Business #14 Legislative focus

Adopted by the Parliament, the law ratifying the STTR multilateral convention, introducing new tax rules for cross-border intragroup payments, was published in the Official Gazette. The measure allows Romania to apply an additional tax where certain payments (such as interest, royalties or services) are taxed in the recipient jurisdiction below a 9% rate. The rules apply to multinational groups exceeding specific thresholds and target payments to affiliated entities, aligning Romania with international efforts to prevent profit shifting.

Multinational companies will face additional tax exposure on intragroup payments and must assess the effective tax rate in recipient jurisdictions to avoid extra taxation in Romania.

Businesses should review cross-border payment structures, verify applicable tax rates, and reassess intragroup financing and service arrangements to ensure compliance with the new rules.

The Ministry of Finance has proposed a new state aid scheme for Romania’s manufacturing sector, targeting companies that make initial investments of at least 50 million RON in eligible production industries. Support would be granted through direct grants or tax credits, under a multi-billion-lei budget aimed at stimulating large-scale industrial development and improving energy and environmental performance.

Manufacturing companies could access significant public funding for large investments, but must meet strict conditions on energy efficiency, emissions reduction, and resource use, while also ensuring substantial co-financing and maintaining investments for at least five years.

If the decision is approved, businesses should assess eligibility, prepare large-scale investment projects with required co-financing, and ensure compliance with environmental and efficiency targets before applying during the limited funding sessions.

A new PSD-backed bill allows companies paying corporate income tax to deduct the cost of holiday vouchers granted to employees directly from the tax due. The deduction would be capped at 20% of the corporate tax owed and would apply from the next fiscal year.

The measure changes the fiscal treatment of employee benefits, effectively allowing part of the vouchers to be financed through reduced tax payments. Companies paying corporate income tax could lower their tax burden if they grant holiday vouchers, which may encourage wider use of employee benefit schemes and reduce net labour-related costs.

Employers should assess the fiscal advantage of voucher schemes, review HR benefit policies, and prepare for updated rules and thresholds to be set through secondary legislation.