Romania

Foreign tax credits

• Tax credits for taxes paid to a foreign state may be obtained in Romania only if the DTT concluded between Romania and the foreign state applies and only if proper documentation confirming the tax was paid is available.
• A Romanian PE of a legal entity resident in the European Union or the European Economic Area (EEA) that obtains revenues from another EU or EEA member state, taxed both in Romania and in that member state, may claim a tax credit in Romania under the applicable tax law provisions.

Tax exemption for reinvested profits

The profit invested in technological equipment assets used for production, processing, and refurbishment activities, electronic computers and peripheral equipment, cash registers and machinery, control and invoicing machinery and devices, as well as in software, produced and/or acquired, including on the basis of the financial leasing contracts, and commissioned/used for the purpose of pursuing the economic activity, is tax exempt under the Romanian Fiscal Code, under certain conditions. The equipment subject to this incentive cannot be depreciated by using the accelerated method.

Research and development (R&D) incentives

Companies can benefit from an additional deduction of 50% of the eligible expenses for their R&D activities. Moreover, accelerated depreciation may be applied for devices and equipment used in the R&D activity.

In order to benefit from this supplementary deduction, the eligible R&D activities must be applicative research and/or technological development relevant to the taxpayer’s activity and must be performed in Romania or in the EU/EEA member states.

Exemption from profit tax for taxpayers engaged exclusively in innovation and R&D activities

Taxpayers that exclusively perform innovation and R&D activities on scientific research and technological development and related activities are exempt from profit tax for the first ten years of activity.

Tax incentives related to professional and technical education

When determining the taxable profit, expenses for organising and developing professional and technical studies as per specific education legislation are considered deductible.

Reductions for maintaining/increasing equity

Reductions are granted when determining the CIT, micro-company tax, and activity-specific tax, depending on the maintenance/increase of equity, for a period of five years, from 2021 to 2025, as follows:

• A reduction of 2% if, in the year for which the tax is owed, the accounting own equity is positive and equal to at least half of the subscribed share capital.
• A reduction between 5% and 10% if the taxpayer registers an increase between 5% and 25% in the adjusted own equity in the year for which the tax is owed as compared to the previous year’s adjusted own equity.
• A reduction of 3% if there is an increase (between 5% and 20%) in the adjusted own equity in the year for which the tax is owed, as compared to the one computed for 2020.

Where two or three of the above-mentioned reductions apply, the corresponding percentages are added together to determine the total amount of the reduction.

Local tax exemptions for business located in industrial parks

No property tax is due for buildings and constructions located in an industrial park. Also, land within industrial parks is exempt from land tax.

The incentives granted for the set up and development of industrial parks include:

• Local tax exemptions/reductions for immovable assets and land related to the industrial park.
• Other incentives that may be granted by the local tax authorities.
• Development programmes for infrastructure, investments, and equipment endowments granted by local and central public administration, companies, and foreign financial assistance.
• Concessions and structural funds for development.

The companies operating within the industrial park benefit from:

• Various services offered by the park administrator free of charge or with reduced fees.
• Advantageous conditions with regard to location, use of the infrastructure, and communications of the park, with payment in instalments.

Local Councils may grant land tax exemptions for owners of land situated in degraded or polluted areas, but not included in the area of improvement, at taxpayer’s request and with the approval of the Ministry of Agriculture and Rural Development and the Ministry of Environment.

Land tax exemptions apply from the first day of the month following approval being obtained.

Other incentives granted to taxpayers

For justified claims of the taxpayers, the tax authorities may grant incentives for the payment of taxes, such as the rescheduling of tax payments due.

Rescheduling of tax payment obligations may be granted by the tax authorities to individuals and legal entities upon request. The time-frame for the rescheduling is a maximum of five years.

In order to benefit from the rescheduling of tax payment obligations, taxpayers must meet certain conditions and also provide a guarantee.