What makes Romania attractive for investors (both foreign and domestic) in terms of financing tools? What makes the state aid subsidy type a viable financing opportunity? You can find out all these answers and much more from Andreea Mitrea, Advisory Senior Manager at FiNEXPERT Consulting. Andreea has an extensive expertise in providing consultancy to access non-reimbursable funds, managing a diverse client portfolio and successfully assisting for application and reimbursment large investment projects.
As one of the leading Foreign Direct Investment - FDI recipients in the region, Romania has a competitive, investment-conductive business climate and offers a wide range of financing tools and fiscal incentives. One of the most of the most advantageous financing resources are the regional state aid schemes, granted either as cash reimbursement for 15 to 50 percent of eligible costs associated with the investment (up to EUR 37.5 million) or as exemption from the payment of various taxes.
Regional state aid represents a transfer of Romanian state resources to private beneficiaries (companies) that carry out their investments in Romania, and it is an addition to the already available EU funds or de minimis aid. Romanian state aid schemes have been drafted in accordance with EU legislation and have been already reported to and approved by the EC. Long story short, these regional state aid schemes are waiting to be accessed by investors, with over EUR 1 billion being allocated starting with 2014.
Moreover, investors should know that Romania has been implementing regional development state aid schemes since 2007, following its accession to the EU, which have been efficient and well-substantiated financing programs with a quantifiable outcome. The balance of actual regional development for 2007-2014 projects shows the positive impact of state aid in supporting investments: over EUR 758 million in financing agreements for initial investments that reach EUR 3 billion and create 22,000 new jobs, with lots of success stories in terms of project implementation.
What state aid schemes can be accessed and by whom? Do they have to comply with specific conditions?
Romania continues to welcome investors to access several types of available incentives, under different types of regional state aid schemes which are available for access up to 2020.Two of these schemes have been particularly successful and popular among investors:
Grants awarded for tangible and intangible asset acquisition under GD 807/2014 (for a minimum of EUR 3million capex investment). The eligible expenses are costs of building constructions of all kind, leasing costs of buildings, new technical installations, machinery and equipment and intangible assets associated with an initial investment.
Cash reimbursements of company payroll costs for newly created jobs under GD 332/2014 (for investments which create at least 10 new jobs). The eligible expenses are the salary costs (including net salaries and all related taxes) recorded for each of the new employees for two consecutive years, up to the limit of the medium national gross salary.
The incentive can be granted to large, medium-sized and small (both newly set-up and existing) enterprises, depending on the type of investment, the field in which the investment is to be implemented and the provisions of the state aid scheme applied for.
Incentive granting is conditioned by obtaining the financing agreement of the responsible authority, as preliminary to investment launch and subject to fulfilling the eligibility criteria applicable both to the investor and the investment.
The ultimate purpose of regional state aid is to support economic development and employment. Romania has drawn up a regional aid map (the geographical areas where companies can receive regional state aid, and at which levels) in accordance with EU guidelines.
Romania welcomes investors to all its regions, as currently the level of state aid (the percentage of the eligible expenses reimbursed via state aid schemes) goes from 10 to 50 percent country-wide. Percentages of 10 to 35 percent are applicable to those regions of the country with potential overcapacity concerns, whereas the 50 percent threshold applies to the rest of the country, those regions that present high prospects for long-term economic growth.
What about the TECHNICAL & PROCEDURAL HIGHLIGHTS? What are the main conditions to observe or steps to follow?
State aid is granted to those initial investments (not started prior to receiving the financing agreement or submitting a financing request) related to creating a new unit, expanding the activity of an existing unit, diversifying the product/service portfolio or a fundamental change to the general production process of an existing unit.
The beneficiaries of state aid pursuant to the scheme can be enterprises which are registered in accordance with Romanian legislation (Law no. 31/1990), and, inter alia, do not fall into the category of "companies in a difficult situation" and cumulatively fulfill all the eligibility criteria on the date of registration of their application.
Once all the eligibility criteria are fulfilled, the company can proceed to receiving the financing agreement, implementing the project and collecting the state aid grant.
In order to secure a financing agreement, the investor should submit an application and supporting documents that prove the viability of the investment and the economic efficiency of the enterprise.
After a complete analysis of the application, and subject to fulfilling all the relevant criteria, the investor is likely to receive a financing agreement that gives the green light to starting the investment and hiring the people. The enterprises are obliged to start the investment for which they requested financing within at most four months of the date of issuance of the financing agreement.
State aid is payable after the eligible expenditure is totally or partially paid, according to the financing agreement.
The enterprise is obliged to keep operational the initial investment it makes for at least five years of the date of its completion.
Is the state aid a WIN-WIN PARTNERSHIP?
It definitely is, as Romania has drafted mutually beneficial state-aid schemes: stimulating investments leads to economic growth and helps create regional synergies. This win-win partnership comes hand in hand with a series of long-term commitments to be undertaken by both parties.
Foreign investors implementing and developing their investment projects in Romania enjoy the same rights and incur the same obligations as all other investors and are offered by the Romanian government extensive support to turn business opportunities into value-added projects.
