The Romanian Government has approved the necessary legislative amendments to create a holding regime in Romania, the ordinance being published in the Official Gazette on Friday, November 15, effective as of January 1st, 2014.
The ordinance includes profits tax exemptions for Romanian holding companies as regards revenues from dividends received, revenues from the sale of shares and revenues from the liquidation process. As per the said ordinance,
the following revenues are non-taxable for profits tax purposes:
- dividends received from a foreign legal entity that pays profits tax or a similar tax and it is situated in a non-EU country with which Romania has concluded a double tax treaty, if the Romanian company that receives the dividends holds for an uninterrupted period of 1 year (upon the date of booking the revenues) minimum 10% of the share capital of the company paying the dividends;
- revenues from the sale of shares held in a foreign legal entity situated in a country with which Romania has concluded a double tax treaty if the Romanian company holds for an uninterrupted period of 1 year (upon the sale
date) minimum 10% of the share capital of the foreign company;
- revenues from the liquidation of a foreign legal entity situated in a country with which Romania has concluded a double tax treaty if the Romanian company holds for an uninterrupted period of 1 year (upon the start date of the liquidation) minimum 10% of the share capital of the foreign company.
The ordinance does not include additional details on what should be understood by an entity paying profits tax or a similar tax - as a preliminary view, we consider that this condition should be regarded rather similarly to the condition stipulated under the Parent-Subsidiary Directive requiring for the qualifying entities to pay profits tax or a similar tax without the possibility of an option or of being exempt (since as regards the dividends revenue the intention of the law appears to incline towards granting tax exemption for such revenues derived from EU, Romanian and non-EU treaty countries under similar conditions).
|