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Romania

12 April 2019

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Changes in Romania's Financial Assets Tax

Romania has published Emergency Ordinance No. 19 of 29 March 2019 in the Official Gazette, which amends the new financial assets tax on credit institutions that was introduced 1 January 2019. Key points are summarized as follows:

  • The rates based on the Romanian Interbank Offer Rate (ROBOR) are replaced with fixed rates of:
    • 0.2% for credit institutions with a market share below 1%; and
    • 0.4% for those with a market share equal to or above 1%;
  • The tax base is narrowed with the exclusion of the following financial assets:
    • cash;
    • cash balances at central banks at net value, excluding non-performing exposures;
    • non-performing exposures at net value;
    • debt instruments issued by public authorities at net value, excluding non-performing exposures;
    • loans and advances to public authorities at net value, excluding non-performing exposures;
    • state-guaranteed loans granted to the non-government sector, at net value, excluding non-performing exposures;
    • loans to credit institutions, receivables and amortized amounts, at net value, excluding non-performing exposures;
    • deposits with credit institutions, receivables and amortized amounts, at net value, of which non-performing exposures are excluded;
    • correspondent accounts with credit institutions and linked receivables, at net value, excluding non-performing exposures; and
    • reverse repo transaction and lent securities, linked receivables and amortized amounts, at net value, excluding non-performing exposures;
  • The payment of the tax is changed from quarterly to an initial payment for the first 6 months due 25 August of the current year, and payment for the whole year due 25 August of the following year, taking into account the initial payment and any adjustments (i.e., initial payment for first six months and for the previous year will both be due 25 August each year from 2020);
  • Total financial assets tax is limited to the amount of accounting profit, and is deductible for corporate tax purposes;
  • The tax may be reduced by up to 100% if certain lending targets are met, including an increase in lending to non-financial institutions and households (8% increase target for 2019) or a reduction in interest margins (below 4% reference margin or 8% margin reduction target for 2019), and if targets are not met, an apportionment formula applies for lower tax reductions; and
  • Credit institutions are exempted from paying the tax if in a loss position before calculating the tax.

The changes are effective from 1 January 2019.

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