Business Guide to Romania* - Bayern - Europa

Business Guide to Romania*
2005 Edition
*connectedthinking

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This guide has been prepared for the assistance of PricewaterhouseCoopers clients and also parties interested in
doing business in Romania. It does not exhaustively cover the subject, but is intended to be a synopsis of some of
the important initial questions that may arise. When specific problems occur in practice, it is likely that a close
understanding of the laws, regulations and decisions of the country will be of benefit, and appropriate accounting,
tax and legal advice be considered.
The material contained within this Guide has been assembled in June 2005 and is based on the legislation as it
stands at the beginning of June 2005. For the most up to date information, please contact PricewaterhouseCoopers
Bucharest.
For further information, please contact one of the following:
T erritorial S enior P artner
Vasile Iuga
As s uranc e S ervic es
Vasile Iuga
Dinu Bumbacea
David Fuller
Alexandru Lupea
Advis ory S ervic es
Dinu Bumbacea
Emilian Radu
T ax and L egal S ervic es
Rene Bijvoet
Mihaela Mitroi
Edwin Warmerdam
P ric ewaterhous eC oopers
Opera Center
1-5 Costache Negri Street
Bucharest 5, Romania
Tel: + 40 21 202 8500
Fax: + 40 21 202 8700
E-mail: forename.surname@ro.pwc.com
www.pwc .c om/ro
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Contents
Chapter Page
1. Romania: a Profile 7
1.1 Physical Characteristics: Geography and Climate 7
1.2 Political Structure 7
■ Government 7
■ Presidential Elections 8
■ Parliamentary Election 8
1.3 Population and Urbanisation 8
1.4 Language 8
1.5 Education 8
1.6 The Economy 8
1.7 Transport and Communications 9
■ Transport 9
■ Communications 10
1.8 Suggestions for Business Visitors 10
■ Visas 10
■ Currency 11
■ Business and Social Etiquette 11
■ Public Holidays 11
1.9 Living Conditions 11
2. Business Environment 12
2.1 Business Climate 12
2.2 The Aims of Government 12
2.3 Free Trade Zones 12
2.4 Financial Services 12
2.5 European Union Associate Status 13
2.6 NATO Accession 13
2.7 International Agreements 13
2.8 Real Estate 14
2.9 The Property Market 15
2.10 Business Lobby Groups 15
3. Foreign Investment, Privatisation and Foreign Trade 16
3.1 Foreign Investment 16
■ Regulatory Climate 16
■ Regulatory Legislation 16
■ Restrictions on Foreign Investment 16
PricewaterhouseCoopers - Business Guide to Romania 2005 1

■ Investment Incentives 16
■ Guarantees and Rights 17
3.2 Privatisation 17
■ Regulatory Climate 17
■ Privatisation Background 17
■ Privatisation in 2004 17
■ Privatisation Calendar 17
3.3 Trade 18
■ Regulatory Climate 18
■ Regulatory Authority 18
4. Banking, Finance and Insurance 19
4.1 Banking and Other Lending Institutions 19
■ The National Bank of Romania 19
■ The Foreign Currency Market and Foreign Currency Rules 20
■ Commercial Banks 20
■ Money Laundering 21
■ Foreign Investments 21
■ Credit Unions 21
■ Building Societies 22
■ Institutions Issuing Means of Performing Electronic Payments 22
4.2 Specialised Financial Institutions 22
4.3 Leasing 22
4.4 Capital Markets 22
4.5 Insurance 23
5. Corporate and Business Law 25
5.1 Legal Framework 25
■ Company Law 25
■ Commercial Register Law 25
■ Competition Law 25
■ Direct Investment Legislation 25
5.2 Forms of Business Organisation 25
■ Registration Procedure 26
■ Capital and Shares 26
■ Directors (Administrators) 27
■ Censors 27
■ General Meeting of Shareholders 27
5.3 Branches 27
5.4 Representative Offices 27
6. Labour Relations and Social Security 29
6.1 Labour Relations and the Labour Code 29
■ Availability of Labour 29
■ Employer / Employee Relations 29
■ Fund to Guarantee Outstanding Salary Payments 29
2 PricewaterhouseCoopers - Business Guide to Romania 2005

■ Unions 30
6.2 Working Conditions 30
■ Salaries and Wages 30
■ Working Hours 30
■ Paid Holidays 30
■ Equal Opportunities 30
■ Health and Safety 30
■ Termination of Employment 31
6.3 The Social Security System 31
■ Coverage 31
■ Contributions 31
■ Employees' Contributions 31
■ Employers' Contributions 31
6.4 Foreign Personnel 32
■ Fiscal Registration Number 32
■ Residence Permit 32
■ Work Permit 32
7. Accounting and Audit Requirements and Registrations 33
7.1 Accounting 33
■ Introduction of International Financial Reporting Standards 33
■ Existing Romanian Accounting Regulations 34
■ Significant Accounting Differences between RAR and IFRS 34
7.2 Chart of Accounts 34
7.3 Audit Requirements 34
■ Legally Required Audits 34
■ Auditing Standards for Legally Required Audits 34
■ Securities Commission Requirements 34
■ Accountants and Law Firms 34
8. Taxation of Corporations 35
8.1 Corporate Tax System 35
■ Companies 35
■ Dividends 35
■ Accounting and Fiscal Depreciation 35
■ Territoriality 36
■ Representative Offices 36
8.2 Incentives 36
■ Profit Tax Legislation 36
■ Direct Investments 36
■ Free Trade Zones 36
■ Disadvantaged Areas 36
■ Industrial Parks 37
■ Oil and Gas Incentives 37
8.3 Gross Income 37
■ Accounting Period 37
PricewaterhouseCoopers - Business Guide to Romania 2005 3

■ Business Profits 37
■ Capital Gains 37
■ Interest, Royalties and Service Fees 37
■ Dividends 37
8.4 Deductibility of Expenses 38
■ Provisions and Reserves 39
■ Changes in the Destination of Reserves and Funds 39
■ Thin Capitalisation Rules 39
■ Transfer Pricing 40
■ Losses 40
8.5 Tax Computations 40
■ General Aspects 40
■ Consolidation 40
8.6 Other Taxes 40
■ Withholding Tax 40
■ Property Tax 41
■ Health Tax 41
■ Advance Tax Ruling 41
9. Taxation of Individuals 42
9.1 Individual Income Taxpayers 42
9.2 Taxable Income and Method of Taxation 42
■ Salary Income 43
■ Income from Independent Activities 43
■ Rental Income 43
■ Income from Pensions 43
■ Income from Agricultural Activities 43
■ Income from Prizes 43
■ Other Income Subject to 16% Flat Tax Rate 43
■ Income from Investments 44
■ Income from Real Estate Transactions 44
■ Income from Gaming 44
9.3 Tax-exempt Income 44
9.4 Deductions from the Annual Income Tax 45
9.5 Taxation of Non-residents 45
10. Indirect Taxation 46
10.1 Value Added Tax (VAT) 46
■ Scope of VAT 46
■ Place of Supply 46
■ Taxable Regimes 46
■ Import VAT 47
■ VAT Incentives 47
■ Simplification Measures 47
■ Taxable Amount 48
■ Non-Deductible Input VAT 48
4 PricewaterhouseCoopers - Business Guide to Romania 2005

■ VAT Compliance 48
10.2 Customs and International Trade 48
■ Customs Duties 48
■ Temporary Import Relief 48
■ Customs Duties Incentives 49
■ Verification of the Declared Customs Value 50
■ Import Restrictions 50
■ Customs Regime for Individuals 50
10.3 Other Indirect Taxes 50
■ Excise Duties 50
■ Clearance Fees 51
11.Fiscal Procedure 52
11.1 General Principles 52
■ Liability of Other Persons 52
■ Rules Governing Evidence 52
■ Fiscal Administrative Acts 52
■ Fiscal Domicile 53
■ Tax Jurisdiction 53
■ Other Rules 53
11.2 Specific Tax Procedures 53
■ Tax Registration 53
■ Tax Returns and Tax Assessment 53
■ Tax Audit 53
■ Collection of Budgetary Receivables 53
12.PricewaterhouseCoopers in Romania 54
■ Assurance Services 54
■ Advisory Services 55
■ Tax Services 56
■ Legal Services 56
Appendices 57
Appendix I Government Ministries - contact details 59
Appendix II Major Banks - contact details 60
Appendix III Hotels and Restaurants 61
Appendix IV Chart of Accounts - for companies applying OMF 94
or OMF 306/2002
63
Appendix V Major Differences between OMF 94 (for filing with the
Ministry of Public Finance) and IFRS
65
Appendix VI Accountants and Law Firms 66
Appendix VII (a) Double Taxation Agreements 67
Appendix VII (b) Withholding Tax Rates of Some Major DTAs 68
Appendix VIII Individual Income Tax Calculation 69
Appendix IX Customs Duties 70
Appendix X Import Duty Exemptions 71
Appendix XI Excise Tax for Domestic and Imported Products 72
PricewaterhouseCoopers - Business Guide to Romania 2005 5

Romania
(by county)
6 PricewaterhouseCoopers - Business Guide to Romania 2005

Chapter 1
Romania: a Profile
■ Romania's population accounts for 21.7 million
■ GDP has registered a 8.3% growth in 2004 as
against 2003
1.1 Physical Characteristics: Geography
and Climate
Romania is situated in southeastern Europe, just north of
the Balkan Peninsula. With an area of 238,391 square
kilometres (91,780 square miles), Romania is the second
largest country in Central and Eastern Europe.
Romania borders on Ukraine and the Republic of Moldova
to the north and northeast, on Bulgaria to the south, on
Serbia to the southwest, and on Hungary to the
northwest. The Black Sea coast is its eastern border. The
Danube River runs along Romania's southern border for
1,075 km, and eventually forms the Danube Delta before
flowing into the Black Sea.
Romania has a varied terrain and large areas of the
country are mountainous. It is rich in natural resources,
amongst which are to be found oil, natural gas, coal, iron
ore, non-ferrous ore (copper, lead, and zinc), gold and
silver ore, sulphur, and salt.
The climate is continental with hot summers, long cold
winters, and short springs and autumns. The average
temperature in summer is 23° Celsius (72° Fahrenheit),
although on some days it may exceed 40° C (102° F). In
winter, the weather is usually frosty, with considerable
snowfall.The temperature averages -3° C (27° F), but it
may occasionally fall below -25° C (-13° F).
1.2 Political Structure
Government
The Constitution, passed by Parliament on 21 November
1991, proclaims Romania a republic and a parliamentary
democracy. The President is elected for five-year terms
(according to the Constitution amendment in 2003) while
the bicameral Parliament is elected for four-year terms.
The bicameral parliament is composed of the Senate (137
seats) and the Chamber of Deputies (332 seats).
The President nominates the Prime Minister. Cabinet
ministers, selected by the Prime Minister, have to be
approved by Parliament before taking up office.
The latest elections took place in November-December
2004. The current President is Traian Basescu, who was
Mayor of Bucharest from 2000 to 2004.
In the current cabinet, Calin Popescu-Tariceanu is Prime
Minister. The cabinet comprises 15 ministers, three vicepremiers
and five ministers-delegate, 23 members in all.
The ministers are:
Cãlin Constantin Anton Prime Minister
Popescu - Tãriceanu
Mihai Rãzvan Ungureanu Foreign Affairs
Ene Dinga European Integration
Ionel Popescu Public Finance
Monica Luisa Macovei Justice
Teodor Atanasiu National Defence
Vasile Blaga Administration and Interior
Gheorghe Barbu Labour, Social Solidarity and
Family
Ioan-Codrut Seres Economy and Commerce
Gheorghe Flutur Agriculture, Forestry and Rural
Development
Sulfina Barbu Environment and Waters
Management
Gheorghe Dobre Transport, Constructions and
Tourism
Mircea Miclea Education and Research
Monica Octavia Muscã Culture and Religious Affairs
Mircea Cintezã Health
Zsolt Nagy Communications and
Information Technology
PricewaterhouseCoopers - Business Guide to Romania 2005 7

