TAXATION

The Romanian tax environment has undergone significant changes in the past two years, driven by a need for fiscal consolidation and alignment with international standards. Key developments include the implementation of the OECD Pillar 2 rules starting 2024, which represents a significant shift in international tax policy, aiming to ensure a minimum effective tax rate of 15% for large multinational and national groups of companies with annual consolidated revenues of at least €750 million. The ratification of the Multilateral Instrument (MLI) for the prevention of Base Erosion and Profit Shifting (BEPS) in 2024 further underscores Romania's commitment to international tax cooperation. 

Turning to domestic tax developments, the introduction of a minimum turnover tax in 2024, targeting companies with a turnover exceeding €50 million, has been a notable change, with the view to increase tax revenue for the state budget. Moreover, a specific turnover tax was introduced for entities operating in the oil and gas sector and for credit institutions, levied on top of the standard corporate income tax, further adding to the tax burden in these sectors. The construction tax was reinstated in 2025 at a rate of 1% on the value of constructions owned by taxpayers, to further boost state revenues.

Alongside these changes, the Romanian government has made significant strides in digitalizing tax administration. The introduction of systems like SAF-T, RO e-invoice, and RO e-transport are aimed at streamlining tax administration, enhancing efficiency, and improving data collection. These efforts represent a key step toward modernizing the tax system and achieving greater transparency and compliance. 

However, despite these efforts, the business sector continues to face challenges in a tax environment marked by frequent changes in legislation and interpretation, sometimes with retroactive effect. This lack of predictability creates uncertainty and makes it difficult for businesses to plan for the future, hindering investment and economic growth. The White Book 2025 emphasizes the need for a more stable and predictable tax environment, advocating for greater clarity and open dialogue between policymakers and the business sector to create a sustainable and favourable fiscal climate for both businesses and the Romanian economy.

Consultation between the state authorities and the business community is essential to review both draft legislation and the implementation of existing legislation. This enhances the quality of legislation and supports its uniform application. There is still a continuing problem of legislation being passed quickly, often at very short notice, and with little time for the business community to have effective input. Although the Ministry of Finance has several structures designed to enable consultation with private stakeholders on different areas of interest in relation to public policies (e.g. the Directorate for Public Policy and Monitoring of Legal Acts and the Unit for Communication, Public Relations, Mass-Media and Transparency), in practice there is hardly any real process of consultation with the business environment on these issues. Furthermore, tax inspectors’ interpretations of legislation change frequently, and new interpretations are also applied to the past. This means that, in practice, the rules can change unpredictably and dramatically. 

Moreover, instead of focusing on solving essential problems related to collection, such as fighting fiscal evasion in connection with VAT and excise duties in sensitive sectors (e.g. tobacco, alcohol, and grain), as well as combatting undeclared work, the tax authorities often carry out lengthy fiscal inspections on honest taxpayers, imposing administrative burdens on businesses.      

In practice, there are various situations in which the differences in the interpretation of tax legislation caused either by a lack of a proper understanding of the factual or legal situation in the case in question by the state authorities, or by the lack of clarity of the law lead to the initiation of legal procedures, often in cases of reduced complexity, but which have a significant duration. These procedures add an unnecessary burden to the workload of the courts, hence leading to a decrease in the quality of the operation of the judicial system because they demonstrate a lack of predictability both in terms of the interpretation of the law, as well as the approach taken by the administrative and judicial authorities.

