State aid schemes
Two state aid schemes were implemented in 2014 and are now operational (with potential for additional grants being awarded in 2015):
- State aid scheme ensuring sustainable economic development – Government Decision (GD) 807/2014; and
- State aid scheme for investments promoting regional development (by means of creation of new jobs) – GD 332/2014.
Behind the langue de bois names of these state aid schemes are two grant initiatives financed by the Romanian government and aimed at supporting the initial investment performed by companies from various sectors. To access the grants, investors should file specific requests (including documents such as business plans) with the authorities and meet the conditions provided by the specific state aid legislation (for example, for the second scheme mentioned, more than 10 jobs are created as a result of the investment). Subsequently, investment characteristics are monitored by the authorities during the 'life' of the investment, to ensure that conditions are continuously met.
Under these grant schemes the Romanian state had funds of up to €100 million available in 2014. The funds available are split per country regions, as the state is looking to assist with a more evenly spread development of the country. As regards the amounts to be granted, each year they are included in the state budget and communicated to the public.
In addition to the grants, the Romania introduced in the tax legislation several incentives available to all taxpayers with the same intention: to boost investment and business development.
For example, Romanian entities may avail of corporate tax incentives such as:
- the tax exemption for profits reinvested in certain new non-current assets;
- an additional deductible allowance of 50% for eligible expense related to R&D activities; and
- a tax deferral related to the use of accelerated tax depreciation for specific categories of assets.
Other tax incentives available include:
- Postponement of VAT for imported goods (VAT reverse-charge mechanism for import);
- VAT exemption for imports of goods followed by intra-community supplies; and
- Customs duties suspension procedure.
All these incentives follow specific rules and can result in a lower effective taxation of the business of Romanian entities.