Chapter 1 - Romania: a Profile
Contact details for all government ministries are listed in
Appendix I.
The territory of Romania is subdivided into 41 counties
(judete) plus Bucharest; these are the administrative units
of local government. Bucharest and its surrounding area
form a unitary district with county status. Local councils
and mayors are directly elected. Also, the government
appoints its representatives (prefects) to each county.
Presidential Elections
Traian Basescu, the candidate of the centre-right coalition
(DA) , which is formed by the Liberal and Democratic
Parties (PNL-PD), won the second round of Romania's
presidential election on 12 December, 2004, defeating
Adrian Nastase of the Social Democratic Party/Humanist
Party alliance (PSD-PUR).
Parliamentary Election
Romania's parliamentary election on 28 November 2004
resulted in a near-tie between the Social Democratic
Party/Humanist Alliance, which won 36.6% of seats in the
Chamber of Deputies and 37.1% in the Senate, and, the
centre-right coalition (DA) which won 31.3% of seats in
the Chamber of Deputies and 31.8% in the Senate. Also
the Greater Romania Party won 12.9% of seats in the
Chamber and 13.6% in the Senate, and the Party of
Ethnic Hungarians won 6.2% in the Chamber and 6.2% in
the Senate.
ate Chamber
1.3 Population and Urbanisation
Romania's population accounts about 21.7 million,
according to the latest statistics information (July 2004).
Ethnic Romanians make up about 89% of the population.
The main minority groups are Hungarians (7%), followed
by a large community of Rroma, and smaller numbers of
Germans, Russians, and Serbs. More than half of the
population (55%) lives in urban areas.
Major Cities
8 PricewaterhouseCoopers - Business Guide to Romania 2005
The population of Romania is predominantly Christian of
different denominations: Orthodox (89%), Roman Catholic
(5%), Reformed (3.5%), Greek Catholic (1%), Pentecostal
(1%). Romania also has small Jewish and Muslim
communities.
1.4 Language
The official language of the country is Romanian. The
language uses the Latin alphabet and is part of the
Romance language family. In some parts of Transylvania,
Hungarian is spoken alongside Romanian, while in other
parts of Transylvania and in Western Romania German is
spoken also.
In addition, many Romanians speak English and/or
French, and business is often conducted in one of the
latter two languages.
1.5 Education
Education is mandatory from the ages of six to fifteen.
The Romanian state education system includes primary,
secondary, and higher education institutions. The higher
education sector consists of academic universities and
polytechnic institutes. Like many post-communist
countries, Romania has always had a reputation for
strength in scientific fields. Recent years have seen an
increase in the number of secondary and post-secondary
establishments and private education has become more
popular. Business administration and management
studies have been introduced in cooperation with the US
and Canada.
1.6 The Economy
Romania's recent economic and political achievements
have prompted all international rating agencies to
upgrade the country's ratings. S&P has revised its outlook
from positive to stable, falling in line with previous
City Population Industries
Bucharest 1,930,000 Capital; business and manufacturing centre
Constanta 350,000 Shipping and tourism
Iasi 389,000 Manufacturing and transportation
Timisoara 332,277 Business, manufacturing and agriculture
Galati 322,000 Transportation and agriculture
Cluj-Napoca 338,000 Business and manufacturing
Brasov 308,000 Agriculture, manufacturing and tourism
Craiova 320,000 Manufacturing and transportation

upgrades made by Moody's and Fitch Ratings. These
changes are expected to improve Romania's position on
foreign capital markets.
The economy, continued to grow, with figures for 2004
showing over 8% increase in GDP, outpacing 2003's
growth rate of 4.9%. The surge in economic growth was
due mainly to increased domestic demand, favourable
developments in the agricultural sector as well as a strong
expansion of the services and construction industries. The
government has said it will aim for a 5.5% economic
growth for this year.
Inflation slipped to 9.3% at end-2004 (from 14% at the
end of 2003) and is estimated to fall to 7% by year-end
2005. The unemployment rate also dropped, falling to
6.2% in 2004 against 7.2% at the end of 2003.
The foreign direct investment stood at around EUR 4
billion, up 115% compared to 2003, according to data
from the National Bank of Romania. The sharp increase in
foreign investment was the result of major privatizations
that took place in 2004 (e.g. the sale of the national oil
company - Petrom, the sale of electricity and gas
distribution companies). The social capital subscribed by
foreign investors in Romanian companies was of EUR
2.25 billion in 2004, 46% up compared to 2003, according
to the National Trade Register Office. The number of new
companies established by foreign investors was of
10,169, having a subscribed social capital of EUR 160
million in 2004.
Key economic indicators (drawn from official statistics)
Chapter 1 - Romania: a Profile
Foreign direct investment (FDI) is expected to further
increase in light of upcoming EU membership,
provisionally set at 1 January 2007.
The trade deficit last year reached EUR 7.34 billion,
31.4% above the level reported for 2003, according to the
National Statistics Institute. Imports amounted to EUR
26.3 billion in 2004, a 24% increase on 2003, while
exports rose by 21.3% in 2004 to EUR 18.9 billion.
Romania's industrial output rose by 5.3% in 2004 from
2003, according to the National Statistics Institute. Labour
productivity was 11.9% higher year-on-year, data showed.
Meanwhile, the central bank's (BNR) hard currency
reserves, excluding some 105 tonnes of gold, rose to
EUR 10.8 billion at the end of December 2004 from
EUR 6.4 billion the previous year, while at the end of May
2005, the total reserves reached EUR 13.2 billion. The rise
was mainly due to the central bank's hard currency
purchases from the interbank market.
1.7 Transport and Communications
Transport
Rail: Romania has a railway network of 11,385 kilometres,
of which electrified track of 3,971 kilometres. International
express trains connect the main central European capitals
with Bucharest, the Black Sea coast and main cities.
Indicator 2002 2003 2004
GDP (EUR billion) 48.4 50.3 58.9
GDP (% change against previous year) 4.9 4.9 8,3
GDP per capita (EUR) 2,230 2,318 2,714
Inflation % (year-end) 17.9 14.1 9,3
Unemployment % (year-end) 8.1 7.2 6.2
EUR/ROL exchange rate (average) 31,234 37,591 40,592
Foreign direct investment (EUR billion) 1.1 1.9 4.1
External debt (EUR billion) 14.6 15.24 17.5
Exports FOB (EUR billion) 14.7 15.6 18.9
Imports CIF (EUR billion) 18.8 21.2 26.3
Credit Rating
Standard & Poors B+ BB BB+
Moody's B1 Ba3 Ba3
Fitch BB- BB BBB-
Foreign Exchange Reserves
(EUR billion) 5.895 6.399 10.839
PricewaterhouseCoopers - Business Guide to Romania 2005 9

Chapter 1 - Romania: a Profile
Romania is a member of the International Railway Tariff
System RIT and Inter Rail.
Roads : The total length of roads in Romania reaches
198,589 km, of which national roads account for 14,696
km. Highways have a total length of around 114 km.
Major east-west highway projects are in different stages
of development.
Waterways: Romania has access to both the Black Sea
and the Danube River. In Constanta, the Black Sea's
largest commercial port, can anchor vessels with a
maximum displacement of 200,000 tdw. The Danube is
now connected to the North Sea by the Danube-Main-
Rhine waterway.
Air: In Romania there are currently 18 airports open to
commercial air traffic, the most important being Bucharest
(Henri Coanda), Timisoara (Traian Vuia) and Cluj-Napoca
(Someseni). The main Romanian providers of scheduled
passenger air transportation are: Tarom, the Romanian
flag carrier based in Bucharest Henri Coanda; and
Carpatair, a private Romanian-Swiss regional airline based
in the Timisoara International Airport and which has
international flights to Germany and Italy. Also many
international airlines serve Romania and there are daily
flights to most European capitals.
Air freight is handled almost exclusively in Bucharest.
Communications
Telephone networks: The incumbent fixed-line operator
Romtelecom, owned by OTE of Greece, has upgraded
service considerably in recent years. Romtelecom has
introduced new digital exchanges, optic fibre overlay
networks, and expanded international dialling and ISDN
services. After the market's liberalisation in January 2003,
more telecom operators have entered the market,
competing with Romtelecom on international, long
distance and more recently on local calls. Following
liberalisation, tariffs for international calls decreased by
60%, due to competition using VoIP. Sixty alternative
fixed telephony operators were active in Romania at the
end of 2004, having around 250,000 subscribers.
At end-2004 there were 14.6 million subscribers to
Romanian fixed and mobile telephone services, up 56.6%
on the 2002 figures, according to the Communications
Regulatory Authority. Out of these subscribers, 30.05%
were to fixed telephony and 69.95% to mobile operators.
Mobile telephony was the driver of the telecom sector in
the recent years, acquiring a number of 10.1 million
subscribers since the launch of the GSM in 1997. The
10 PricewaterhouseCoopers - Business Guide to Romania 2005
main mobile operators are: Mobifon (Connex), Orange and
Telemobil (Zapp).
Television: Television is the most widely used advertising
medium in Romania today and the one with the greatest
impact. Public television consists of three national
networks, TVR 1 and TVR 2 and TVR Cultural and there
are at least seven major private television stations
including Pro TV, Antena 1, and Prima TV. More than half
of the total number of households have cable television,
allowing access to a wide range of international and local
broadcasts. Programmes are shown in the original
language with Romanian subtitles.
Radio: State-owned Radio Romania operates three
national AM radio networks. There are also several private
FM networks, including three with extensive national
range (Kiss FM, Radio 21 and Pro FM) and one with
international coverage (Europa FM).
Newspapers and Periodicals: Romania has a multitude of
daily newspapers written for diverse audiences. There are
also more than 200 weekly papers as well as a growing
number of magazines, many of which are produced under
license from a foreign copyright owner. Distribution is
made through the national press distribution company
Rodipet.
Research, Advertising, and Media Buying: The growth of
the consumer society has stimulated the emergence of
research organisations (eg. CSOP Gallup, IRSOP and
IMAS), and marketing research consultants (eg. Mercury
Marketing & Research and AMER Nielsen). There are a
number of agencies in the advertising sector, most with
international affiliations (eg. McCann Erickson, Leo
Burnett & Target, Saatchi & Saatchi, D'Arcy, Grey, Lowe &
Partners, Ogilvy & Mather, Graffiti BBDO and Young &
Rubicam).
Internet: There were around 4.4 million Internet users at
the end of 2004. The number of Internet connections in
Romania rose by 92.49% year-on-year to 980,364 in
2004, according to the National Regulatory Authority for
Communications (ANRC). Also, the number of Internet
providers in Romania rose to 515 in 2004 from 233 the
previous year while the number of PCs exceeded 2.6
million in 2004.
1.8 Suggestions for Business Visitors
Visas
As is the case with any business trip, when visiting
Romania some advance preparation is essential. Useful
information for visitors is outlined below.