On the positive side, in the economic and social context of the last three years the state has offered significant support to help taxpayers get through the problems caused by tthe COVID19 pandemic and the energy crisis following Russia’s invasion of Ukraine. The tax authorities implemented certain favorable tax measures such as (I) Granting tax benefits for annual income tax, social insurance contributions and health insurance contributions due by individuals; (II) Extending the deadline for submitting the Single Declaration for income tax and social contributions due by individuals, the deadline for submitting Form 230, as well as the deadline for payment of the income tax and mandatory social contributions due by individuals by 30 June 2020 (inclusive); (III) Introduction of certain tax facilities for the stimulus packages/bonuses granted by employers during the state of emergency period to employees whose activity involved direct contact with the public and who were at risk of infection with COVID-19; (IV) Granting tax benefits in relation to the annual building tax; (V) Cancellation of certain ancillary liabilities (VI) Deferral of tax payments. Furthermore, the authorities extended certain social protection measures and issued norms for the regulation of the right to stay in Romania for foreign individuals, starting from 15 May 2020, in the context of the pandemic. All these measures, which aimed to support businesses in the context of the pandemic, were welcome.  In this respect, we consider that measures such as the extension of the facility offering tax exemption for reinvested profit and for investments in assets used in production and processing activity, as well as in assets representing technology, or tax facilities for research and development activities which entered into force starting from 1 January 2023 are welcome since they support the development of the business environment.

The FIC considers that improving transparency should be a top priority for the authorities, as this would lead to an increase in the predictability of the Romanian tax environment and would enhance trust among current and future investors. Lack of transparency in the legislative process seriously compromises the potential for economic development, mainly because it acts as a deterrent to the attraction of foreign direct investment. A consistent and coherent interpretation of legal provisions, aimed inter-alia at eliminating situations where different views have been expressed, in relation to sometimes controversial retroactive application of certain legal provisions, would greatly contribute to improving transparency.  

Cooperation is the key to setting up a more transparent and predictable environment and in order to nourish that, the FIC further proposes a number of steps to deal with the following concerns which have been identified:

• Binding and non-binding rulings already issued by the tax authorities cannot be accessed by taxpayers. Even though these would not be binding for other taxpayers, access to them would bring clarifications with regard to how the law should be interpreted, and contribute to a more transparent tax environment.

• The purpose of binding and non-binding rulings is to facilitate cooperation between the tax authorities and companies by eliminating uncertainty, and the legal timeframe for their issuance, especially for binding rulings, is too long. Moreover, while these deadlines are in some cases already unsatisfactory for the taxpayer (given the urgency of the transactions), the situation is worsened by the fact that there are also frequent delays due to internal consultations with the MPF before a tax ruling is issued.

• During tax inspections, the tax authorities issue a draft report and present it to the taxpayer in the final discussion, which marks the closing of the tax inspection. Even though the taxpayer is allowed to present its comments, since the tax inspection has already been closed, this process is a mere formality which rarely triggers any changes in the tax inspectors’ conclusions. Consequently, from a practical point of view, it does not represent an effective mechanism for ensuring the taxpayer’s right to defend its position. Moreover, during the administrative process, while the relevant fiscal authority is handling appeals, the taxpayer is not informed about the conclusions which have been reached (not even during or after the hearing of the appeal arguments), but simply receives the tax authorities’ final decision, without having the opportunity to express an opinion.

• Lack of transparency and predictability with respect to MAP processes makes it difficult for taxpayers to follow a course of action or to initiate such instruments in order to avoid double taxation.

FISCAL REFORM
In the current geopolitical and economic context, fiscal stability and predictability are essential for building a trusting relationship between taxpayers and public policy decision-makers. The lack of predictability and changes in the legislative process increase uncertainty about the future of investments in Romania.

A holistic approach to the fiscal framework, fiscal-budgetary policies, tax administration, and wage policies is needed, to identify sustainable measures for the budget and the economy, ensuring fiscal equity, improved collection, adjustment of imbalances, and a reduction of grey areas. It is vital that the authorities, together with the business environment, analyse the entire fiscal framework with a long-term perspective that supports the consolidation of public finances for the benefit of both the state, as well as the private sector.

FLAT TAX ON SALARY INCOME
The analysis of macroeconomic and tax practices over the last 4-5 decades shows that the introduction of a flat tax on salary income is associated with developing or developed economies that have a living standard gap compared to more developed states. Salary taxation in Romania is high, as outlined by specialised studies.

In the absence of a deep structural reform of the National Agency for Fiscal Administration (ANAF), the application and control of a progressive system would be very difficult to manage and would not trigger the expected results.

