• Legal background

• Direct investments

• The possibility to perform investments in any field and under any of the forms provided for by the law;

• Equal, unbiased treatment for both resident and non-resident investors;

• Guarantees against nationalization, expropriation or other measures with an equivalent effect, except when such measure is imposed by public interest, when the expropriation is carried out under the conditions set forth under the law with the payment of prior, proper and effective compensation;

• The possibility of non-resident investors to set up commercial companies over the Romanian territory and to fully subscribe the share capital of the same;

• The companies that are resident or non-resident legal entities may acquire any real rights over real estates, to the extent necessary for the performance of the activities, according to the their object of activity, save for the lands that may be acquired by Romanian individuals or legal entities.

Moreover, foreign investors are guaranteed the right to transfer the following revenues abroad, with no restrictions whatsoever, after the payment of the legal taxes and fees, in exchangeable hard currency:

• The dividend or the benefit obtained by a Romanian legal entity, in the event that there are shareholders or associates;

• The revenue obtained in the case of a partnership, as well as the revenues obtained from the sale of the shares or the social parts;

• The amounts obtained pursuant to the liquidation of a company, according to the legal provisions;

• The amounts obtained as compensation, pursuant to an expropriation or to the implementing of another measure with an equivalent effect;

• Other revenues according to the form of achievement of the investment.

• Direct investments with a significant impact on the economy

Direct investments with a significant impact on the economy are defined by the law as being such investments the value of which exceeds the equivalent of USD 1 million and that contribute to the development and modernizing of Romania's economic infrastructure, thus resulting in a positive effect of engagement in the economy and the creation of new workplaces. Only new investments made by liquid capital in ROL or exchangeable hard currency, performed within a maximum of thirty days following the date of statistical registration with the Ministry of Development and Prognosis shall benefit from the provisions of this normative act.

Direct investments that meet the requirements provided for by this normative act, shall benefit from the following facilities:

• Exemption from the payment of customs fees for imported goods (installations, equipment, technology) necessary for investment purposes;

• Postponement of the payment of the Value Added Tax for the above-mentioned goods that are either new, imported or manufactured in Romania.

• Fiscal deduction of a 20-percent quota of the investment value;

• The recovery of fiscal losses, in the course of the following five years, out of the taxable profit;

• The use of accelerated repayment upon notification to the competent authorities, but without the obligation of prior approval.

• The facility regarding the postponement of the payment of the Value Added Tax for new goods that are either imported or manufactured in Romania and are necessary for making the investment was cancelled as of June 1st, 2002;

• The facility regarding a fiscal deduction of a 20 percent quota of the investment value will be cancelled as of January 1st, 2005;

• The facility regarding the use of accelerated repayment will also be repealed as in January 1st, 2005.
If an investment meets the requirements to benefit from facilities granted by several laws, the investor must express its option for only one regime of facilities.

The investments made in accordance with the conditions of this normative act must be maintained for at least 10 years, and in the event of a voluntary dissolution of the company, the company must pay the taxes and fees, calculated in accordance with the law, for the entire duration of the investment, as well as delay increases calculated from the date when the taxes and fees should have been paid in the absence of the facilities.

The assignment of the goods for which the investors benefited from facilities within less than two years following the date when such goods were brought into the country or were purchased shall result in the payment of the counter value of the facilities from which they had benefited, as well as delay increases calculated from the date when the taxes and fees should have been paid in the absence of such facilities.

• Disfavored areas

Pursuant to the Government Emergency Ordinance no. 24/1998, as republished, with its subsequent amendments, a legal framework was created to characterize certain geographical areas as disfavored areas and to implement a system of facilities for investments made in such areas.

Currently, by means of government decisions, upon the proposal of the National Council for Regional development, 35 geographical areas have been designated as disfavored areas.

