Update regarding the Romanian VAT rates
VAT consistently represents one of the largest sources of government revenue. In 2022, the 22 EU member states that belong to the OECD had an average standard VAT rate of 21.8%[1]. This tax is thus one of the main macroeconomic tools available to the government to adjust budget revenues. In the near future there will be a lot of discussion about changes in VAT rates. [1] https://www.oecd.org/tax/tax-policy/tax-database-update-note.pdf
Corporate tax consolidation through fiscal unities
The Romanian Tax Code provides the possibility for certain companies to form fiscal unities, which file a joint corporate income tax return. The essential feature of these fiscal unities is that the tax results of their members are added together. If the overall tax result is positive, it is taxed; a negative overall result is carried forward at a later date.
Supreme Court of Justice decides on grounds for contesting a tax administrative act
The Romanian Law No. 554/2004 on Administrative Procedure (hereinafter referred to as the Administrative Procedure Law APL) regulates the appeal against administrative acts, decisions and resolutions issued by Romanian authorities, including the Central Tax Administration ANAF.
Changes regarding the use of rental vehicles in road transport of goods
On 25th May, 2023 the Law No. 124/ 2023, which amends and supplements the regulations concerning road transport of goods, entered into force.
Employer’s obligations at the conclusion of the employment agreement
In Romania, both labor law and the practice of the courts and authorities are employee-friendly. The employer therefore already has considerable obligations before or at the time of concluding the employment contract. Below we will mention frequently overlooked or neglected obligations that are relevant in practice.
Insolvency of insurance companies
Romania has already witnessed the insolvency proceedings of two large insurance companies. In May 2022, proceedings initiated on the assets of City Insurance; since June 2023, Euroins has been affected. Compared to insolvency proceedings of conventional companies, there are relevant differences in some cases; the following is a summary.
Practical information for incorporating a company in Romania
Romania presents an enticing landscape for investment, characterized by low corporate taxes, affordable labor and living costs, and a European-centric mindset among its populace. However, some Romanian peculiarities are sometimes surprising for foreign persons. Below are some key considerations related to establishing a company in Romania.
Potential risks linked to how the provision of services is documented
Services have often been used as pretexts for fraud aimed at reducing corporate income tax and/or VAT. As a result, not just Romanian legislation but also tax authorities adopt a restrictive approach to their treatment in practice. Accordingly, caution is advised when documenting invoices for services. Key aspects to consider are detailed below.
Relevant practical aspects of setting up superficies rights for wind farms
The construction of a wind farm in Romania first requires the securing of the land necessary for this purpose. While the classic approach in this respect is to buy the land in question, in the case of wind farms many investors prefer to secure the land by setting up so-called superficies rights (drepturi de superficie). The superficies right enables its beneficiary to erect his own construction on another person's land. This actually leads to the separation of the ownership of the land from that of the construction. There are important practical aspects and challenges to be considered when drafting superficies agreements.
Protection of whistleblowers in Romania: finally implemented correctly
Even before countries like Germany, where the whistleblower law failed in the federal council (Bundesrat) in February 2023, Romania managed to implement the EU Whistleblowing Directive.