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Romania news brief Q1

More VAT exemptions

A series of facilities for VAT exemption have been revaluated, thus they will be applied to construction services, rehabilitation, modernization of hospital units as well as to deliveries of medical equipment.

The VAT exemptions will apply:

a) direct to the construction of state hospitals, practically through invoicing without VAT by the suppliers of goods/service providers;

b) indirect at NGO hospitals, through the refund of VAT related to the purchases of goods or services performed.

VAT will be eliminated on medical equipment, including prostheses and orthopedic products.

It was reduced from 19% to 9%, now eliminated to help the sector as tested on dental prostheses.

Effectively from June 11, more activities get VAT exemption. Also it is debating on reduced VAT to 5% for kids products.

SAF-T implementation

The SAF-T reporting is currently mandatory applying in Romania for large and medium size taxpayers. Companies can use recommended verification tools to test and assure the data is accurate and complete ahead submission. Authorities warn to fine any inconsistency or change. Small firms will have to prepare as well in order to have software compliant until effective requirements are in place to them as well, expected to be required starting with 2025.

Tax on property

The tax for property (land and residence) in 2023 is applied on selling value as follows:

  • 1% on property owned above 3 years;
  • 3% on property owned below 3 years;

Transactions are processed through a public notary office, which is responsible for all legal arrangements and tax transfer to the State, thus it should be asked on further terms. The only exception applies in the case of donations between relatives or spouses, case in which the sale of houses and land is exempt from tax.

Industrial licenses

A single industrial license system should become operational starting with 2024, as legislative foundations are laid through an emergency ordinance. Now it is in progress of establishing the organization and operation of a dedicated office, which will have a central role in obtaining the single industrial license. Applicants will submit a single application for the industrial license, and the office, through the Contact Point solely electronic, will take care of the communication with the responsible authorities.

The system will bring major simplification of the procedure for obtaining an industrial license.

State aid for SMEs

SME in the field of construction, transport, automotive and tourism will be able to access new state aid. Companies will have the possibility to develop digital technologies through solid partnerships. Allocated amounts will reach up to EUR 3 million as per strategic projects.

Fiscal facilities for digital nomads

A digital nomad is defined as „the foreigner who is employed with a work contract at a company registered outside Romania and who provides services using information and communication technology or who owns a company registered outside Romania, within which he provides services using information technology and communications and can carry out the employee’s activity or the activity within the company, remotely, by using information and communication technology”.

The facilities consist of: exemption from paying income tax, social insurance contributions and social health insurance, applicable to digital nomads present on the territory of Romania for one or more periods that do not exceed 183 days during any interval of 12 consecutive months, ending in the calendar year in question.

New fiscal reporting rules for multinationals

Romania must apply EU directive 2101/2021 regarding reporting country by country.

Companies operating in Romania, with a consolidated turnover above EUR 750 mil, must comply in offering transparent information related to activity, profit and taxes in each market starting with financial situations for 2023.  

Authorities are targeting to diminish fiscal evasion tentative and related risks.

Family inheritance still not taxable

Romania offers favorable and somewhat stable conditions for the transfer of family businesses by donation and/or inheritance. However, at the international level, the subject is being reviewed. In Romania, the transfer of business (shares) by inheritance or donation is not considered yet a taxable income when it is made to members of the new generation of the family.

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