Moreover, introduction of progressive income taxation, to increase tax revenue and promote fairness, is unlikely to contribute to reducing the budget deficit. On the contrary, it could have a negative impact, considering the issues Romania has faced for many years – i.e., reduced individual voluntary and accurate compliance, inefficient tax collection, and weaker-than-expected economic activity, the latter of which was also pointed out by the European Commission in mid November 2024.

The FIC published an analysis „Is it time to change the taxation of income from wages?” which outlines a first overview of the economic context of Romania, some possible scenarios, practices in other EU countries, some proposals from the FIC, as well as a summary of the recommendations of the World Bank, OECD, IMF, and the European Commission on the subject of labour income taxation. This short analysis is a first basis for future debates, but for a complete picture, the effect of the reintroduction of progressive taxation on total budget revenues must be quantified, as well as the effect on the economy. At the same time, our study highlights that various categories of budget revenues have different elasticity coefficients.

The interpretation of Romanian and applicable EU tax legislation by ANAF and taxpayers remains one of the main areas of dispute during tax inspections.

Practice has shown that tax inspection reports and assessment decisions issued upon the closure of tax audits are frequently appealed against in courts by taxpayers, and there are more and more cases where the rulings are in favour of the latter. This means that the interpretation of the courts is based upon a legal assessment process which should be understood and assimilated by both ANAF and taxpayers. In these situations, ANAF assumes a series of costs, in the form of compensatory damages paid to taxpayers, as well as in terms of time and resources allocated to litigation which they lose, which makes the overall tax administration process less efficient. Similarly, taxpayers face significant costs for court actions, as well as uncertainty with respect to applying a tax treatment until the court issues its decision.

A consolidated database with traceability features for each case at the different courts in Romania, bringing together the tax decisions and rulings issued by Romanian courts, would bring three main benefits: 1. It would lead to an improvement in ANAF’s resource allocation process starting with the internal risk analysis and a better assessment of costs vs. opportunities, especially when jurisprudence exists covering tax matters specific to an economic sector or business model, and 2. It would assist unitary application of legislation in Romanian courts, in proceedings judging the same underlying principle. 3. It would allow taxpayers to apply the jurisprudence to their cases and therefore reduce the risks of disputes with ANAF and increase certainty of tax compliance.

The FIC supports the efforts made by the tax authorities to fight against tax evasion and the important steps undertaken towards a more digitalised and effective tax administration.

While a digital road map has been created, the measures taken have been putting a priori pressure on taxpayers and created a lot of challenges on the business community to comply within the terms set by the tax authorities. While the objectives underlying the implementing of these new reporting requirements have undeniable merits, the terms and their form may be better streamlined. Several recommendations on improving and making this process more efficient and effective are summarised below.

There are still steps to be taken in order for the introduction of tax reporting, to provide more transparency on the business activities of companies and their related tax impact, to combat tax evasion, to make the tax administration’s activities more efficient via enhanced digital tools, and to support taxpayers by enabling more efficient tax compliance, reducing the necessary time and financial costs.

Currently, several digital tools have been implemented by the tax authorities for communication with taxpayers.

Although many of them provide valuable information and instruments for bidirectional data communications, the original objectives considered for their creation and their evolution in time no longer match today’s need for highly efficient communication with the business community. Moreover, internal procedures for handling requests from taxpayers should also be included – there are often cases when responses to taxpayers are delayed because of the allocation of the requests between the different departments and functions within ANAF, which, from the perspective of taxpayers, too frequently work as a “black box”.

The high volume of data reporting from taxpayers, the high volume of complex tax legislation and the high volume of communication surrounding non-routine communications (tax challenges, tax administration, others) requires a reshape of existing digital communication platforms made available by the tax authorities.

While the tax authorities have implemented internal procedures for assessing various risk levels to taxpayers, and the internal tax audit procedure, and have provided a valuable public instrument (a Tax Procedure Code) to support the administration part of the relationship with the business community, there is a significant need for more transparency, predictability and simplification in this area.

