Business confidence in Romania is at the highest level in the last 4 years due to robust economic growth prospects and to the recovery of investment and consumption.
Ease of Doing Business
According to the World Bank’s Doing Business Report, Romania is ranked 37th worldwide on the aggregate ease of doing business index, climbing 13 positions since 2014. The overall paying-taxes ranking of the country has been improving and is the second best among the regional peer countries.
From a tax perspective, the number of payments/ year required to fulfil fiscal obligations has dropped dramatically, from 113 in 2012 (historic maximum) to only 14 in 2016. Coupled with a tax system that is one of the friendliest in the EU, even more accessibility is the next step for growth.
Aiding emerging entrepreneurs
For the short, medium and long term, the government is committed to aiding emerging entrepreneurs.
The pro-growth policy has further implications for the Romanian business environment, with the necessary paid-in minimum capital decreasing by 2.3 percentage points since 2004, reaching a minimum historical value of 0.6% of income per capita.
Various fiscal incentives
The Romanian government offers a number of fiscal incentives that are aimed at leveraging the local technology and R&D capabilities by incentivizing investors and employers.
EXEMPTION FROM PROFIT TAX
16% profit tax exemption for the reinvested profit in new technological equipment used for business purposes
INCOME TAX EXEMPTION FOR IT&C EMPLOYEES
An exemption of the 16% income tax is available in Romania for employees working in IT, under conditions including:
- Bachelor’s degree in one of the 14 technical specializations available
- Employee is hired on a software/ engineer/programmer/software analyst position
- Annual revenue per exempted employee must be over USD 10 000
DEDUCTION OF R&D ELIGIBLE EXPENSES
Eligible R&D expenses are considered the depreciation of R&D equipment and salaries for R&D personnel
50% of these expenses can be deducted from the taxable income
ACCELERATED DEPRECIATION OF MACHINERY, EQUIPMENT AND REAL ESTATE USED FOR R&D PURPOSES
A deduction of 50% from the fiscal value of the assets can be applied during the first year of use, while the remaining value may be depreciated linearly along the expected remaining lifespan
Accelerated depreciation can also be used for equipment and/or for research and development activities
If a company benefits from exemption of the income tax for reinvestment it will not benefit from accelerated depreciation
HIRING YOUNG GRADUATES FOR INDEFINITE PERIODS OF TIME
The incentives are granted to the employer on a monthly basis for a period of one year.
For both types of incentives the employers will have to take into consideration that they have to maintain working relations for 18 months.
In case of termination the employment contract before this period , the employer will return the incentive if the contract was terminated in the following conditions:
Termination of the employment contract due to cancellation of the employees position in the company for reasons which are not related to the employee;
HIRING UNEMPLOYED INDIVIDUALS OVER 45 FOR INDEFINITE PERIODS OF TIME
In case the employee does not correspond professionally to the job he has been assigned;
Nullity of the employment contract observed by the parties agreement or by a court decision;In case that job is occupied again by a person that was illegally fired.