Corporate - Deductions

Last reviewed - 16 October 2023

Expenses fall into three categories: deductible expenses, limited deductibility expenses, and non-deductible expenses.

Deductible expenses

As a general rule, expenses are deductible only if they are incurred for business purposes.

Some of the deductible expenses specifically mentioned by the Romanian Fiscal Code include:

  • Marketing and advertising expenses.
  • Research and development (R&D) expenses that are not recognised as intangible assets for accounting purposes.
  • Expenses incurred for environmental protection and resource conservation.
  • Expenses incurred for management improvement; updating information technology (IT) systems; introducing, maintaining, and developing quality management systems; and obtaining quality compliance confirmation.
  • Losses incurred when writing off client receivables in any of the following cases:
    • The bankruptcy procedure of the debtor was closed due to a court ruling.
    • A reorganisation plan confirmed by a court decision has been implemented.
    • The debtor is deceased, and the receivable cannot be recovered from the heirs.
    • The debtor is dissolved or liquidated.
    • There have been concluded insurance contracts.
    • The debtor has major financial difficulties affecting its entire patrimony.
  • Expenses related to losses from the valuation of shares and long-term bonds.
  • Travel and accommodation expenses related to business. 
  • Daily allowances for expenses incurred by employees in connection to travels in Romania and abroad.
  • Expenses incurred from professional training and development of employees.
  • Expenses related to benefits granted to employees as equity instruments settled with cash, at the moment of the effective granting, if the benefits are subject to personal income tax (PIT).
  • Expenses incurred in connection to work safety, prevention of work accidents and occupational diseases, the related insurance contributions, and professional risk insurance premiums.
  • Expenses incurred in connection to the acquisition of packaging materials during the useful life set by the taxpayer.
  • Fines, interest, penalties, and other increased payments due under commercial contracts.

Note that credit institutions apply IFRS rules, and certain deductibility rules are provided for this category of taxpayers.

Limited deductible expenses

The deductibility of the following expenses is limited:

  • Interest expenses and other borrowing costs (see the Group taxation section for more information).
  • Provision and reserve expenses (see details below).
  • Depreciation and reduction in value of fixed assets under fiscal depreciation rules (see details below).
  • Perishable goods and losses resulted from transport/storage, according to law.
  • Protocol expenses are deductible at up to 2% of the accounting profit, adjusted with protocol and profit tax expenses. Output VAT related to gifts of at least RON 100 offered by taxpayers fall under the protocol expenses category.
  • Social expenses are deductible at up to 5% of salary expenses and include, among other items, maternity allowances, funeral benefits, and allowances for serious or incurable diseases and prostheses, as well as expenses for the proper operation of certain activities or units under taxpayers’ administration (i.e. schools, museums, libraries, canteens, sports clubs, clubs, etc.), expenses for cultural and nursery tickets granted by the employer in accordance with the legislation in force, expenses for tourism and/or treatment services, including transport, granted by the employer for its own employees and their family members, gifts represented by money of in kind, including gift tickets given to employees and their children, and medical services granted in case of professional diseases and labour accidents until transfer to a hospital. Expenses incurred for benefits granted under a collective labour agreement are also deductible within the same limits.
  • Expenses incurred with lunch vouchers and holiday vouchers given by employers, according to law.
  • Technological losses within the internal consumption norm required for the production of a good or provision of a service.
  • Expenses incurred for functioning, maintenance, and repairs corresponding to an establishment represented by an individual’s personal property, used as well for individual purposes, deductible in the limit of the surfaces at the disposal of the company based on the contractual agreements.
  • Expenses incurred with electricity at the level of the technological internal consumption norm or, in case it is missing, at the level of the norm approved by the National Authority for Energy, including the commercial consumption for the taxpayers in the electricity distribution business.
  • Taxes and fees paid to non-government organisations or professional associations related to the taxpayer’s activity are deductible up to the limit of EUR 4,000 per year.
  • All direct expenses attributable to vehicles with up to nine seats that are not used exclusively for business purposes are 50% deductible for CIT purposes, under certain conditions provided by law. These expenses are fully deductible for vehicles used for the following activities:
    • Emergency, safety and security, courier services, cars used by sales and acquisitions agents.
    • Paid transportation services and taxi activities.
    • Rental.
    • Driving schools.
    • Vehicles used as commodities.
  • For vehicles with up to nine seats not used exclusively for business purposes, tax depreciation is limited to a maximum of RON 1,500 per month for each vehicle starting from 1 February 2013.

