Romania: Fiscal Incentives

Last Updated: 20 August 2019
Article by Monica Colt and Carmen Mazilu

Government Ordinance no. 6/2019, which was published in the Official Gazette no. 648 / 05 August 2019 and enters into force on 8 August 2019, provides the basis for granting certain fiscal incentives as summarized below

I. Beneficiaries of the fiscal incentives

1. Subject to certain conditions, public and private companies having outstanding tax liabilities as of 31 December 2018 equal to or higher than RON 1 million may benefit from the following tax incentives:

  • Facilities that ease payment of the tax liabilities, which include payment in instalments, deferred payment of ancillary costs (e.g. late payment interest and penalties) and/or of a percentage of the tax liabilities with a view to their write-off;
  • Conversion of the tax liabilities into shares;
  • Discharge of the tax liabilities by transfer of immovable goods in lieu of payment;
  • Write-off of a maximum of 50% of the tax liabilities under certain specific conditions.

2. Public and private companies, individuals and entities without legal personality having less than RON 1 million outstanding tax liabilities as of 31 December 2018 , as well as individuals and legal entities having more than RON 1 million outstanding tax liabilities as of 31 December 2018 may benefit from write-off of ancillary costs related to the outstanding tax obligations (e.g. late payment interest and penalties) under specific conditions on a case by case basis.

The outstanding tax liabilities may refer to tax returns submitted by taxpayers, to revised tax returns submitted by 15 December 2019 for the tax periods prior to 31 December 2018, to tax decisions issued following a tax audit in progress on 8 August 2019, to tax liabilities approved for payment in instalments (esalonate) or to amounts not approved for refund by the tax authorities (e.g. denied VAT refund).

Subject to the approval of the local authorities (e.g. municipal governments), the tax incentives may also be applicable to local tax liabilities such as property tax.

II. Steps to be taken in order to benefit from fiscal incentives

1. Taxpayers, public and private companies with outstanding tax liabilities equal to or higher than RON 1 million that intend to apply for this facility must:

  • notify the competent tax authority by 30 September 2019, and
  • engage an independent expert to prepare a restructuring plan and a private prudent creditor test. The test is an analysis which should conclude that the state is behaving as would a private creditor that is sufficiently prudent and diligent and can recover a larger amount of tax liabilities by granting tax incentives as opposed to enforcement and bankruptcy proceedings.

2. Except in specific cases, public and private companies, individuals and entities without legal personality having less than RON 1 million outstanding tax liabilities as of 31 December 2018 and individuals and legal entities having more than RON 1 million outstanding tax liabilities as of 31 December 2018 that intend to apply for the said tax facility must:

  • submit a written request to the competent tax authorities,
  • have fulfilled all their tax reporting obligations up to the date of the written request, and
  • pay all the outstanding tax liabilities (including the current ones) by 15 December 2019.

As a final remark, it is worth mentioning that these facilities will not be applicable until the tax authorities issue the related implementing procedures. The forecasted date for issuing these procedures is 15-30 days after the date on which the GO enters into effect, i.e. 8 August 2019. Therefore, in the absence of such implementing procedures, taxpayers are not yet in a position to request application of the fiscal facilities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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