Figure 14 VAT Compliance gap (% of VTTL)

Source: EU VAT Gap Report 2024, European Commission

We appreciate the efforts undertaken by the National Agency for Fiscal Administration (ANAF) to address the challenges of reduced voluntary tax compliance by individuals. Acknowledging the significant personal income tax compliance gap and the need for clear efforts to increase voluntary compliance, in 2023, ANAF developed and published its first Sectoral Strategy, the Strategy to increase individuals’ voluntary tax compliance in the area of personal income tax in Romania for 2023 - 2025, aimed at increasing compliance in this critical area.

Since then, various actions have been undertaken by ANAF, such as: regulatory changes for taxation at source for certain types of income, multiple on-line sessions for individual taxpayers, publication of income type-specific guides, a communication campaign with letters tailored to specific target groups (based on data analyses from numerous sources), educational presentations in schools, quarterly reports on ANAF’s actions and the related results, also covering individual taxpayers, as well as the introduction of an increased penalty of 70% for undeclared income and income from non-identified sources.

While tax amnesty programs (such as the six amnesties offered by the Romanian government within the period 2015 – 2024) can provide a short-term boost in revenue and improve compliance, it is important to acknowledge that they also carry risks related to fairness and long-term effectiveness. Relying on tax amnesties as a recurring solution can undermine long term efforts by the tax administration to increase compliance. Frequent amnesties can erode the effectiveness of regular enforcement measures and reduce the incentive for taxpayers to comply voluntarily on an ongoing basis.

The FIC welcomes the measures enforced via Government Ordinance no. 11/2021, which sets out, as a general rule, that VAT refund requests should be solved without a prior tax audit (with certain exceptions). However, if a the VAT refund request is solved with a prior tax audit, the period in which the tax audit is carried out frequently exceeds the 90-day-deadline. Moreover, there are also significant delays between the date when the refund is approved and the effective reimbursement.

Moreover, interest on late tax refunds is currently only granted to taxpayers under certain conditions and applications are often ignored by the tax authorities, forcing the taxpayer to litigate to recover the interest.

In 2021, a corporate tax consolidation regime was introduced for Romanian entities. This reform was long awaited and could contribute to the attraction of investors (groups of entities) to Romania, by creating a true and authentic holding regime.

Law no. 33/2024 has abolished the possibility for non-resident taxpayers to designate a global fiscal representative for the purpose of fulfilling their VAT obligations in relation to imports of goods into Romania, if these are followed by intra-community supplies.

According to the explanatory memorandum of Law no. 33/2024, the possibility has been abolished because the aforementioned VAT obligations may also be fulfilled by the fiscal representative defined within Art. 319, para. 7 of the Fiscal Code.

In practice, the lack of possibility (before 2021) to appoint a global fiscal representative in Romania has proven to be one of the main reasons why foreign companies have been reluctant to route their imports through Romania and has led many to use other EU countries instead (e.g. Germany, the Netherlands, Belgium).

Consequently, the FIC encourages the re-introduction of such a facility in Romania. Although the abolition was decided based on the fact that VAT obligations can be fulfilled by the fiscal representative defined within Art. 319, para 7 of the Fiscal Code, this would require the non-resident to register for VAT in Romania (via indirect representation). Given the recent implementation of SAF-T, RO e-factura, RO e-transport, and other digitalisation measures that also have an impact on non-resident taxpayers with VAT registration in Romania, the associated compliance costs are now significantly higher than in previous years.

Amendments made in 2022 to the Offshore Law (Law nr.256/2018) included more favorable provisions on the exploitation of natural gas in the Black Sea, unlocking investment in the area. As a result, the exploitation phase started in one offshore block, while the development phase is happening in another offshore block. The 2022 amendments are still valid.

One of the most important changes made in the Offshore Law was related to the tax regime for investments in this area, which has become more permissive.

