes for tangible and intangible assets, tax exemptions for lands, development programs for infrastructure, donations and development funds.
In order to encourage reinvestments of the companies’ profit used to increase job opportunities for the improvement of activities conducted by Romanian legal persons distributing dividends, the Romanian legislation specifies that dividends reinvested in this manner are not subject to taxation.
As it is mentioned in the introductory paragraph, an extremely significant condition for planning an investment in Romania regards the understanding of the legal framework. Some of our experienced lawyers can provide assistance and all necessary guidance imposed by such circumstances. We deliver immediate answers, highly efficient solutions and alternative business ideas that can successfully complement any financial initiative. Call our lawyers in Romania now for a free case consultation – we are here to help.