Romania's 50 percent deductibility for R&D expenditure to help the economy

The fiscal incentive for companies, which carry out research & development (R&D) activities to increase their range of products, sustain Romania’s economic growth, according to Florin Gherghel, head of Tax Department at Noerr Finance & Tax.

A company can deduct R&D related expenses if it aims to obtain a new product that generates higher revenues. There is an additional deduction calculated on the taxed profit, leading to another 50 percent deduction of the eligible expenses, according to Gherghel.

He commented that companies can also apply the accelerated amortization method for equipment used during the R&D activity.

“Considering that R&D activities will surely increase the added value in the Romanian economy, and consequently help its growth, the increase to 50 percent of the additional deduction may only be beneficial – this deduction was 20 percent until February,” Gherghel told BR.

He added that fiscal incentives are granted solely for activities that lead to usable results for the company, which are carried out both in Romania and in the EU/The European Economic Space. In addition, the R&D activity needs to be relevant for the company.

“The fiscal stimulus is granted separately for R&D activities in each developed project,” explained Gherghel.

At present, companies are waiting for the change of the application norms, after the Fiscal Council was updated last month.

Florin Gherghel is one of the key speakers of the flagship event Tax & Law, organized on March 28 by weekly magazine Business Review. The event hosts a panel of experts that will outline the main fiscal and legal changes that impact the local business environment.

Ovidiu Posirca