One of the amendments with high impact for investors is the increase from 30% to 40% of the maximum level of deduction of investments in the upstream segment (exploration and production) for the determination of the above tax, as well as the fact that the Offshore law in its updated form permits such investments also to be deducted from producers’ corporate income tax result – decreasing the significant tax burden of investors in the Black Sea Exclusive Economic Zone.

All of the above measures, as well as the fact that the level of taxation for companies will remain unchanged throughout the duration of the concession agreement, were implemented in an effort to create a more stable, predictable, neutral, flexible and competitive legal framework, which is necessary to attract investments and in line with FIC recommendations in previous periods.

However, as a result of the current economic-social context and in line with EU regulation on an emergency intervention to address high energy prices, the overall energy sector in Romania has been affected by various tax issues over the last year. For example, during 2024 a supplementary turnover tax (“STT”) of 0.5% applied to the adjusted turnover was introduced for companies operating in the oil and gas sector in addition to the standard corporate income tax due. This was applicable only for oil & gas companies with a turnover exceeding EUR 50 mil. Starting from 2025 it will apply to all oil and gas companies irrespective of turnover level.

Moreover, even if it is not energy specific, companies carrying out operations within the Black Sea Exclusive Economic Zone will also be subject to Pillar Two rules in Romania if they are part of multinational groups exceeding revenues of at least 750 mil. EUR in at least two of the previous four years. As a result, a qualifying domestic minimum tax could be due in Romania, in addition to the standard corporate income tax and the STT.

In late May 2024, a welcome update to tax legislation was also introduced. The authorities defined the territory of Romania in the Black Sea from a customs, excise and VAT perspective as being up to 12 nautical miles (while before this change of law, the excise and VAT territory was up to 200 nautical miles). This change aligned the tax legislation and simplified development operations which will take place in the Black Sea Exclusive Economic Zone.

The reinvestment of profits helps companies to develop themselves and, indirectly, to contribute to the development of the overall economy and, by implication, to an increase in budget revenue.

In Romania, tax legislation has stipulated for a few years that companies may benefit from tax exemption for profits reinvested in technological equipment, computers and peripherical equipment, cash registers, informatics programs, as well as the right to use of informatics programs, produced and/or acquired, which are commissioned and used for business purposes.

As from 1 January 2023, the application of the tax incentive was extended to other assets used in the production and processing industry and to assets involved in re-technologization processes. This measure is particularly welcome from the point of view of the business community, given the current economic challenges.

The mandatory private pension system (2nd Pillar), currently covering 8.2 million participant members (at the end of Q3 2024), must be protected by maintaining legal stability and predictability.

The voluntary private pension system (3rd Pillar), managing the savings of close to 800,000 participants as at 30 September 2022, should be consolidated by increased tax incentives to facilitate the taking up of these funds by more categories of workers. More significant tax incentives have already been implemented in neighbouring EU Member States to encourage private retirement savings and, by implication, the reduction of pressure on the public pension budget on a long-term basis.

Private pension funds provide stable finance for the economy. Today they contribute to the development of the financial markets in Romania and, going forward, they will reduce pressure on the state budget in the context of an ageing demography.

With the growth of pensions funds, it is essential that the possibilities for investing contributions grow at a similar pace. Further development of the Romanian capital market is needed to allow pension funds to build a more diversified investment portfolio.

The flat Personal Income Tax rate was established in 2018 at 10%, and Romania has high (uncapped) Social Security Contributions for skilled professionals obtaining salary income.

From February 2017, the capping of Social Security Contributions at 5 gross average monthly salaries for employees (5 times * RON 2,681 = 13,405 per month for 2016) was eliminated.

For freelancers the cap on the 10% Health Contribution on the taxable income from independent activities has increased to 60 gross minimum salaries per annum starting from 2024 and the current cap for 2025 is set at RON 243,000.

Nevertheless, the capping of the 25% Pension Contribution remains at 24 gross minimum salaries; thus for 2025 it is RON 97,200.

The cap on the Health Contribution on other sources of income such as dividends, capital gains, rental, etc. has remained at a maximum of 24 gross minimum salaries which for 2025 is RON 97,200, while no Compulsory Pension Contribution is due.