Non-deductible expenses

Expenses deemed non-deductible include, among other items, the following:

  • Domestic CIT, including differences from previous years or from the current year, and CIT paid in foreign countries, deferred tax registered according to accounting standards.
  • Expenses with tax not withheld at source in the name of non-resident individuals and legal entities.
  • Expenses related to non-taxable revenues.
  • Interest, fines, and penalties due to Romanian or foreign authorities, according to legal provisions, with the exception of the ones pertaining to agreements concluded with these authorities.
  • Expenses incurred for management, consultancy, assistance, or other supply of services performed by a non-resident located in a state that has no exchange of information agreement concluded with Romania. These provisions are applicable if the expenses are incurred in respect of transactions deemed as artificial.
  • Sponsorship, patronage, and private scholarships expenses. Taxpayers are, however, granted a fiscal credit of up to 0.75% of turnover and 20% of the CIT due, whichever is lower. 
  • Expenses for the proper functioning of certain early education units or the amounts paid for the placement of employees' children in such early education units. However, these expenses can be deducted, in order, from the CIT, payroll tax, VAT, or excise duties, at up to RON 1,500 per month per child. This rule is applicable starting with 1 January 2024.
  • Expenses related to transactions with persons located in a state included in Annex 1 from the EU list of non-cooperative jurisdictions for tax purposes where the expenses are incurred in respect of transactions without economic substance.
  • Expenses representing the acquisition cost of the fiscal cash registers. However, such expenses can be deducted from CIT. The ones that cannot be deducted in the respective tax period may be carried forward for the next seven consecutive years.
  • Losses incurred when writing off client receivables, for the amount not covered by a provision, in any cases other than the following: a reorganisation plan was applied through a court decision in accordance to Law no. 85/2014; the bankruptcy procedure of the debtor was closed due to a court ruling; the debtor is deceased and the receivable cannot be recovered from the heirs; the debtor is dissolved or liquidated; the debtor has major financial difficulties affecting its entire patrimony; or there have been concluded insurance contracts.
  • Expenses resulted from benefits granted to employees as equity instruments settled with cash, unless subjected to PIT.
  • Expenses resulted from benefits granted to employees as equity instruments settled with shares. However, these would represent an element similar to expenses (a tax deduction) when effectively granted.
  • Expenses in favour of shareholders, other than those related to goods or services provided by the shareholders at market value.
  • Expenses incurred with insurance premiums unrelated to the risks and assets of the taxpayer’s business, with the exception of those that relate to goods representing a banking guarantee for the loans used for business purposes.
  • Expenses registered in the accounting records based on documents issued by an inactive taxpayer, according to the provisions of the Fiscal Procedure Code, with the exception of those representing acquisitions of goods performed during foreclosure procedures or from legal entities in bankruptcy procedure according to Law no. 85/2014.
  • Expenses relating to missing or damaged non-imputable inventories or tangible assets, as well as related VAT, if the case. These expenses are deductible in case any of the following conditions are applicable to the inventory/assets:
    1. They were destroyed following natural disasters or major force situations in the conditions provided by the methodical norms.
    2. Insurance contracts have been set up in respect of these.
    3. They were degraded from a qualitative perspective, and the proof of destruction is available.
    4. The food intended for human consumption, with a close-to-expiration date, other than those found in the situations/conditions provided in points 1 and 2, if their transfer is carried out according to the legal provisions on reducing food waste.
    5. The animal by-products not destined for human consumption, other than those found in the situations/conditions provided in points 1 to 3, if their disposal is carried out in accordance with the legal provisions on reducing food waste.
    6. The agri-food products that have become improper for human or animal consumption, if the targeting/guiding is aimed at transforming them into compost/biogas or neutralising them, according to the legal provisions on reducing food waste.
    7. Other goods than those found in the situations/conditions provided in points 1 to 6, if the term of validity/expiry is exceeded, according to the law.
  • Expenses reflected in accounting records, irrespective of their nature, that later prove to be related to acts of corruption as defined under the law.

Note that credit institutions apply IFRS rules, and certain non-deductibility rules are provided for this category of taxpayers.


Romanian law makes an explicit distinction between fiscal and accounting depreciation. Fiscal depreciation is treated as a deductible element within the CIT computation, while accounting depreciation should be treated as a non-deductible expense. Companies should maintain a separate record to reflect the separate computation of the fiscal and accounting depreciation. Any accounting revaluations of fixed assets are not taken into account in computing the tax depreciation.

Assets are generally depreciated using the straight-line method. However, accelerated or reducing balance depreciation methods may be used to determine fiscal depreciation, while the accounting depreciation method may be different.