All visitors to Romania require passports, preferably with a
validity of more than six months. Visitors from a number
of countries such as the EU member states, EU accession
countries, Switzerland, the USA and Canada do not
require a visa obtained before arrival in Romania.
Also, one must declare cash amounts that exceed
EUR 10,000 at customs upon arrival or departure.
Currency
As of 1 July 2005, the Romanian Leu (ROL), was subject
to denomination so that 10,000 old lei (ROL), in circulation
on that date, has been exchanged for 1 new leu (RON).
The existing banknotes and coins, i.e. the old lei, shall be
legal tender until end-December 2006.
By 31 December 2006, the existing banknotes and coins,
i.e. the old lei, are to be replaced gradually by the new
banknotes and coins.
Starting 1 January 2007, the exchange shall be made only
at the NBR branches carrying out payments and at the
offices of the credit institutions authorised by the NBR
Governor's order to perform the exchange. There is no
time limit for exchanging ROL notes and coins for RON
notes and coins.
Transactions between residents must be in ROL/RON. All
prices are given in ROL and RON.
The exchange rates at 1 June 2005 were:
1 EUR = 36,172 ROL/3.617 RON;
1 USD = 29,510 ROL/2.951 RON.
Cash, traveller's cheques and credit cards may be used in
Romania, but cash remains the preferred method of
payment. The use of credit cards has significantly grown
in popularity in recent years, and automatic teller
machines are more numerous. Euros and dollars can be
exchanged at official exchange offices.
Business and Social Etiquette
Romanian business customs tend to be formal.
Introductions are respectful, business cards are
exchanged and suits are worn. The handshake is used
both on meeting and taking leave. Dealing with public and
state officials can sometimes be time-consuming and
requires perseverance.
Romanians are often very proud of their national heritage,
and tend to be sensitive about cultural and political
matters that concern their country.
Public Holidays
Romania has the following public holidays:
■ New Year (1 and 2 January);
■ Orthodox Easter Sunday and Monday;
■ Labour Day (1 May);
■ National Day (1 December);
■ Christmas (25 and 26 December).
Chapter 1 - Romania: a Profile
Additionally, little business takes place between
Christmas and New Year. During the summer, some
companies, government agencies, and the courts are
closed for August or operate with reduced hours and
staff.
1.9 Living Conditions
Bucharest and large Romanian cities like Constanta, Iasi,
Timisoara, Cluj Napoca or Brasov offer reasonable living
conditions for expatriates. While normal precautions
against petty theft and car crime should be taken,
Bucharest and other cities do not have a high crime rate
and are safer than many other international capitals.
Bucharest has numerous restaurants and cafes, including
a steadily increasing number of privately owned
restaurants serving international cuisine. Appendix III
presents a list of contact numbers for hotels and
restaurants in Bucharest. There are also a variety of
theatres, concert halls, libraries, cinemas, bars,
nightclubs, and casinos.
Bucharest is the least expensive European city in terms of
cost of living, being in the 103rd place worldwide from
144 cities across six continents, according to a survey
made by Mercer Human Resource Consulting. The survey
covers and measures the comparative cost of over 200
items in each location, including housing, transport, food,
clothing, household goods and entertainment.
The standard of housing varies widely in Romania. The
existing residential market offers a wide range of choices,
from modern flats and villas to refurbished old villas
located in picturesque neighbourhoods. The new supply
is more adequate to international standards and quality is
improving every year. The northern area of the city is the
most popular among expats.
PricewaterhouseCoopers - Business Guide to Romania 2005 11

Chapter 2
Business Environment
■ Government introduced flat tax
■ EU treaty signed in April 2005 and membership
expected in 2007
■ Ratings agencies improved outlook
2.1 Business Climate
The vigorous economic growth in the last five years, the
continuous reduction of the inflation, the progress in
restructuring the economy and the acceleration of the
privatisation process have determined the European
Commission to acknowledge Romania as having a
functioning market economy, in its 2004 regular report.
Romania's progress has been recognized also by all the
rating agencies as well. At the beginning of 2005
Romania's credit outlook was improved to “positive” from
“stable” by Standard & Poor's, which cited the country's
progress toward joining the European Union in 2007. At
the end of 2004, Fitch upgraded the country's long-term
foreign currency two notches to investment grade ('BBB
minus'). Also, US financial rating agency Moody's
upgraded Romania's country rating by two steps to Ba1.
The new government moved fast in modifying the
country's tax system, replacing a 25% corporate profit tax
and an 18-40% personal income tax scale with a flat tax
rate 16%. To offset a possible revenue gap the
government said it plans to raise excise taxes on petrol,
alcohol and cigarettes as well as capital gains taxes. The
government also says that budget shortfalls might be
avoided as lower taxes would help curb tax evasion.
The privatisation process will continue this year with large
privatisations in the financial sector as well as in the
energy sector.
The Fiscal Code and the Fiscal Procedural Code have
been subject to constant change since their entry into
force. The adoption of the Labour Code was also a major
12 PricewaterhouseCoopers - Business Guide to Romania 2005
step forward in the transposition of the acquis on social
policy and employment.
2.2 The Aims of Government
The Government's main objective is the EU accession.
The new government is determined to meet all the EU
requirements so that Romania can join the EU in 2007.
The main government priorities on short term are the fight
against corruption, the independence and restructuring of
the judiciary system, the regulations on public
procurement, state aids and competition, border and
environmental control.
2.3 Free Trade Zones
Romania has six designated Free Trade Zones, mainly
located around ports: Constanta Sud-Agigea (on the
Black Sea), Sulina (at the mouth of the Danube), Braila,
Galati, Giurgiu (on the Danube), and Curtici-Arad (on the
Hungarian border).
The Free Trade Zone legislation falls under Law 84/1992
modified by the Law 244/2004. Specific customs rules
also are in force concerning Free Trade Zones. The
relevant legislation allows, under certain conditions,
exemption from customs duties and value added tax,
unrestricted import and re-export of foreign goods, and
permission to conduct financial transactions in convertible
currency.
2.4 Financial Services
The banking sector continued to benefit from better
economic times in 2004 and retail banking services such
as mortgages, leasing and insurance have started to pick
up considerably. Most Romanian banks are now in
private hands; while the two remaining state-owned large
banks, BCR and the Savings Bank CEC, are expected to
go private either this year or in 2006. BCR's assets under
management total about EUR 6 billion, accounting for

nearly one-third of Romania's banking sector. CEC is
ranked fourth with assets totalling EUR 1.4 billion at the
end of 2004. CEC has the largest network of about 1,400
branches and offices.
Most banks have set up investment arms; the big four
accounting firms have also established a significant
presence in the country.
Both the capital market and the insurance industry
recorded upswings in 2004. Market capitalisation for the
two regulated capital markets, the Bucharest Stock
Exchange and the over-the-counter RASDAQ market was
around EUR 12 billion at the beginning of June 2005 as
compared to EUR 11 billion at the end of 2004. Foreign
investment in the stock exchange in 2004 stood at some
EUR 74.7 million, a 3.5-fold increase on the previous year.
Investors mainly focused on the market's blue chips,
which include Petrom, Rompetrol Rafinare (Petromidia)
and banking operators Banca Romana pentru Dezvoltare
(BRD) and Banca Transilvania. Financial investment
companies (SIFs) are also highly sought-after stock.
The two stock exchanges, BSE and Rasdaq are set to
merge in fall 2005. The next in line to join will be Sibiu
Monetary - Financial and Commodities Exchange
(BMFMS), by the end of 2005.
The capital market regulator is the National Securities
Commission, which intends to bring more transparency
and trust to the Romanian market through its regulations.
There are 45 registered insurance companies in Romania
offering an increased range of insurance services. A large
number of these companies are members of UNSAR
(National Union of Insurance and Reinsurance
Companies) and this group comprises around 90% of
capital and premiums in the industry. Large international
insurers have established domestic operations and sales
forces. There is also a significant number of insurance
brokers authorised by the market regulator.
The insurance industry regulator is the Insurance
Surveillance Commission. During the recent period,
numerous regulations have been issued to fill the
legislative gap and to be in line with EU legislation in this
sector as in many others.
Romanians are increasingly interested in the insurance
market but insurance penetration is still much lower than
the EU average. Although most of the large insurance
companies operating in the Romanian market offer
various life insurance services, sometimes associated with
private pension plans, life insurance has a reduced share
Chapter 2 - Business Environment
in the overall insurance activity. The Romanian market is
dominated by non-life insurance.
The government is moving forward in reforming the
pension system under a three-pillar scheme and the
emergence of private pension funds is expected to give
the industry a boost.
For more details in respect of Financial Services in
Romania, please refer to Chapter 4.
2.5 European Union Associate Status
The negotiations for EU accession were officially launched
in 2000. In October 2004, the European Commission's
Progress Report on Romania stated that the country's
economy meets the criteria for being regarded as a
functional market economy.
At the end of 2004, the European Commission confirmed
the provisional finalisation of all negotiation chapters and
the treaty with the EU was signed in April 2005. The
provisional date for Romania’s Accession to the EU was
set for 2007. However, in case of "major shortcomings"
observed during the preparation for accession, the entry
can be delayed by one year, in compliance with the
safeguard clause included in the Accession Treaty.
Between 2000 and 2004, Romania has received important
grants from the EU through the Phare, Ispa and Sapard
instruments that exceeded EUR 2.6 billion. For 2005 and
2006, Romania is set to receive from the EU some
EUR 1 billion per year as pre-accession funds.
The EU post-accession funds allocated for Romania
(2007 to 2009) stand at EUR 11 billion, of which
EUR 6 billion will be paid in this period (the rest of the
payments to be made as the projects are unfolded).
Romania's contribution to the EU budget will stand at
some EUR 800 million in 2007, over EUR 800 million in
2008 and some EUR 900 million in 2009.
2.6 NATO Accession
Romania officially joined the Alliance at the end of March
2004, some 55 years after NATO had been established.
2.7 International Agreements
Romania has diplomatic relations with over 170 nations.
This has enabled the country to join important
organisations and be party to key agreements including
the following:
■ Membership:
PricewaterhouseCoopers - Business Guide to Romania 2005 13

