Romania cuts tax on dividends, makes it easier to receive state aid

Romania’s Government approved the ordinance which reduces the tax on dividends from 16% to 5% and cuts the VAT to 9% for drinking water and water used for irrigations. The ordinance also exempts private schools from paying income tax. The new regulation also changes the taxation of small enterprises and raises the income threshold for a company to be considered a small enterprise, from EUR 65,000 to EUR 100,000. The measures will be implemented starting January 1, 2016, when the new fiscal starts applying. The tax for small enterprises will be 1% for companies with at least two employees, 2% for those with one employee and 3% for those without any employee. Currently all small companies pay a single income tax of 3%. Reducing the tax on dividends from 16% to 5% will increase investments, according to the Government. The Government has also reduced the level of investments that companies need to make in order to receive money from the state for covering costs with the plot and other expenses. Starting next year, companies will need to invest EUR 5 million, compared to EUR 10 million now. The state grants the money through a state aid scheme, which was approved last summer. This is available until the summer of 2020, and has a total budget of EUR 600 million. editor@romania-insider.com