According to the Fiscal Code, all excise duties on energy, tobacco and alcohol products increased on 1 January 2024. Additionally, a second increase followed in July for unleaded gasoline and diesel. Consequently, the excise duties on unleaded gasoline rose to 2,019 lei per 1,000 litres in January and to 2,382.84 lei in July. The excise duties on diesel increased to 1,850 lei per 1,000 litres in January and to 2,183.85 lei in July.

The increases in excise duties for all tobacco and nicotine products were brought forward from April to January, resulting in the hikes being applied three months earlier than initially foreseen in the Fiscal Code. Moreover, the excise duty on cigarettes was increased by 2.5% above the provisioned level, raising it from 626.97 lei per 1,000 cigarettes to 672.97 lei (instead of 655.97 lei). Moreover, in 2024, a new non-harmonised excise duty of 115 lei per kilogramme was introduced for nicotine pouches. For all tobacco and nicotine products, excise duty levels are scheduled to increase again in April 2025 and April 2026, according to the timetables shown in appendices to the Fiscal Code.

Towards the end of 2024, it was decided to increase the excise duty on beer and on spirits and sparkling wine for the next two years according to a new schedule, replacing the previous method of adjusting the excise duty based on inflation. The excise duty on beer was increased by 4.3% for 2025 (compared to 2024) and by 5% for 2026 (compared to the level set for 2025). Moreover, excise duties on spirits and sparkling wines increased by 4.4% starting from 1 January 2025.

The new Global Minimum Tax payable by large multinational and national groups of companies, with a consolidated turnover (at group level) of at least EUR 750 million in at least two of the four years preceding the reference year, entered into force in January 2024. Directive 2523/2022 has been transposed into Romanian legislation under Law 431/2023.

This new legislation creates a system through which an additional amount of tax (a “top-up tax”) must be collected each time the effective tax rate of a multinational or national group in a given jurisdiction is below 15%. The effective tax rate indicator is calculated based on specific rules which involve complex adjustments to the financial statement indicators unless one of the safe harbour tests is fulfilled. The calculations are made at jurisdictional level and not at the level of the entity, which provides an additional layer of complexity to the process.

The FIC welcomes the way the law has been transposed into domestic legislation and appreciates the Ministry of Finance’s ongoing efforts to work and cooperate with professionals in the business environment.

Globally and within the European Union, there is a significant interest in attracting Research and Development (R&D) investments, due to their critical role in driving innovation, economic growth, and competitiveness. Countries worldwide recognise that R&D investments lead inter-alia to technological advances, improved productivity, and the creation of high-value jobs.

Various reports (e.g., from the World Bank and the OECD) provide relevant data related to R&D investments and tax incentives available in numerous countries. These incentives are designed to encourage innovation and economic growth by reducing the financial burden on companies investing in R&D.

The FIC appreciates the efforts of the Romanian authorities to clarify and improve the legislation related to tax incentives for R&D. A transparent, objective, and predictable framework for the application of these incentives has the role of stimulating companies to make investments in such value-added activities.

Supporting R&D investments is a priority for the Romanian authorities as well, as reflected in the National Strategy on Research, Innovation, and Smart Specialisation for 2022-2027 which contains a proposed target to reach 1% of GDP for business sector R&D expenditures by 2027. Nevertheless, Romania faces significant challenges in this area, and ranks among the lowest in the European Union for R&D expenditure as a percentage of GDP. Such data are relevant when highlighting the need for increased investments and more effective policies to stimulate this crucial sector.

Although various R&D tax incentives have been gradually introduced into Romanian tax legislation since 2009 (e.g. an additional 50% deduction of eligible expenses for profit tax calculation, accelerated depreciation for equipment used in R&D activities, as well as the salary income tax exemption), the practical application of such tax incentives was limited until 2022 (when the Registry of Experts was created and the R&D certification methodology was issued).