Chapter 2 - Business Environment
- United Nations
- World Bank
- International Monetary Fund
- World Trade Organisation
- European Bank for Reconstruction and Development
- Bank for International Settlements
- Council of Europe
- Organisation for Security and Co-operation in Europe
■ Agreements:
- Associate member, European Union (EU)
- Central European Free Trade Agreement (CEFTA)
- Free trade agreement with European Free Trade
Association (EFTA)
- Most Favoured Nation (MFN) status with United
States
- Partnership for Peace programme with NATO and
official invitation to join NATO as full member
- Free Trade Agreements with Hungary, Czech
Republic, Turkey and Moldova.
In addition, Romania has concluded a number of bilateral
agreements concerning trade, avoidance of double
taxation, and mutual guarantees of investments.
2.8 Real Estate
Pior to 1990, most land in Romania was owned by the
state, by the state-owned entities or by the so-called
"agricultural cooperatives". Individuals owned only a
limited amount of farmland and residential land.
After 1990, specific regulations governing the
retrocession of property taken over by the state either
legally or abusively during the socialist regime, back to
their former owners, were passed. Thus, the main
regulations are Land Law no. 18/1991, Law no. 54/1998
on the transfer of titles on lands. Law no. 1/2000 on the
Retrocession of Agricultural and Forestry Land and Law
no. 10/2001 on the Legal Regime of Immovable
Properties Abusively Taken from their Legal Owners
between 6 March 1945 and December 1989, as
subsequently amended.
Romanian individuals and legal entities (regardless of the
citizenship or nationality of their shareholders) are free to
acquire title to the land.
In accordance with the provisions under the Romanian
Constitution, amended in 2003, foreign citizens and
14 PricewaterhouseCoopers - Business Guide to Romania 2005
stateless individuals will be entitled to acquire title to land
in Romania only with the observance of the conditions
resulting from the accession of Romania to the European
Union and from other international treaties Romania is
party to, on the basis of mutuality and in accordance with
the provisions of a special type of law ("lege organica", in
Romanian) to be passed in this respect, as well as by
legal inheritance. As per the provisions of the draft law
regulating the conditions on the foreign citizens' and
stateless persons' right to acquire title to land, initiated by
the Romanian Ministry of Justice, foreign citizens of EUmember
states shall be entitled to acquire title to land
only after 5 years from the accession of Romania to the
European Union.
Currently, foreign individuals and companies may own
buildings and/or obtain the right to use the land (based on
lease agreements, concession agreements, etc). Also,
Romanian or foreign companies and individuals are
allowed to rent land and or buildings.
Authentication by a notary public is compulsory for the
land transfer to be valid. Validity of transfer of title to the
land against third parties is to be ensured by the recordal
of such with the relevant Land Register. When purchasing
real estate properties, one should take into account that
there are certain regions in Romania where the
registration of ownership in the Land Register has been
implemented only recently, and therefore a proper review
of ownership when purchasing real estate property is
quite difficult to assess. It is therefore advisable for legal
title checks to be conducted in respect of any property,
before acquiring it.
Furthermore, the National Cadastre and Land Registration
Agency has recently been established (through the
reorganisation of the former National Cadastre Office),
with its remit to include real estate property registration in
Romania, a role taken over from the Ministry of Justice.
This Agency also coordinates and oversees the
performance of cadastral work at the national level.
Under the new legal provisions, ownership right and other
in rem rights on immovable properties are to be recorded
with the real estate information register (i.e. Land Registry)
solely on the basis of transfer deeds, which must be
concluded in authentic (notarised) form. The public
notary having prepared the deed of conveyance, which
alters, establishes or extinguish an interest in real estate,
shall apply for the registration with the Real Estate
Registry of such deeds, no later than the day after their
conclusion.

Mortgages are created under authentic deeds and in
order to have effect towards third parties, they must be
recorded in the Land Registry. Also the intent to create a
mortgage for land/building can be recorded in the Land
Registry. Recording of the intent to mortgage expires
after two months as of the registration in the Land
Registry.
In order to enforce the mortgage, the mortgageor (e.g. a
bank) must resort to an enforcement agent to start the
enforcement procedures. Commencement of this
procedure is registered in the Land Book. Objections can
be filed against the enforcement procedure, which could
suspend such procedure. In case of bankruptcy, the
mortgageor submits its claim with the liquidator and has
priority to the sale proceeds of the asset mortgaged, over
any other receivables, except for the taxes and liquidation
costs related to the sale of the asset.
New legislation instrumental to EU integration relating to
public-private partnership has been recently enacted.
The focus of the recent legislation is on the design,
financing, building, exploitation, maintenance and transfer
of any public asset under a 'public private partnership
agreement for work concessions'. In accordance with the
newly enacted provisions, assets being private property of
the state resulting from the implementation of the PPP
project, as well as the plots of land used for the project
may be alienated, mortgaged, pledged or posted as
security in the benefit of third parties, provided that the
prior approval of the owner has been obtained.
2.9 The Property Market
The market for office buildings in Bucharest is growing
while the availability of land is decreasing. Industrial, retail
and residential property sectors are reporting strong
growth. The northern and central areas in Bucharest are
the most popular areas for office building construction.
The average sales price for an A-class office in Bucharest
is EUR 1,550 per square meter, according to a survey by
the real estate agency Colliers. Bucharest-based first
class buildings totalize 150,000 square meters (sqm).
Rent prices for offices in Bucharest are around EUR 16
per sqm, according to the above mentioned study.
Monthly rent for space within the retail sector ranges
from minimum EUR 10 per sqm, to maximum EUR 100
per sqm, depending on the location. Magheru Boulevard
is Bucharest's most expensive area with 50-100
Euros/sqm, followed by Calea Victoriei and Calea
Dorobanti - 20-60 Euros/sqm. Apartment rents vary from
EUR 400 to EUR 5,000 per month, depending on location,
Chapter 2 - Business Environment
size and furnishings. Rental costs for villas in some
residential areas, especially in the northern part of
Bucharest, may range from EUR 1,500 to EUR 7,000.
2.10 Business Lobby Groups
There are a number of business groups that lobby
Government ministries on policy issues. These include the
Foreign Investors Council (FIC) (tel. + 40 21 222 19 31,
www.fic.ro) the American Chamber of Commerce
(AMCHAM) (tel. + 40 21 315 86 94, www.amcham.ro) and
the Businessmen's Association of Romania (AOAR) (tel.:
+40 21 319 01 43, www.aoar.ro).
PricewaterhouseCoopers - Business Guide to Romania 2005 15

Chapter 3
Foreign Investment, Privatisation
and Foreign Trade
■ Foreign and domestic investments enjoy equal
treatment
■ Foreign direct investments in 2004 account for
around EUR 4 billion
■ Large privatisations took place in the energy sector
3.1 Foreign Investment
Regulatory Climate
Total foreign direct investment in 2004 stood at around
EUR 4 billion, up 115% compared with 2003, according
to data from the National Bank of Romania. At the end of
2004, a number of 107,398 companies with foreign capital
were registered in Romania, having a total subscribed
social capital of EUR 9.95 billion.
In September 2002, the Romanian Agency for Foreign
Investment (ARIS) was established as a government
authority responsible for the implementation of state
policy for attracting foreign investment.
The role of ARIS is to promote Romania's business
environment abroad and help ease an investor's entry into
Romania. ARIS provides investors with all the necessary
information about Romanian legislation, investment
opportunities, as well as assistance with administrative
procedures for registering the company with the Trade
Registry.
All businesses must be registered according to the
legislation that governs the particular type of enterprise.
According to the Law on Direct Investments, foreign and
local investment should be treated equally.
ARIS has monitored and assisted a number of 50 projects
(in different stages) in Romania in 2004 with a cumulated
value of EUR 3.3 billion.
16 PricewaterhouseCoopers - Business Guide to Romania 2005
Regulatory Legislation
The following major pieces of legislation (in addition to
taxation law) regulate foreign investment in Romania:
1. Commercial Code
2. Company Law
3. Competition Law
4. Law on Direct Investment
5. Law regarding the promotion of direct investments
with a significant impact on economy
6. Law on Banking Activities
7. Securities Law
8. Commercial Companies Privatisation Law
9. Trade Register Law.
Restrictions on Foreign Investment
No restrictions are imposed on foreign ownership or
participation in joint ventures and in Romanian
companies. It is possible for a foreign entity to own 100%
of any type (SA, SRL) of Romanian-registered company.
Currently, the main industrial sectors in which additional
governmental approval is necessary for investors are:
■ Defence;
■ State Monopolies;
■ National Security.
Resident and non-resident companies are allowed to
acquire and hold rights over movable assets in Romania.
Investment Incentives
Law 332/2001 on the promotion of direct investments
with a significantimpact on the economy provides that
companies that invest over USD 1 million or the
equivalent, in Romania can benfit from certain incentives,
as follows: customs duty exemption for certain
tangible/intangible goods included in a list, an investment

allowance of 20% of the value of the investment, applied
in the month when the investment is finalised and
utilisation of accelerated depreciation for fixed assets,
except for buildings (Further details are provided in
Chapter 8 - Taxation of Corporations).
In order to benefit by the incentives, the investment
should be registered with the Romanian Agency for
Foreign Investments.
The Fiscal Code provides for VAT payment exoneration for
import of equipment (machines, means of transportation,
apparatus etc) and certain raw materials (Further details
are provided in Chapter 10 - Indirect taxation).
Guarantees and Rights
Foreign investments are not to be subject to
nationalisation, expropriation, requisition, or any other
measure of similar effect, except when this is in the public
interest and even then only after 'appropriate
compensation'. Romania is party to a number of bilateral
investment guarantees and is a member of the Multilateral
Investment Guarantee Agency (MIGA). There are,
however, no government guarantees available to
compensate for inconvertibility.
3.2 Privatisation
Regulatory Climate
Investors can either acquire the state's shares in a fully or
partially state-owned joint stock company from the
Authority for State Assets Recovery (AVAS) or the
responsible ministers.
Privatisation includes a wide array of methods, including
open and closed tenders, local stock auctions and direct
sale. In certain cases, foreign investment banks act as
intermediaries.
Privatisation Background
The privatisation process commenced in 1990 with the
creation of joint stock companies out of approximately
6,200 state-owned entities. Of the shares in these
companies, 70% were allocated to the State Ownership
Fund (SOF) and 30% to one of the five Private Ownership
Funds (POFs). Following Emergency Ordinance No
296/December 2000, the State Ownership Fund became
the Authority for Privatisation and Management of State
Ownership (APAPS) - a public institution that operated
under the authority of the Romanian Government. In 2004
the Bank Asset Recovery Agency has merged through
Chapter 3 - Foreign Investment, Privatisation and Foreign Trade
absorption with the Authority for Privatization and
Management of State Ownership resulting the Authority
for State Assets Recovery.
Privatisation in 2004
After a slow start and many delays due to various
reasons, including international unfavorable conditions,
the privatization in the energy sector finally happened.
The need of massive funds in order to align Romania's
energy infrastructure with those of the EU countries as
well as the permanent pressures from the IMF, the WB
and EU for restructuring and privatization of the sector
has lately accelerated the privatization process.
The most significant privatisation in the country's postcommunist
history is the privatization of Petrom, the
Romanian national integrated oil company and the largest
Romanian company in terms of turnover (estimated
EUR 2.3 billion for 2004) and market capitalization
(EUR 6.2 billion as of middle June). The successful bidder
was the Austrian OMV which agreed to pay USD 1.86
billion (EUR 1.49 billion) for 51% stake in Petrom
(EUR 669 million for a third of the company's shares and
another EUR 830 million for a capital increase in order to
hold a majority stake), according to public sources. Other
bidders included Hungary's MOL and the US Occidental
Oil and Gas Holding Corporation.
Other privatisation deals of 2004 included the privatization
of the two electricity distribution companies, Electrica
Banat and Electrica Dobrogea with the Italian company
Enel, and the two gas distribution companies Distrigaz
Sud and Distrigaz Nord with Gaz de France respectively
the German E.ON Ruhrgas.
Privatisation Calendar
At the beginning of 2005, the Government had finalised
other two important privatisations in the energy sector.
CEZ AS, the Czech Republic's biggest energy company,
has taken over electricity distributor Electrica Oltenia SA,
and E.ON AG, Europe's second-largest utility, acquired
51% of Electrica Moldova SA.
Privatisation process for Electrica Muntenia Sud is also
schedule to begin in 2005. Other electricity distribution
companies will also be privatised as well as the three
power holdings: Craiova, Turceni and Rovinari.
In the financial sector, the two remaining large state
banks are likely to be sold also in 2005-2006. In the
telecoms sector the sale of remaining state's shares at
Romtelecom, as well as the privatisation of the
PricewaterhouseCoopers - Business Guide to Romania 2005 17