The useful lives to be used for tax purposes are the ones stated in the Official Fixed Assets Catalogue, published under government decision. Ranges are provided for classes of fixed assets, from which the taxpayers can choose the useful life (e.g. office and housing buildings: 40 to 60 years, commercial buildings: 32 to 48 years, commercial furnishings: 9 to 15 years, automobiles: 4 to 6 years).

For vehicles with up to nine seats, the fiscal depreciation is limited to a maximum of RON 1,500 per month for each vehicle. Certain categories of vehicles are exempt from this monthly deduction limitation (e.g. used exclusively for emergency, security, or delivery service; used for paid passenger transport; or used for paid supply of services).

Land cannot be depreciated for tax purposes.

Accelerated depreciation

Under the Romanian Fiscal Code, machinery and technical equipment, computers and their peripherals, as well as patents, may be depreciated by using the accelerated method, under which a maximum of 50% of the asset’s fiscal value may be deducted during the first year of usage, while the rest of the asset’s value can be depreciated using the straight-line method over the remaining useful life.


As a rule, goodwill is deemed non-depreciable from a Romanian fiscal perspective.

Start-up expenses

Start-up expenses recognised as intangible assets according to the applicable accounting regulations can be depreciated over a maximum period of five years.

Provisions and reserves

As a general rule, provisions and reserves are non-deductible for CIT purposes. However, there are certain provisions and reserves that are deductible, such as:

  • Setting up or increasing the legal reserve fund up to 5% of the accounting profit, adjusted with CIT expense, and until it reaches 20% of the share capital.
  • Provisions related to guarantees for proper execution granted to the clients.
  • Provisions for depreciation of receivables are deductible at up to 50% if the related receivables meet the following conditions simultaneously:
    • Not collected for a period exceeding 270 days from the due date.
    • Not guaranteed by another person.
    • Due by a person not affiliated with the taxpayer.
  • Bad debt provisions are fully deductible if all the following conditions are met:
    • The debtor is a company for which the court declared the opening bankruptcy procedure or an individual for whom insolvency procedure has been declared open based on:
      • Reimbursement plan.
      • Asset liquidation.
      • Simplified procedure.
    • Receivables are not guaranteed by another person.
    • The debtor is not a related party.
  • Specific provisions established by non-banking financial institutions and other legal persons according to their incorporation law.
  • Adjustments for impairment set up by credit institutions that apply IFRS and prudential filters set up according to regulations issued by the National Bank of Romania.
  • Technical reserves set up by insurance and reinsurance companies, in accordance with their regulatory legal framework, except for the equalisation reserve.
  • Risk provisions for transactions carried out on financial markets, in accordance with the rules issued by the Romanian National Securities Commission.
  • Provisions and adjustments for impairment of receivables that were acquired by legal persons from credit institutions in order to be collected, for the difference between the receivables value and the amount due to the assignee, provided several conditions are met.
  • Reserves from revaluation of fixed assets and land made after 1 January 2004, which are deductible through depreciation or through expenses triggered by assets sold or written off, are taxable at the same time and for the same amount as the tax depreciation/write-off deduction (i.e. when the assets are sold or written off).
  • In case the level of the subscribed share capital was reduced, the part of the legal reserve corresponding to the reduction that was previously deducted represents an element similar to revenues.

The reduction or cancellation of any provision or reserve deducted from the taxable profit, due to changing the destination of the provision or reserve, distribution towards shareholders in any form, liquidation, spin-off, merger, or any other reason, should be included in the taxable revenue and taxed accordingly.

Note that special rules are applicable to credit institutions that are required to apply IFRS rules.

Fiscal losses

Companies are allowed to carry forward fiscal losses declared in the annual CIT returns for a period of up to seven years, based on the FIFO method. No related adjustment for inflation is allowed.

Any loss incurred by a PE of a Romanian company located in a non-EU/European Free Trade Association (EFTA) member state or in a country that has a DTT in place with Romania is only deductible for tax purposes from the revenue derived by that PE, and losses can be carried forward only for a period of five years.

For foreign legal persons, carryforward of losses applies only to revenue and expenses attributable to their PE in Romania.

Losses incurred by a company can be transferred within a merger/spin-off operation and can be recovered by the successors, in proportion to the assets and liabilities transferred. The successors of these restructuring operations are able to use such losses during the remaining period.

Carryback of losses is not available in Romania.

Payments to foreign affiliates

Transactions with Romanian-affiliated companies and with non-resident related parties fall within the scope of the investigations regarding compliance with transfer pricing legislation (see Transfer pricing in the Group taxation section).