The main goals purported to be achieved pursuant to the issuance of the enactments governing the regime of the disfavored were the drawing of a legal background that would contribute to economic recovery and the attraction of capital in certain territories that were seriously affected by programs of industrial restructuring and extensive layoffs.

The disfavored areas are strictly delimited geographical areas that meet at least one of the following requirements:

• The percentage of unemployed persons out of the total work resources of the area is at least three times higher than the percentage of the unemployed in the total work resources on a national level, over the last three months preceding the month of drafting of the documentation for designating the disfavored area;

• They are isolated areas, lacking communication means and having a poorly developed infrastructure.

Companies with majority private capital, which are Romanian legal entities, as well as private entrepreneurs, benefit from a number of facilities for newly created investments in the disfavored areas, provided that they have their headquarters in these areas, carry out their activity in such areas and create new workplaces, as follows:

• Exemption from the payment of the Value Added Tax for the repayable goods, manufactured in the country and acquired in view of making and performing the investment;

• Exemption from the payment of customs fees for imported raw materials and parts, necessary for achieving one's own production in the disfavored area;

• Exemption from the payment of profit tax during the period of existence of the disfavored area;

• Exemption from the payment of fees charged for changing the purpose or withdrawing from the agricultural circuit certain lands intended for making the investment;

• The granting of certain amounts for financing special programs, approved by government resolution, out of the special development fund at the government's disposal.

The facilities regarding the exemption from payment of custom fees and Value Added Tax for the repayable goods imported in view of making the investment, the exemption from payment of the Value Added Tax for the repayable goods manufactured in the country and acquired for the same purpose, as well as the facilities related to exemption from the payment of the profit tax were cancelled as of June 2002.

Investors in disfavored areas may change the purpose of the goods for the acquisition of which they had benefited from facilities only after paying the customs fees and the Value Added Tax, respectively, from the payment of which they had been exempt. Companies that benefited from facilities for investments made in a disfavored area may voluntarily cease their activity but only after payment of the legal fees and taxes.

• Industrial parks

Industrial parks represent a defined area where a company carries out economic activities, scientific research and/or technological development activities to capitalize on the human and material potential of the area.

The title of industrial park is granted by an order of the Minister of Development and Prognosis pursuant to assessing the lodged documentation, only to partnerships that are Romanian legal entities. A company called administrator-company administers the industrial park. None of the associates that use the utilities and/or infrastructure of the industrial park can hold control, directly or indirectly, over the administrator-company. The duration of the industrial park is to be granted upon the petitioner's request, but not for a period less than 15 years.

Administrator-companies benefit from the following facilities with respect to the activity carried out for establishing and developing an industrial park:

• Facilities granted to the small and medium enterprises

To benefit from the facilities granted to small and medium enterprises, companies that produce material goods and services must cumulatively meet the following requirements:

• Fall within the number of annual personnel provided for by the law (up to nine employees micro enterprises; between 10 and 49 employees small enterprises; and between 50 and 249 employees mediumenterprises);

• Achieve an annual turnover equivalent to up to EURO8 million.

Small and mediumenterprises benefit from the following facilities:

• Suspension of the payment of the Value Added Tax to the customs authorities for the import of new machines, vehicles necessary to productive activities, installations, industrial equipment, instruments, technological machines, automation, measurement and control apparatus;

• The possibility of using the accelerated repayment regime, provided that the enterprise should not register losses, for machines, installations, industrial equipment, instruments, appliances and know-how;

• Suspension of the payment of customs fees for the import of scarce raw materials or raw materials that are not produced in the country, necessary for their own activities of production and/or rendering of services;

• Postponement of the payability of the Value Added Tax for new machines, vehicles necessary to productive activities, installations, industrial equipment, instruments, technological machines, automation, measurement and control apparatus, software products that are necessary for making the investment.

Certain facilities previously granted to investors pursuant this enactment have been repealed as of the date of coming into force of the Profit Tax Law:

• Regime Of Foreign Investments In Romania, Made By Means Of Purchasing State Titles