Chapter 3 - Foreign Investment, Privatisation and Foreign Trade
Radio-communication National Company are scheduled
for 2006, while the privatisation of the Romanian Post
Office is schedule to be completed by 2008.
3.3 Trade
Foreign trade regulations have been gradually liberalised
since 1990 and now broadly follow the guidelines set by
the EU.
Regulatory Climate
A specific license is generally not required for the import
and export of commodities into and out of Romania.
Exceptions are those commodities subject to quota as
stipulated by international trade agreements signed by
Romania and those considered as potentially dangerous
for human health or the environment. Other non-tariff
barriers also apply upon the import or export of certain
goods, such as goods susceptible for dual use (both
civilian and military) or goods falling under the CITES
Convention.
Regulatory Authority
The Licence Department of the Ministry of Economy and
Trade is in charge of issuing trade licences.
Other public entities also issue approvals for the import or
export of goods that are subject to other non-tariff
barriers, e.g. ANCEX (The National Agency for Controlling
Exports of Strategic Products).
18 PricewaterhouseCoopers - Business Guide to Romania 2005

Chapter 4
Banking, Finance and Insurance
■ Harmonisation of banking legislation with EU
Directives continues
■ Banks continue to expand retail activities
■ New consumer lending legislation is introduced
■ Leasing market continues to consolidate and
develop
■ New consolidated capital market legislation in line
with EU Directives is passed, to be followed by
merger between the Bucharest Stock Exchange and
RASDAQ
■ Insurance market continues to develop and to
increase its weight in GDP
■ The two remaining state-owned banks, BCR and the
Savings Bank CEC, are expected to go private
either this year or 2006
4.1 Banking and Other Lending
Institutions
Romania has a two-tier banking system. The National
Bank of Romania (NBR) is Romania's central bank and is
under the Parliament's control. Lending institutions
operate under the authorisation and strict supervision of
the NBR.
The privatisation of the largest Romanian bank, the
Romanian Commercial Bank, will be finalised at the end
of the first quarter of 2006, at the latest. In 2003, EBRD
and IFC jointly acquired 25% of the bank's shares, but
they will be sold to the new investor when the
privatisation takes place. CEC (The Romanian Savings
Bank) is also expected to be privatised.
The National Bank of Romania
A Board of Directors, consisting of nine members elected
by the Parliament, heads the National Bank of Romania
(NBR). The term of office is usually five years. The Board
of Directors includes the governor of the NBR, three vicegovernors
(of which one is first vice-governor), and other
five ordinary members. It is the responsibility of the
directors to issue NBR policy guidelines.
The prime functions of the NBR are:
■ Targeting the inflation level. For several years the key
objective was to ensure stability of the domestic
currency with a view to maintaining price stability;
■ To issue and control the supply of banknotes and
coins;
■ To license all banking institutions in Romania and
monitor their activities;
■ To establish and manage the state's foreign exchange
policy;
■ To establish and manage monetary and credit policy;
■ To supervise the foreign currency operations regime;
■ To align Romania's banking sector and monetary
system with EU norms and standards.
NBR has its own Supervision Division conducting on-site
evaluation of all lending institutions operating in Romania
(i.e. commercial banks, credit unions, building societies
and companies issuing means of performing electronic
payments). This process generally takes place on an
annual basis.
There is ongoing co-operation between the NBR and
international banking institutions, including the IMF and
the World Bank, as well as with other European central
banks. This is aimed at developing and improving
procedures and supervisions and furthering the NBR's
transformation into a dynamic, modern central bank.
NBR also collaborates on the domestic financial market
with the Insurance Surveillance Commission and National
Securities Commission for exchange of information and to
maintain an adequate surveillance over the financial
market in general.
PricewaterhouseCoopers - Business Guide to Romania 2005 19

Chapter 4 - Banking, Finance and Insurance
NBR publishes on a monthly basis the reference interest
rate used as benchmark interest rate for domestic
currency denominated loans.
Large-scale changes have been brought to the banking
legislation in order to harmonise it with EU legislation.
The Foreign Currency Market and Foreign
Currency Rules
The Romanian currency is the leu (plural lei), abbreviated
as ROL. The inter-bank foreign exchange market was
established in 1994. Foreign currency can be bought or
sold at spot or forward rates. Intermediaries authorised by
the NBR freely set the exchange rate. The NBR also
publishes daily official reference exchange rates.
On 20 April 2005, the reference exchange rates published
by the National Bank of Romania were USD 1 = ROL
27,986 and EUR 1 = ROL 36,495.
A new denomination for the Romanian Leu will be
introduced as of 1 July 2005 - i.e. 10,000 old ROL will be
replaced by 1 new RON. Current bank notes and coins
and new ones will circulate until 31 December 2006; after
that date only the new RON may be used.
Exchange offices provide exchange facilities to private
individuals (residents and non-residents).
In March 2003, the reference currency for establishing the
ROL official exchange rates against other foreign
currencies was changed to EUR (replacing the USD).
The NBR recently issued a new Set of Foreign Currency
Regulations that governs the transactions between
residents and non-residents performed both in foreign
currency and ROL and the transactions performed
between residents in foreign currency.
In the past, Foreign Currency rules have been amended
several times, mainly as regards the restrictions
applicable to some foreign currency operations, in order
to harmonise the domestic rules with EU legislation.
The government has recently liberalised the capital
account allowing non-residents to open ROL
denominated time deposit accounts with Romanian
banks. However, the NBR reduced the reference interest
rate from 17.31% p.a. to 8.45% p.a from January to April
2005 in order to reduce the impact of such liberalisation.
The NBR is also entitled to apply certain safeguard
measures in case the related capital inflows generate
strong fluctuations in the market. In addition, a partial
relief for foreign currency operations between residents
was given in order to balance the liberalisation's effects.
20 PricewaterhouseCoopers - Business Guide to Romania 2005
The following steps remain before Romania reaches full
liberalisation of foreign currency operations ahead of
accession to the EU:
■ from 1 September 2006
- transactions of residents with foreign money market
instruments / transactions of non-residents with
domestic money market instruments;
- operations in current accounts and term deposit
accounts opened by residents abroad.
For statistical purposes, notification/reporting to the NBR
must be made for operations generating long and
medium-term private foreign debt, for non-monetary
operations between residents and non-residents (offset,
clearing, barter, etc) and for residents to participate in
more than 10% of the share capital of a foreign company.
Commercial Banks
The banking market has witnessed significant changes in
recent years following the development of domestic
banks and the influx of foreign banks into Romania. Most
domestic banks in Romania are now private, and foreign
banks are investing at a fast pace. A large number of
banks have recently started extending their retail
activities. Consumer and mortgage loans registered
significant increases. This trend is expected to continue in
the coming years. Currently there are 38 banks and
branches of foreign banks authorised to operate in
Romania.
Thin capitalisation rules are not applicable to lending
institutions.
At the end of December 2003 significant new
amendments were brought to the Banking Law. The
amendments were designed to be in line with EU
Directives.
New definitions of lending institutions were introduced,
and now cover commercial banks, credit unions, building
societies and those issuing means of performing
electronic payments.
The Banking Law only applies to banks and those issuing
means of performing electronic payments, while special
laws will separately regulate credit unions and building
societies.
Commercial banks in Romania must be registered with
and operate under a license issued by the NBR. Banks
may engage in the following activities:

■ Taking deposits;
■ Making loans;
■ Issuing guarantees and letters of credit;
■ Issuing and trading securities;
■ Owning and administering movable and immovable
assets for own activity and bank's staff use, lending
operations with movable and immovable assets, up to
5% of own funds;
■ Leasing through a subsidiary only until EU accession;
after accession, direct financial leasing will be
allowed.
Commercial banks may also participate in currency
auctions provided they have broker or dealer licenses.
The main regulations issued by the NBR for banks are:
■ Minimum share capital and own funds of ROL 370
billion from 31 May 2004 (only cash capital infusions
are accepted);
■ Legal reserve: 5% of gross profit until the legal
reserve represents a fifth of the share capital
(deductible for tax purposes);
■ General banking risks fund of 1% of the balance of
assets bearing risks specific to banking operations
(deductible for profit tax purposes);
■ Setting up of specific credit risk provisions for
principal and interest related to loans granted
(deductible for profit tax purposes);
■ Minimum reserve requirements of 18% (deposited
with the NBR) for ROL and 30% for foreign currency;
■ Capital Adequacy Ratios of 12% (own funds/net
exposure) and 8% (own capital/net exposure); also
special capital adequacy requirements will be fully
applicable starting from 2006 in relation to the trading
book activities;
■ Lending limit of 10% of own funds to any client;
■ Total long term investments in non-financial
companies and non-lending institutions (20% of nonfinancial
company's share capital and 15% of bank's
own funds), but total amount cannot be more than
60% of bank's own funds;
■ Financial statements need to be approved by external
independent auditors;
■ Restrictions on holding property other than for own
use;
■ Detailed operational reports to the NBR in
standardised format and specific frequency.
As a general trend, the supervision of banking activity has
tightened with respect to significant shareholders, top
management and administrators, internal audit, money
laundering, customer identification procedures, solvency
and investment portfolio risks.
A legislative framework has been created for derivatives,
but as it is relatively new, the market is still undeveloped.
Also, the tax legislation has not been updated to include
specific provisions regarding the tax treatment of
derivatives.
Money Laundering
Special legislation against money laundering has been in
place since December 2002. Generally, transactions
above EUR 10,000 could be investigated.
Foreign Investments
In the last few years there has been an increase in the
number of foreign banks operating in Romania, either
through branches or subsidiaries (requiring a minimum of
five shareholders).
Appendix II lists major foreign banks operating in
Romania as of 20 April 2005.
Banks have to apply IAS rules harmonised with EU
Directives for accounting and reporting purposes, starting
with financial statements of 2001/2002. Effective from
2006, banks would need to prepare the consolidated
financial statements in accordance with International
Financial Reporting Standards (IFRS). Also, from the same
date, banks would need to report their own funds on a
consolidated basis.
Credit Unions
Chapter 4 - Banking, Finance and Insurance
Although credit unions have been operating for some time
in Romania, under a more restrictive legislative framework
introduced during 2001 and 2002, they are now
assimilated with lending institutions, as are banks.
Credit unions must obtain a license from the NBR in order
to operate. Although their activity is not regulated by the
Banking Law, but under a separate legal framework, their
activity is subject to similar requirements as those
applicable to banks.
The same accounting treatment for banks applies to
credit unions as well.
PricewaterhouseCoopers - Business Guide to Romania 2005 21

