Deloitte: Fiscal changes for bad loan sales could block deals in Romania

Changes in Romania’s fiscal laws starting 2018 will increase fiscal costs for loan sale deals, warns Deloitte. In some cases, costs would exceed the sale price, thus questioning the deal altogether, said Dan Badin, Partner Coordinator with Fiscal & Judicial services, Deloitte Romania. Deloitte created a study on this topic, at the request of the Romanian Bank Association - ARB. The study shows 22 EU member states offer full deductibility from the income tax for the losses resulting from sale of bad loans. Only three member states, the Czech Republic, Slovakia and Poland, impose certain restrictions, while offering full deductibility under certain circumstances. Greece allows it only after the sale is concluded, while Lithuania uses anticipated fiscal solutions or fiscal authority opinion. In Romania, with the law change earlier this year, deductibility was capped to 30% of the value of the net loss, which is the difference between the sale price and the loan value. Financial institutions would thus owe taxes on 70% of the difference between the sale price and the value of the bad loan. editor@romania-insider.com