CONTACT
Andreea Mitrea, Advisory Senior Manager at andreea.mitrea@fin-expert.ro
As one of the leading Foreign Direct Investment - FDI recipients in the region, Romania has a competitive, investment-conductive business climate and offers a wide range of financing tools and fiscal incentives. One of the most of the most advantageous financing resources are the regional state aid schemes, granted either as cash reimbursement for 15 to 50 percent of eligible costs associated with the investment (up to EUR 37.5 million) or as exemption from the payment of various taxes.
Regional state aid represents a transfer of Romanian state resources to private beneficiaries (companies) that carry out their investments in Romania, and it is an addition to the already available EU funds or de minimis aid. Romanian state aid schemes have been drafted in accordance with EU legislation and have been already reported to and approved by the EC. Long story short, these regional state aid schemes are waiting to be accessed by investors, with over EUR 1 billion being allocated starting with 2014.
Moreover, investors should know that Romania has been implementing regional development state aid schemes since 2007, following its accession to the EU, which have been efficient and well-substantiated financing programs with a quantifiable outcome. The balance of actual regional development for 2007-2014 projects shows the positive impact of state aid in supporting investments: over EUR 758 million in financing agreements for initial investments that reach EUR 3 billion and create 22,000 new jobs, with lots of success stories in terms of project implementation.
What state aid schemes can be accessed and by whom? Do they have to comply with specific conditions?
Romania continues to welcome investors to access several types of available incentives, under different types of regional state aid schemes which are available for access up to 2020.Two of these schemes have been particularly successful and popular among investors:
Grants awarded for tangible and intangible asset acquisition under GD 807/2014 (for a minimum of EUR 3million capex investment). The eligible expenses are costs of building constructions of all kind, leasing costs of buildings, new technical installations, machinery and equipment and intangible assets associated with an initial investment.
Cash reimbursements of company payroll costs for newly created jobs under GD 332/2014 (for investments which create at least 10 new jobs). The eligible expenses are the salary costs (including net salaries and all related taxes) recorded for each of the new employees for two consecutive years, up to the limit of the medium national gross salary.
The incentive can be granted to large, medium-sized and small (both newly set-up and existing) enterprises, depending on the type of investment, the field in which the investment is to be implemented and the provisions of the state aid scheme applied for.
Incentive granting is conditioned by obtaining the financing agreement of the responsible authority, as preliminary to investment launch and subject to fulfilling the eligibility criteria applicable both to the investor and the investment.
The ultimate purpose of regional state aid is to support economic development and employment. Romania has drawn up a regional aid map (the geographical areas where companies can receive regional state aid, and at which levels) in accordance with EU guidelines.
Romania welcomes investors to all its regions, as currently the level of state aid (the percentage of the eligible expenses reimbursed via state aid schemes) goes from 10 to 50 percent country-wide. Percentages of 10 to 35 percent are applicable to those regions of the country with potential overcapacity concerns, whereas the 50 percent threshold applies to the rest of the country, those regions that present high prospects for long-term economic growth.
What about the TECHNICAL & PROCEDURAL HIGHLIGHTS? What are the main conditions to observe or steps to follow?
State aid is granted to those initial investments (not started prior to receiving the financing agreement or submitting a financing request) related to creating a new unit, expanding the activity of an existing unit, diversifying the product/service portfolio or a fundamental change to the general production process of an existing unit.
The beneficiaries of state aid pursuant to the scheme can be enterprises which are registered in accordance with Romanian legislation (Law no. 31/1990), and, inter alia, do not fall into the category of "companies in a difficult situation" and cumulatively fulfill all the eligibility criteria on the date of registration of their application.
Once all the eligibility criteria are fulfilled, the company can proceed to receiving the financing agreement, implementing the project and collecting the state aid grant.
In order to secure a financing agreement, the investor should submit an application and supporting documents that prove the viability of the investment and the economic efficiency of the enterprise.
After a complete analysis of the application, and subject to fulfilling all the relevant criteria, the investor is likely to receive a financing agreement that gives the green light to starting the investment and hiring the people. The enterprises are obliged to start the investment for which they requested financing within at most four months of the date of issuance of the financing agreement.
State aid is payable after the eligible expenditure is totally or partially paid, according to the financing agreement.
The enterprise is obliged to keep operational the initial investment it makes for at least five years of the date of its completion.
Is the state aid a WIN-WIN PARTNERSHIP?
It definitely is, as Romania has drafted mutually beneficial state-aid schemes: stimulating investments leads to economic growth and helps create regional synergies. This win-win partnership comes hand in hand with a series of long-term commitments to be undertaken by both parties.
Foreign investors implementing and developing their investment projects in Romania enjoy the same rights and incur the same obligations as all other investors and are offered by the Romanian government extensive support to turn business opportunities into value-added projects.
CONTACT
Andreea Mitrea, Advisory Senior Manager at andreea.mitrea@fin-expert.ro
Any presented information is general and is not meant to address the specific conditions of a particular individual or legal person. Although we try to provide accurate and up-to-date information, there is no warranty that such information is accurate at the time of its receipt or that it continues to be accurate. No action should be taken based on this information without relevant professional assistance following a careful examination of the circumstances that are typical of a particular state of affairs.