Chapter 4 - Banking, Finance and Insurance
Building Societies
The general legal framework for building societies has
been in place since 2002, but there is only one building
society currently operating on the Romanian market.
Similar regulations for banks currently apply to building
societies, but adjustments are expected.
Institutions Issuing Means of Performing
Electronic Payments
The new Banking Law has introduced the possibility that
an institution, other than a bank, may issue means of
performing electronic payments.
The minimum share capital for such institutions is
ROL 120 billion.
4.2 Specialised Financial Institutions
Specialised financial institutions in Romania are still
developing and, at present, the range of services offered
is quite limited, especially in relation to factoring
operations. Brokerage houses have been established and
many of these are linked to banks. Also, mortgage
companies may now operate in accordance with a new
specific regulatory framework. Also, a new specific
regulatory framework in line with EU legislation was
introduced in 2004 to regulate consumer lending activities
performed by entities other than banks and more recently
by entities linked to banks.
4.3 Leasing
Government Ordinance no. 51/1997, revised at the
beginning of 2000, and further amended in December
2004, provides a more stable framework for leasing
operations in Romania. However, we expect that there will
soon be changes in the leasing legislation in order to
harmonise it with EU legislation. As in many countries,
leasing operations are split into finance leases and
operating leases.
Currently, there are over 7,000 companies that qualify as
leasing companies, but only 100 are actively operating on
the Romanian leasing market. They offer both financial
and operational leases and various types of assets to be
leased for flexible periods of time. Minimum share capital
for a leasing company is ROL 500 million.
Effective from 1 January 2004, the Fiscal Code brought a
new definition of a financial lease, recognised for tax
purposes. A financial lease is a leasing activity that fulfils
at least one of the following conditions:
22 PricewaterhouseCoopers - Business Guide to Romania 2005
1. the risks and benefits related to the ownership over
the leased asset are transferred to the lessee from the
signing date of the contract;
2. the lease agreement clearly states that at the end of
the lease period the ownership over the leased asset
will be transferred to the lessee;
3. the leasing period exceeds 75% of the asset's useful
life.
Thin capitalisation rules are not applicable to leasing
companies for leasing operations. For accounting
purposes, the definition provided by IAS needs to be
observed by companies applying IAS rules.
Details of customs and VAT implications of leasing are
included in Chapter 10 - Indirect Taxation.
4.4 Capital Markets
In 2003, the Bucharest Stock Exchange and the
Electronic Stock Exchange RASDAQ drafted a merger
plan to be in line with EU markets. The merger procedure
started in 2004 after the new consolidated capital market
legislation was approved.
The main changes brought by the new consolidated
capital market law are:
■ change in the legal status of BSE from a public
interest institution to a private company;
■ merger of BSE with the OTC market;
■ new market architecture regarding relationships
between regulatory, trading and settlement
institutions;
■ creating the legal framework for new trading
instruments (e.g. bonds, derivatives);
■ increased safety for investors owing to the creation of
the Investors Compensation Fund.
Under the new capital market legislation, banks are
allowed to act directly as intermediaries with previous
authorisation in this respect. One Romanian bank has
already taken the first step to trade on the capital market.
The supervisory body is the National Securities
Commission (which also regulates, supervise and controls
the OTC market and institutional investors). The National
Securities Commission was established after the initial
Securities Exchange Law was passed in 1994. In 2002,
the Government issued a new legal framework for
securities transactions, regulated markets, brokers,
investment funds and derivatives. This legal framework

tried to bring more transparency and accuracy of the
transactions and participants on the capital market.
A new consolidated capital market legislation in line with
EU Directives was approved in 2004.
All institutions under the supervision of the National
Securities Commission are required to apply IAS rules,
starting from financial statements for 2003.
Bucharest Stock Exchange
The first Bucharest Stock Exchange (BSE) opened in
1882, although in subsequent years most securities
trading took place outside the market. The existing Stock
Exchange opened in July 1995 with Canadian and British
technical assistance. Currently 67 brokers are active
members of the BSE. BSE is open for trading during each
working day. Trading is stopped on Easter and between
22nd December and the first working day of the following
year. The exchange's trading system encompasses both
order-driven and block trade markets and is fully
automated, with all transactions matched and reported
immediately. The BSE lists 60 companies divided into two
categories (17 being listed in the first tier and 43 in the
second). There are also 21 bonds listed on BSE (20
issued by municipal entities and one by a private
company). Certain criteria need to be fulfilled in order for
a company to be listed on the BSE (transparency
included). Also, there are certain restrictions for trading
and price fluctuation.
The level of transactions on BSE has significantly
increased in the previous years from EUR 1,852.47 million
in 2000 to EUR 27,049 million in 2004 and this upward
trend is expected to continue in 2005. Listing of municipal
bonds, some mutual funds and development of
derivatives instruments together with more-strict trading
and transparency rules, contributed to the increase in the
level of transactions.
The BET (Bucharest Exchange Trading), the official index,
measures BSE performance. It is a synthetic indicator
based on the 10 most liquid shares traded on the BSE.
The index increased by 127% (EUR denominated) in
2004.
BET-C and BET-FI measuring the performance of all
traded stocks on BSE and, respectively, the performance
of five financial investments companies with special
statute under Romanian law, increased by more than
110% during 2004.
RASDAQ
The RASDAQ trading system opened in October 1996 as
part of a USD 20 million capital market development
project run by the US Agency for International
Development (USAID). RASDAQ is modelled on
America's NASDAQ system.
RASDAQ is an exchange market that trades all the
companies initially privatised through the Government
Mass Privatisation Programme. It has less rigorous
requirements than the BSE. A RASDAQ index
(composite) based on all transactions began as a
benchmark of activity in 1998. There are currently 3,890
companies listed on RASDAQ in three categories (two top
categories and a base category for most of the
companies).
New regulations have been issued for the purpose of
tightening supervision and increasing transparency of
transactions in this market.
Following the approval in 2004 of the consolidated capital
market law, the BSE and RASDAQ started a merger
process, which is expected to be finalised in 2006. As a
result, 109 companies have passed from the trading
system of RASDAQ to the BSE trading system.
The merger is intended to form a unified capital market,
also incorporating the Sibiu Monetary Financial and
Commodity Exchange (BMFMS).
Futures and options whose underlying assets are
commodities, currencies and stocks traded on BSE are
traded on the Bucharest Commodities Exchange and the
BMFMS, but the volume is still low.
4.5 Insurance
The Insurance Surveillance Commission (ISC) regulates
and controls the activity of insurance companies and
insurance brokers.
A council formed by a president, a vice-president and
three members nominated by the Parliament heads the
ISC.
The prime functions of the ISC are:
Chapter 4 - Banking, Finance and Insurance
■ to supervise insurance companies' financial standing
in order to protect the insured persons' interest;
■ to ensure that insurance companies observe
prudential norms specific to insurance activity;
■ to issue norms for enforcement of Insurance Law
32/2000, to help elaborate the chart of accounts,
PricewaterhouseCoopers - Business Guide to Romania 2005 23

Chapter 4 - Banking, Finance and Insurance
accounting norms and procedures specific to
insurance activity;
■ to authorise insurance companies and insurance
brokers and to apply penalties for non-compliance.
Starting from September 2001, the ISC has been
accepted as a member of the International Association of
Insurance Supervisors.
The insurance legislation is continuously being improved.
Numerous amendments to the existing regulations have
been issued to fill in the legislative gap and to harmonise
the domestic insurance legislation with EU Directives. This
process is expected to continue in the coming period.
The main rules refer to classes of insurance, insurers and
insurance broker authorisation procedure, minimum
solvency margins, insurers' insolvency, technical reserve
calculation methods, life insurance funds administration,
investments and asset valuation. Insurers have to set up
specific technical reserves for their insurance activity,
which are tax deductible.
There are 45 insurance companies and 270 insurance
brokers currently operating in Romania. Among them,
foreign insurance companies hold a large slice of the
24 PricewaterhouseCoopers - Business Guide to Romania 2005
market and their share is increasing, especially in the life
insurance business (i.e. AIG, ING Nederlanden, Generali,
Allianz-Tiriac, Interamerican, Grawe, Aviva, etc).
The insurance market saw a significant growth in 2004 in
quantitative terms. The volume of gross written premiums
in 2004 was ROL 35,000 billion (EUR 863 million), three
times higher than in 2001. The gross written premiums
represented 1.4% of GDP in 2004 as compared to 0.9%
in 2001.
Currently, non-life insurance represents more than 70% of
insurance activity in Romania, of which compulsory thirdparty
liability car insurance has the main share. The life
insurance market, despite its significant increase during
previous years, is still undeveloped. In 2004 the
Parliament approved the law on occupation pensions and
universal pension funds (Pillar II).
From 1 January 2002, insurance companies have applied
IAS rules for accounting and reporting purposes.

Chapter 5
Corporate and Business Law
Provided by David & Baias, correspondent law
firm of PricewaterhouseCoopers in Romania
■ Legislation allows for the establishment of a wide
range of business entities, including wholly foreign
owned subsidiaries and branches
■ The most common type of company is the limited
liability company (SRL), largely because it is easiest
to operate and can have a sole shareholder
■ Many foreign businesses initially establish
representative offices
■ Expert legal and tax advice should be sought in the
early stages of operation, as legislation varies
according to interpretation and changes regularly
5.1 Legal Framework
Romanian legislation governing domestic and foreign
investment has undergone radical changes since the 1989
Revolution, particularly with the introduction of the
Company Law in 1990 (re-issued in 1998, modified again
in May 2001 and April 2003, and republished in November
2004). The current legislative bases for investment and
business operations in Romania are described below.
Company Law
Company Law governs certain forms of business
organisation. The Law covers registration procedures and
documentation, capital and shares, administration and
shareholders, mergers and liquidation.
Commercial Register Law
The Commercial Register Law regulates the organisation
and functioning of the Trade Register, stipulates the
obligation of business entities to register their entry into
operation and any subsequent changes in status, (e.g.
management, shareholding structure) operation, or nature
of business, and details the registration procedure.
Competition Law
The Competition Law aims at maintaining a competitive
market. Its provisions should be observed by all
companies when establishing their business terms or
acquiring other businesses. Clearance requirements,
depending mainly on the parties' turnover, are set for
mergers and acquisitions, as well as for certain
agreements (e.g. agreements including exclusivity
clauses).
Direct Investment Legislation
The only legislation in force that stipulates certain
incentives for investors in Romania is the Law on the
Promotion of Direct Investments with Major Economic
Impact (Law no. 332/2001). This law was passed in July
2001 and prescribes the procedures and conditions for
the performance of large-scale investments in Romania
(investments over USD 1 million). Investments that qualify
as significant investments can benefit from a number of
incentives as provided by the Fiscal Code (see Chapter 8
- Taxation of Corporations, for details).
5.2 Forms of Business Organisation
Romanian legislation lists the following types of business
organisation:
1. Limited liability company (societate cu raspundere
limitata - SRL);
2. Joint stock company (societate pe actiuni - SA);
3. General partnership (societate în nume colectiv -
SNC);
4. Limited partnership (societate în comandita simpla);
5. Limited partnership on shares (societate în comandita
pe actiuni);
6. Branch of a foreign company;
PricewaterhouseCoopers - Business Guide to Romania 2005 25