To continue the positive steps in the direction of increasing investments in R&D, considering a practical perspective and based on the feedback received from companies directly involved in such activities, the following aspects could be further considered.

The recent extension of the R&D tax incentive to companies subject to the minimum tax on turnover proved the Government’s interest in attracting and retaining R&D investments in Romania. Nevertheless, given the local provisions in relation to the introduction of OECD Pillar 2 Model Rules, effective 1 January 2024 in Romania, there is a risk that the tax benefits provided by the Fiscal Code in relation to the supplementary deduction for R&D expenses will no longer represent a real benefit for taxpayers subject to the global minimum tax. Thus, the additional deduction for R&D activities may become inapplicable for many companies, potentially making Romania less attractive for investment.

In contrast, various jurisdictions in Europe, and beyond (e.g., France, Germany, Ireland, Belgium, Slovakia, and Austria) have already considered amendments to their current R&D incentives systems and have implemented mechanisms that are not affected by Pillar 2, typically in the form of tax credits (i.e., falling under the definition of Qualified Refundable Tax Credits under Pillar 2 rules).

Most jurisdictions in the Central and Eastern Europe region (e.g. the Czech Republic, Latvia, Lithuania, Poland, Slovakia, Slovenia, Hungary) grant deductions of over 100% of the total amount of eligible expenses for R&D activities, and, in some cases, additional deductions are permitted of up to 200% or even 300% (e.g., Lithuania, Hungary, Poland).

Since 2017, the Fiscal Code has offered a 10-year profit tax exemption for taxpayers exclusively engaged in innovation/R&D activities. However, this benefit has never been applied due to practical limitations and the absence of supporting legislation to apply the scheme.

In conclusion, while a number of initiatives have been made to support R&D through various tax incentives, there are significant practical and legislative challenges that need to be addressed.

Income from the transfer of virtual currency was introduced in the Fiscal Code as a separate category within the broader framework of taxable income from other sources through the provisions of Emergency Ordinance no. 25/2018. Although this addition to the Fiscal Code did not address many areas of uncertainty in relation to the taxation of cryptocurrencies, it did serve to bring additional clarity to the taxation regime for this type of income (e.g., through the clear stipulation that the acquisition price may be deducted from the sales price, etc.).

By reference to this established framework of cryptocurrency taxation in Romania, an amendment was proposed in the Budget, Finance and Banks Commission of the Chamber of Deputies, which aims to provide a tax exemption to individuals for cryptocurrency income earned until 31 July 2025. This exemption was introduced as an amendment to the law for the approval of Emergency Ordinance no. 107/2024, which was sent to the Chamber of Deputies for debate and approval. The law was adopted by the Chamber of Deputies and was sent to the President of Romania for promulgation. The President, however, has referred the law to the Romanian Constitutional Court with the claim that some of its provisions are unconstitutional. Consequently, the law, and hence the cryptocurrency tax exemption, has not yet entered into force.

In the motivation for the amendment which would institute the cryptocurrency tax exemption, the initiator claimed that this transitory measure would bring further transparency to the cryptocurrency sector in Romania and that it would allow a real mapping of this specific market within the Romanian economy. It is also claimed in the motivation that this measure would allow cryptocurrency investors to transfer their earnings to Romanian credit institutions and create the legal framework needed to alleviate fears and concerns about fraud.

It is unclear, however, how such a proposal would serve these purposes without specific additional measures to increase transparency in Romania and boost the confidence of credit institutions. Furthermore, it is debatable whether this type of uncertain projected effect can offset the certain net decrease in terms of tax collection from individuals who are investors in the cryptocurrency sector. Given the current budget deficit constraints and measures which were already taken by the Romanian Government (increased taxation for certain types of income like dividends, expense reductions and public sector salary freezes), such a measure appears to be counterproductive in terms of efforts to reduce the budget deficit.

From a tax perspective, the wording of the amendment may also raise interpretation difficulties, as the exemption in its current form would apply to „the difference between income from investments in virtual currencies acquired for resale and income realised and collected in virtual currencies”.