The holding company in Romania

The Romanian legislation does not provided for the concept of a holding company as such.

Nevertheless, Romanian tax law recognizes a special regime for companies the activity of which fully or partially consists of holding financial assets, such as subsidiaries and in receiving dividends from them or in achieving gains from the assignment of these securities.

Therefore, it is possible to use these tax rules to deduct a tax regime specific to holding activities of possessing financial interests in Romania.

The holding activity is performed by a company subject to the micro-enterprise regime

We have to remember that this derogatory tax regime is the most common one in Romania.

In such case, all incomes consisting either in the collection of dividends or in the achieving of financial gains, shall be taxed (either at a rate of 1% or at a rate of 3% of the achieved income).

The holding activity is performed by a company subject to the general regime of profit taxation

In such case, all incomes consisting either of the collection of dividends or in the achieving of financial gains is tax-free, provided that the company receiving the dividend or achieving the gain (1) has owned for at least one year the subsidiary which pays the dividend or by which it achieves the gain of at least 10%.

We have to remember that a company that is normally subject, depending on its size, to the micro-enterprise regime, can choose the general profit tax regime with the double condition of having a capital of at least RON 45,000 (approximately EURO 10,000) and at least two employees.  

Conclusion

Article 23 from the Romanian Tax Code creates a real opportunity to incorporate a holding company in Romania by implementing an exemption regime for capital gains from financial transfer, such as existing holding regimes in Switzerland, Luxembourg, Belgium or the Netherlands ...

Nevertheless, the taxpayer has to pay particular attention to the tax status of its company (which must be that of profit taxation) in order to benefit from this favourable regime.

References
(1) Article 23 of the Tax Code