Chapter 5 - Corporate and Business Law
7. Silent partnership (asocatie în participatiune - not a
legal entity);
8. Sole proprietorship;
9. Family association.
All entities (except for the silent partnership) are
considered as resident in Romania for tax and currency
regulation purposes and must comply with statutory
requirements in Romanian legislation for book and record
keeping (see Chapter 7 for further details). The silent
partnership is considered as resident in Romania for tax
purposes, while for currency regulation purposes it will
have the Leader's status.
Dividends/net profits are to be distributed according to
the approved annual accounts (please see Appendix VII
for details regarding the deadline for filing the annual
accounts).
The family association and sole proprietorship are types
of businesses generally not available to foreign investors
with the exception of EU citizens and the European
Economic Area citizens.
The forms of business most commonly used by foreign
investors are the limited liability company (SRL) with one
to 50 shareholders, the joint stock company (SA) with a
minimum of five shareholders and the branch (of a foreign
parent company). Banks and insurance companies can
only be organised in the form of joint stock companies
(SAs).
Representative offices are often used as a market entry
technique, allowing for an assessment of existing
opportunities before making a more substantial
commitment to Romania.
Registration Procedure
The registration procedures for limited liability companies
and joint stock companies are quite similar and consist of
the following main steps:
■ The constitutive documents (by-laws) must be
prepared, approved, and signed by the shareholders;
certain documents must be signed in front of a notary
public or a lawyer;
■ The subscribed capital must be paid upon submission
of the incorporation documents. In the case of a joint
stock company (SA), each shareholder must pay at
least 30% of its subscribed capital upon submission
of the incorporation documents. Capital in cash is
required for all types of companies;
26 PricewaterhouseCoopers - Business Guide to Romania 2005
■ The company is registered with the Trade Register by
issuance of a Registration Certificate. This provides a
Registration Code (Rom. "cod unic de inregistrare",
abridged as "CUI") valid for both the Trade Register
and the tax authorities. The Registration Certificate
also includes in the appendix a certificate of status
certifying the registration of the statements that the
company meets all the requirements for engaging in
the activities covered by the company's objectives.
The relevant authorities would subsequently conduct
investigations at the registered head-offices of the
company, or at other locations where activity might be
carried out, in order to assess the fulfilment of the
operating requirements;
■ The company legally exists and has the right to start
and run its activities starting from the date of its
registration with the Trade Register.
The branch registration procedure is technically similar to
the above.
During the registration procedure, the company would
have a limited legal capacity - i.e. only for registration
purposes. The incorporation procedure takes between
three and five days from when the relevant file is
submitted with the Trade Registry.
Companies and branches whose names contain the
words "national, Romanian, institute" and/or their
derivations or words commonly used in connection with
central public authorities and institutions, have the
obligation to seek a supplementary approval from the
General Secretariat of the Government. If the trade name
includes words commonly used in connection with local
public authorities and institutions, the approval of the
County Hall should be obtained.
Capital and Shares
The minimum capital required for an SRL is ROL 2 million,
about EUR 50. Capital contributions can either be in cash
or in kind, but cannot be entirely in kind.
Capital is divided into shares (Rom. "parti sociale") that
cannot have a value of less than ROL 100,000. Shares
can be freely transferred between existing shareholders.
Transfer of the shares to third parties can only be done
with the approval of shareholders representing at least
75% of the capital. The transfer of shares must be
registered with the Trade Register and entered in the
company's Shareholders Register.
An SA-type company must have a minimum capital of
ROL 25 million in cash or in kind contributions (the law
estimates an increase in the minimum share capital to

EUR 25,000 by 31 December 2005). Part of the share
capital must be contributed in cash. At least 30% of the
subscribed capital must be paid up when founding the
company. The balance must be paid within 12 months
from the foundation of the company.
Capital is divided into shares and the nominal value of a
share must be at least ROL 1,000. Shares can either be
nominative or bearer shares, as established in the
company's constitutive documents. However, shares that
are not fully paid up can only be nominative shares.
In general, shares must have equal value and grant equal
rights to the shareholders. The Company Law, however,
lists the conditions under which preferential shares can be
issued. Such shares give their holders the right to a
preferential dividend, but they do not confer any voting
rights.
The Company Law states that upon finding that, due to
losses incurred, the net asset value, determined as the
difference between the total assets and the company's
debts, amounts to less than half of the share capital, the
directors shall convene the extraordinary general meeting
to decide on whether to reinstate the share capital,
reduce it to the remaining value or dissolve the company.
Directors (Administrators)
Both SRLs and SAs must have one or more directors
(administrators), each appointed by the shareholders.
Directors are responsible for the management of the
company.
The administrators can be Romanian or foreign citizens, in
any proportion.
Administrators may appoint one or more executive
managers to carry out the day-to-day business of the
company.
Censors
If a limited liability company has more than 15
shareholders, it has the obligation to appoint company
censors (see Chapter 7 for further details).
As explicitly stated in the Company law, joint stock
companies are under an obligation to appoint either
censors or auditors, depending on the specific situation of
the company.
General Meeting of Shareholders
The General Meeting of Shareholders decides on all major
issues concerning the company, in accordance with
provisions in the company's constitutive documents and
Chapter 5 - Corporate and Business Law
in the Romanian Company Law. Among others, the
General Meeting of Shareholders decides on:
■ Change of the head office;
■ Opening branches, subsidiaries or working units;
■ Changes in the object of activity;
■ Increases and decreases in capital;
■ Appointment of directors (administrators) and censors;
■ Approval of annual accounts (including dividend
distribution);
■ Merger and liquidation.
5.3 Branches
Branches must be registered using the same procedures
for SRLs and SAs. The foundation of a branch requires
the following documentation:
■ Records of the existence of the parent company (i.e.
company memorandum and articles of association,
certificate of foundation, letter of reference from bank,
latest financial statements);
■ Decision of the Board of Directors to establish a
branch in Romania, listing the activities of the branch
and nominating a General Manager.
Branches must have a General Manager appointed by the
Board of Directors of the parent company, who will
represent the branch in dealings with third parties in
Romania. The General Manager can be Romanian or a
foreign citizen. Branches can only operate in the same
field of activity as their parent companies and they are not
allowed to include in their objectives more or other
activities than the parent company.
5.4 Representative Offices
Representative Offices are often established as a first step
in committing to Romania. Legally speaking, a
Representative Office cannot commit to any contractual
engagements in its own name but can perform the
following activities for its parent company:
■ Using facilities only for the purpose of storage or
display of goods or merchandise belonging to its
parent;
■ Maintenance of a stock of goods or merchandise
belonging to its parent only for the purpose of storage
or display;
PricewaterhouseCoopers - Business Guide to Romania 2005 27

Chapter 5 - Corporate and Business Law
■ Maintenance of a stock of goods or merchandise
belonging to its parent only for the purpose of being
processed by a third party;
■ The sale of goods or merchandise belonging to its
parent displayed at exhibitions or trade fairs which are
not permanent or are occasional, if the merchandise
or goods are not sold later than within a month after
the closing of the trade fair or exhibition;
■ Maintenance of a fixed place of business solely for the
purpose of acquiring products or goods or collecting
information for its parent;
■ Maintenance of a fixed place of business solely for the
purpose of carrying out activities of a preparatory or
auxiliary nature by its parent;
■ Maintenance of a fixed place of business solely for a
combination of the activities mentioned above, under
the condition that the whole activity carried out
through the fixed place of business is of a preparatory
or auxiliary nature.
28 PricewaterhouseCoopers - Business Guide to Romania 2005

Chapter 6
Labour Relations and
Social Security
■ Salary costs are relatively low (the gross average
monthly wage is around EUR 240)
■ Employer social security, health and unemployment
contributions amount to maximum 32.5 - 36% of
gross payroll costs
■ It is not compulsory for expatriates to be employed
by a Romanian company, though foreigners are
required to register and obtain a fiscal registration
number
6.1 Labour Relations and the Labour
Code
Availability of Labour
Romania has a well educated labour force.
Unemployment was unknown prior to 1989, largely due to
overstaffing. After 1989 unemployment increased rapidly,
but since mid-1999 it has steadily declined from 11.3% to
6.2% in December 2004.
Skilled labour is mainly available in the industrial and
services sector. Certain skills, such as knowledge of
Western style accounting and double entry bookkeeping
are mainly focused in big cities, but the situation is
gradually improving.
Employer / Employee Relations
Employer-employee relations are governed by the Labour
Code (effective March 2003), other special laws and the
National Collective Agreement.
The new Labour Code covers Romanian employees under
individual employment contracts, working in Romania or
abroad for a Romanian employer, and foreign nationals or
persons without citizenship under employment contracts
working on Romanian territory for a Romanian employer.
A number of framework regulations contained in the
Labour Code are to be subsequently detailed by special
laws. Furthermore, the new standard form of employment
contract allows for individual contracts to include special
clauses, such as:
■ the non-compete clause (binding employees to refrain
from carrying out competing activities against the
employer);
■ the mobility clause (entitling employees to extra
benefits for employment by requiring them to move
from one place to another);
■ the confidentiality clause (whereby parties agree not
to disclose information acquired during the course of
employment).
Special types of contracts are regulated by the new Code,
including staff leasing, part-time employment, and homebased
work.
Employers are required to maintain a general register of
employees, to be registered with the relevant authorities.
All employees are to be entered in the register, with
information regarding their employment record and data
including performance and termination of employment
contracts. The individual labour books (Rom. "carti de
munca") will continue to be used until 31 December 2006.
Fund to Guarantee Outstanding Salary
Payments
Employers will be required to contribute to the guarantee
fund for outstanding salary payments. The fund will be set
aside to ensure settlement of amounts related to
outstanding salaries, but will not be accessible to firms
that are undergoing insolvency procedures. The Labour
Code does not specifically state the amount of the
ntribution, nor does it detail how the fund is actually to be
set aside. Special rules are expected in this respect.
PricewaterhouseCoopers - Business Guide to Romania 2005 29

Chapter 6 - Labour Relations and Social Security
Unions
Legislation regarding trade unions was implemented in
February 2003. Under this law, unions are independent
organisations, comprising of at least 15 individuals,
working in the same field or industry, but not necessarily
for similar employers.
Union rights include the right to bring a court action to
defend the interests of any of their members without a
power of attorney. Elected union representatives cannot
be dismissed during their term of office and for a period
of two years beyond the end of their term.
Employers are under an obligation to invite union
representatives to board meetings. It is required to notify
unions of resolutions carried out by the board of directors
within 48 hours of being passed.
6.2 Working Conditions
Salaries and Wages
Average salaries in Romania are low compared to
Western European countries and to other countries in
Eastern Europe. The average national gross salary in
Romanian organisations was the ROL equivalent of EUR
240 per month at the end of December 2004. Romanian
law guarantees entitlement to the minimum gross salary,
currently of ROL 3,100,000 (approx. EUR 80). From time
to time, due to increases in the price of consumer goods,
the government raises the level of the minimum gross
salary in ROL terms.
Private sector salaries are increasing due to the limited
supply of skilled staff in certain professions. Consequently
the average gross salary shown in official statistics is
likely to be misleading to foreign investors seeking skilled
employees for a new business venture. An average gross
salary cost (including salary tax) for a skilled employee is
likely to exceed EUR 500 per month. Employer social
security contributions also apply to the gross salary (refer
below).
Working Hours
The standard working week is 40 hours, generally Monday
to Friday from 8:30 am to 5:00 pm with a 30-minute lunch
break. Most industrial workers also have an eight-hour
working day, but factories usually start an hour earlier
than commercial institutions. However, the maximum
30 PricewaterhouseCoopers - Business Guide to Romania 2005
working time cannot exceed 48 hours per week, inclusive
of overtime.
Overtime can be remunerated by time off or extra pay.
Under the new Labour Code, overtime pay is set by
negotiation, either in the collective agreement or in the
individual contracts of employment. However, overtime
pay cannot fall below 75% of the base salary. Under the
effective National Collective Agreement, overtime is paid
at the rate of 100% of the gross salary. The Collective
Agreement prevails over the Labour Code.
Paid Holidays
In addition to statutory holidays, under the new Labour
Code, employees are entitled to a minimum of 20 days
annual paid vacation. Under the National Collective
Agreement, the minimum holiday is 21 days.
Annual paid holidays, as well as additional paid leave - for
special occasions, such as marriage, birth of a child, or
study - must be specified in the individual or collective
agreement. Most companies grant 21 to 24 days of
annual holiday in addition to the seven days of statutory
holiday (refer to Chapter 1).
Equal Opportunities
The Constitution guarantees equal rights for members of
ethnic and religious groups, as well as for men and
women.
Companies with 75 or more staff are required to employ
disabled people in at least 4% of all positions. Companies
that do not meet the required number of disabled
employees must pay an additional monthly amount equal
to the minimum salary (about EUR 80) for every position
that should have been offered to a disabled person.
The new Labour Code emphasises equality of payment
for equal work. Persons employed in the same position
and carrying out the same work should earn the same
base salary.
Health and Safety
Health and safety regulations vary according to the
particular hazards of the industrial sector in question. In
general, they are less stringent than those applied by
other European countries.
However, the new legislation obligates employers to
ensure the access of employees to specialised medical
care, either independently - by concluding an individual

