Romania introduces massive tax changes

Companies in sectors like financial services, oil & gas, software development, constructions, agriculture and food and others will be significantly impacted by these measures. Heated discussion took place in the few months preceding their adoption, with businesses arguing that the newly introduced taxes might discourage investors from doing business in Romania.

These are the most important novelties:

• Companies with turnover of more than EUR 50m will have to pay a minimum 1 % turnover tax, due if the calculated quarterly/annual corporate tax is below the minimum level or if the quarterly/annual tax result (before recovery of losses from previous years) is a loss.
• Credit institutions will have to pay a new tax, in addition to the corporate income tax. The tax rate is applied to turnover and amounts to 2 % for the period between 1 January 2024 and 31 December 2025 and 1 % starting 1 January 2026.
• Companies in the oil & gas sector with turnover of more than EUR 50m will have to pay an additional 0.5 % turnover tax to the corporate income tax for 2024-2025 and the above-mentioned minimum turnover tax from 2026 onwards. This tax does not cover taxpayers engaged in the distribution, supply or transmission of electricity and natural gas and who are regulated or licensed by the Romanian National Energy Regulatory Agency.
• Employees active in software development (previously exempted from tax on income from wages and assimilated to wages, as part of a set of measures aimed to boost the development of this sector) will only benefit from the exemption for gross monthly wages of up to RON 10,000 (approx. EUR 2,000).
• Employees in the construction, agriculture and food industries will no longer be exempted from the payment of health insurance contributions.
• Food products and non-alcoholic beverages with added sugar are subject to new or increased taxes. Thus, the value added tax for foods with added sugar in which sugar accounts for at least 10 % of the product's weight increases from 9 % to 19 %. Also, non-alcoholic beverages with added sugar above 5g per 100 ml will be subject to non-harmonised excise duty.
• High-value real estate owned by private individuals and high-value movable property owned by companies or private individuals is subject to a new tax.

Some of these measures apply from this year, while others will enter into force as of 2024. A set of actions aimed at ensuring compliance with tax rules has also been introduced, with the goal of increasing tax collection. In addition, several measures for reducing the waste of public funds were adopted as part of this package.