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Romania: First series of economic and tax measures tackling COVID-19 enacted

24 March 2020 – The first series of more comprehensive measures adopted by the Romanian government in the context of the COVID-19 outbreak have been published in the Official Gazette and entered into force on 21 March 2020.

The measures are introduced through Government Emergency Ordinance No. 29/2020 on certain economic, tax and budgetary measures (“GEO 29/2020” or “the GEO”) and Government Emergency Ordinance No. 30/2020 amending certain legal acts and establishing certain social protection measures in the context of the epidemiologic situation caused by the spread of the SARS-CoV-2 coronavirus (“GEO 30/2020”).

The purpose of this article is to briefly outline the context and implications of GEO 29/2020 for the business environment.


1. National level

GEO 29/2020 was enacted as the first tax and economic action following the adoption of Decree no. 195/2020 establishing a state of emergency in Romania effective 16 March 2020 (“Decree 195/2020”). In this regard, the GEO also implements Art. 8 of Decree 195/2020, which provides that the government can adopt measures to support economic operators in sectors affected by COVID-19.

Considering its provisions, one of the main rationales of GEO 29/2020 is to aid small and medium enterprises (“SMEs”). In this regard, as per the GEO’s explanatory notes, SMEs are highly exposed to lack of liquidity in this crisis scenario and decisive corrective measures were needed.

2. European Union level

At the EU level, the Commission has reacted through its 13 March 2020 Communication on a coordinated economic response to the COVID-19 Outbreak (available here). The Communication stresses the severity of the COVID-19 crisis and highlights the EU action plan (e.g., measures to ensure liquidity for SMEs and the banking sector, directing EUR 37 billion to the COVID-19 outbreak through the “Coronavirus Response Investment Initiative”), but also measures to be implemented at the national level (e.g., to alleviate the impact on employment, wage subsidies, suspension of payments of corporate taxes or social contributions, granting financial support directly to consumers for cancelled services or events).

Further to the 13 March 2020 Communication, the Commission also adopted on 19 March 2020 a State aid Temporary Framework to support the economy during the current COVID-19 outbreak (“the Temporary Framework”) (available here). This allows Member States to take temporary measures deemed compatible with the internal market as per Art. 107(3)(b) TFEU[1], such as:

  • Direct grants, selective tax advantages and advance payments – Member States are able to set up schemes to grant up to EUR 800,000 to a company to address its urgent liquidity needs;
  • State guarantees for loans taken by companies from banks – Member States are able to provide State guarantees to ensure banks keep providing loans to the customers who need them;
  • Subsidised public loans to companies – Member States are able to grant loans with favourable interest rates to companies;
  • Safeguards for banks that channel State aid to the real economy – supporting banks’ existing lending capacities is considered as direct aid to the banks’ customers and not to the banks themselves;
  • Short-term export credit insurance to be provided by the State when needed.

The Temporary Framework is intended to only apply until 31 December 2020 and all relevant State aid measures adopted must be notified to the Commission.

Economic and tax measures brought by GEO 29/2020

GEO 29/2020 follows the rationale of the Commission’s 13 March 2020 Communication in anticipating and trying to tackle the liquidity issues of SMEs and also implements to a certain extent State aid measures, as included under the Temporary Framework.

1. Measures intended to alleviate economic burden and ensure liquidity for SMEs

SMEs are at the forefront of the measures brought by the GEO. As such, these types of companies are entitled to the following:

  • State guarantees for investment loans and/or working capital loans/credit lines covering up to 80% of the financed amount (excluding interest, commissions and other credit-related banking costs), up to a total financed amount of RON 10 million (approx. EUR 2 million) for SMEs;

The maximum value of working capital loans/credit lines granted to a single beneficiary cannot exceed the working capital expenses average in the last two fiscal years and up to RON 5 million (approx. EUR 1 million). For investment loans, the maximum financing cannot exceed RON 10 million.

  • State guarantees for working capital loans/credit lines covering up to 90% of the financed amount (excluding interest, commissions and other credit-related banking costs), up to a total financed amount of RON 500,000 (approx. EUR 103,000) for micro-enterprises or of RON 1 million for small-sized companies;

The maximum amount of financing granted to a beneficiary cannot exceed the working capital expenses average in the last two fiscal years, up to the thresholds above (i.e., RON 500,000 and RON 1 million, respectively).

  • Interest subsidies of 100% covered by the Ministry of Public Finance for loans/credit lines under the first two points above, from the moment the loan is granted (after the entry into force of the GEO) and until 31 March 2021, by setting up an associated State aid/de minimis scheme;

The interest subsidies are approved by law for the first year. These could also be extended for the subsequent two years (i.e. 2021-2022), but only if the economic growth estimated by the National Commission for Strategy and Prognosis for this period is below the one registered in 2020.

The maximum financing period is 120 months for investment loans and 36 months for working capital loans/credit lines. Working capital loans/credit lines can be extended for up to another 36 months.

  • Deferral from paying utility bills and rent – during the state of emergency, SMEs that have partially or completely ceased their activities based on the decisions taken by public authorities and that hold emergency state certificates issued by the Ministry of Economy, Energy and Business Environment benefit from a deferral from payment of utility bills – electricity, natural gas, water, phone and internal services and rent for space used as a registered office or secondary offices;
  • In on-going contracts concluded by SMEs, other than those under the point above, force majeure can be invoked by the other party only after attempting to renegotiate the contract, proven by any written means, in order to adapt its clauses by considering the exceptional conditions generated by the state of emergency;

As per the GEO, it is presumed to represent force majeure—the unforeseeable, invincible and inevitable event that results from an action of the authorities applying measures imposed by the prevention and control of the pandemic caused by the COVID-19 infection that affected the activity of the SME, as attested by an emergency state certificate. On the other hand, measures adopted by the authorities as per Decree 195/2020 will not be considered unforeseeable.

  • Penalties will not apply for outstanding obligations of SMEs under contracts with public authorities during the state of emergency.

2. Tax measures included in GEO 29/2020

Apart from the economic measures aimed at SMEs, the GEO also introduces a series of tax measures concerning both physical and legal persons. Such measures include:

  • the deadline for paying the 2020 annual tax on buildings, land and vehicles and to receive a 10% bonus on the amount due is postponed from 31 March to 30 June;
  • tax liabilities that become outstanding following the entry into force of the GEO do not incur interest or penalties until the end of the tax aid measures (i.e. 30 days following the end of the state of emergency);
  • tax enforcement measures (Romanian: poprire) regarding state budget claims are suspended up to 30 days following the end of the state of emergency, with the exception of enforcement measures regarding state budget claims set by court decisions in criminal proceedings.

3. Extending the term to file the declaration regarding the ultimate beneficial owner

GEO 29/2020 also extends the deadline to file the declaration regarding the ultimate beneficial owner until three months after the state of emergency has ended.

The economic and tax measures provided by GEO 29/2020 are supplemented by significant social protection actions under GEO 30/2020.

Concluding remarks

Global and EU economic and legal frameworks have been severely challenged and will continue to be tested by the on-going measures meant to tackle the COVID-19 pandemic. As such, it is expected that both the EU and Romanian authorities will continue to enact primary and secondary legislation in their attempts to alleviate the economic environment while preserving the well-being of its citizens. Under these circumstances, we will continue analysing and reporting on the relevant legislative changes that influence business in Romania.

For more information, contact Iustinian Captariu, Partner, at


, or Cătălin Graure, Senior Associate, at .


[1] Aid “to remedy a serious disturbance in the economy of a Member State”.