employment contract with an occupational medical
practitioner - or by concluding a contract with another
employer or with an employers association. A law
governing the legal treatment of occupational medical
services is due to be tabled in Parliament soon.
Termination of Employment
Clauses and grounds for termination are classified by the
following:
■ termination by operation of the law;
■ agreement between parties, on the agreed date;
■ unilaterally by either party, in the cases and under the
restrictive terms as under the law;
a) dismissal (by an act of employee or for reasons
other than an act of the employee);
b) resignation.
Resigning employees are required to give no more than
15 calendar days notice (for non-managerial positions),
and 30 calendar days notice for managerial positions. In
the event of dismissal, the employer is required to give
notice of at least 15 working days to the employee.
However, the effective National Collective Agreement,
which takes precedence over the Labour Code, stipulates
that the notice period for dismissal is 20 working days.
6.3 The Social Security System
Social security legislation was overhauled in April 2001.
The law introduced new definitions of public system,
persons and risks covered in the public system,
contribution and assimilated periods, personal social
security code, pensions, and monthly rates of
contribution.
The law also stipulates the change of computation
method for state social security contributions (the quotas
being annually determined by the laws on the state's
social security budget).
In Romania all employers and employees, as well as other
categories of taxpayers, must contribute to the state
social, health and employment security system.
Coverage
Chapter 6 - Labour Relations and Social Security
Social and health security covers pensions, child benefits,
illness and other social care services. Employment
security covers minimal unemployment benefits, and
grants aimed at generating employment.
Contributions
Both employers and employees are required to contribute
to the social security system. The percentages paid by
the employer and the employee are based on gross salary
and are as follows:
Employees' Contributions as a Percentage of Gross
Salary:
■ Social security contribution - 9.5% (this percentage
applies to a base capped at five times the average
salary for the respective year). In 2005, the national
average gross salary is ROL 9,211,000
(approx. 240 EUR) per month;
■ Unemployment fund - 1%;
■ Health fund - 6.5%.
Employers' Contributions:
■ Social security fund - 22%; 27%; 32% depending on
working conditions, capped at five times the national
average gross salary multiplied by the average
number of employees;
■ Health fund - 7%;
■ Unemployment fund - 3%;
■ Work accidents insurance fund - 0.5% - 4%;
■ Labour office commission - 0.25% - 0.75%.
From 2005, the percentage of work accidents insurance
fund varies between 0.5% and 4%, depending on the risk
category. The criteria for establishing risk categories were
established by the methodological norms.
Employers calculate and withhold salary contributions
when paying salaries. State budget contributions are
payable by the 25th of the month following the month the
salary relates to. Failure to pay these withholding
contributions within 15 days from this date is a criminal
offence and is sanctioned accordingly.
PricewaterhouseCoopers - Business Guide to Romania 2005 31

Chapter 6 - Labour Relations and Social Security
6.4 Foreign Personnel
Fiscal Registration Number
Foreign individuals receiving income sourced in Romania
need to lodge a fiscal application form with the Romanian
tax authorities in order to obtain a fiscal registration
number. This fiscal application form has to be submitted
to the authorities within 30 days from receiving the first
income payment.
Residence Permit
Foreign individuals whose stay in Romania exceeds 90
days within a six-month period need to apply for a
residence permit, unless a relevant international bilateral
agreement stipulates otherwise.
Prior to applying for a temporary residence permit, a visa
from the Romanian embassy or consulate in their country
must be obtained for entry to Romania, except for citizens
of:
■ EU member states
■ United States
■ Canada
■ Japan
■ Liechtenstein
■ Switzerland
32 PricewaterhouseCoopers - Business Guide to Romania 2005
Work Permit
Foreign individuals performing services in Romania may
have:
■ only a foreign employment agreement;
■ both a foreign and a local employment agreement; or
■ only a local employment agreement.
Only foreign individuals performing services in Romania
based on a local employment agreement need to apply
for obtaining a Romanian work permit. As of November
2004, foreign individuals can be seconded to Romania
(i.e. only on a foreign employment contract) for 1 year.
After this period, they need to obtain a work permit.
In order to obtain a work permit, a working visa should be
obtained from the Romanian diplomatic mission or from
the Romanian consular offices in the country where the
expatriate is domiciled, unless the foreign individual is a
citizen of one of the countries indicated above.
The lack of a local employment relationship does not
significantly change tax liability but could affect social
security liability (i.e. foreigners performing services in
Romania based on local employment agreements are
liable to pay all social security contributions required by
the Romanian legislation).

Chapter 7
Accounting and Audit
Requirements and Registration
■ Gradual introduction of International Financial
Reporting Standards (IFRS) and EU accounting
directives
■ Existing Romanian Accounting Regulations (RAR)
geared towards tax compliance not information
provision
■ Significant differences exist between RAR and IFRS
■ Audit requirements depend on accounting
framework adopted (IFRS or RAR)
7.1 Accounting
Introduction of International Financial
Reporting Standards
Historically, accounting in Romania was directed towards
providing information to two specific groups: the tax
authorities and the government (e.g. the National
Statistics Commission). This led to the preparation of
financial statements that did not take into account the
needs of other interested parties such as shareholders,
bankers, suppliers, customers, employees, and potential
investors.
In 1994 a new system of accounting, based on the French
system and incorporating a revised 'Chart of Accounts',
was introduced. Although it allowed the measurement of a
company's assets and liabilities in a manner broadly
consistent with International Financial Reporting
Standards (IFRS), the system still failed to include certain
essential information, such as cash flow statements and
other disclosures, including notes, in financial statements.
Moreover, in practice the system was rarely applied in full,
being restricted mainly to information necessary for tax
purposes.
In February 2001, the Ministry of Public Finance issued
Order number 94 ('OMF 94') for the approval of the
'Accounting Regulations Harmonised with the Fourth
Directive of the European Union and International
Accounting Standards'. This order stipulates the
application of IAS with certain exceptions. OMF 94 will be
applied to most large companies by 2005, including all
publicly listed companies and state companies ("societati
/ companii nationale”) that are of national interest.
The preparation of financial statements that comply with
OMF 94, excluding the application of certain international
accounting standards (namely non-application of IFRS
dealing with hyperinflation or consolidation), has led to
significant departures from IFRS.
In April 2002, the Ministry of Public Finance issued Order
number 306 ('OMF 306') approving the 'Simplified
Accounting Regulations Harmonised with the European
Directives'. Beginning with 1 January 2003, this Order
should be applied by all companies that do not apply
OMF 94.
The introduction of IFRS has been delayed to 1 January
2006 through the publication of Law 420/2004 regarding
changes to Accounting Law 82/1991. However, while the
first stand alone IFRS financial statements are required to
be filed with the authorities for the year starting 1 January
2006, the first IFRS consolidated financial statements
have to be filed for the year starting 1 January 2007.
Starting 1 January 2006, Romania will also adopt in full
the IVth Directive 78/660/EEC as well as VIIth Directive
83/349/EEC, as stated by the Order of Ministry of Public
Finance 1775/2004.
Existing Romanian Accounting Regulations
The Ministry of Finance currently governs Romanian
Accounting Regulations. The regulations take the form of:
■ Laws (i.e. Accounting Law nr. 82/1991 republished) or
Government Ordinances or sessions, detailing
significant new pieces of legislation;
■ Norms (or regulations), providing a detailed
explanation of how the Laws or Government
Ordinances or Decisions should be implemented;
PricewaterhouseCoopers - Business Guide to Romania 2005 33

Chapter 7 - Accounting and Audit Requirements and Registration
■ Orders of the Ministry of Finance providing additional
guidance on accounting and tax issues.
Significant Accounting Differences Between
RAR and IFRS
Appendix V contains a table indicating some of the major
differences between the practical application of RAR (i.e.
OMF 306 and OMF 94 rules) and IFRS. These should be
kept in mind when reading Romanian financial statements
prepared under RAR.
7.2 Chart of Accounts
Both OMF 94 and OMF 306 require the use of a Chart of
Accounts.
The principle underlying the Chart of Accounts is that all
companies should record the same item in the same
account, irrespective of the nature of their business.
Accordingly the Chart of Accounts is a set of predefined
account numbers and names that must be used by all
companies. A brief summary of the Chart of Accounts for
a commercial company under both OMF 94 and OMF 306
is given in Appendix V (note that the Chart of Accounts
for banking institutions and non-profit organisations is
different).
7.3 Audit Requirements
Audits in Romania take place by legal requirement in
accordance with the provisions of the Emergency
Government Ordinance 75/1999 approved by Law
133/2002 (the Audit Law) and subsequently amended by
Government Ordinance 67/2002 and Law 12/2003. The
Government Ordinance 75/1999 was republished in 2003.
Legally Required Audits
Companies Subject to OMF 94
Companies applying the provisions of OMF 94 are
required to submit to an audit by a member of the
Romanian Chamber of Financial Auditors (‘the Chamber’).
This body was created under Emergency Government
Ordinance 75/1999, and is designed to comply with the
requirements of the EU 8th Directive. The Chamber was
created as part of a UK Government-funded project to
improve accounting and auditing practices.
Companies Subject to Romanian Accounting Regulations
Joint Stock Companies (SAs) and Limited Liability
Companies (SRLs) with more than 15 shareholders that
34 PricewaterhouseCoopers - Business Guide to Romania 2005
are not subject to OMF 94 must be audited by their
appointed company 'censors' or financial auditors if the
companies opt for having an external auditor.
Censors are either individuals or companies appointed by
the SA or SRL at the time of their registration as legal
business entities. Their main responsibilities include:
■ Supervision of the administration of the company and
ensuring that accounts and legal books are properly
kept;
■ Ensuring that decisions taken by the General Meeting
of Shareholders are properly implemented;
■ Ensuring that the company and its directors comply
strictly with the law;
■ Ensuring that the end-of-year financial statements are
prepared in accordance with the law.
The auditing rules for companies that are not subject to
OMF 94, or are neither an SA nor SRL included in the
above category, are open to interpretation. Individuals or
companies who are members of the professional
Romanian Accountants Body (CECCAR) normally perform
such audits.
Auditing Standards for Legally Required
Audits
Audits performed by members of the Chamber of
Auditors have to be performed in accordance with the
Auditing Standards established by the Chamber, which
are similar to International Standards on Auditing. A
number of international accounting firms (including
PricewaterhouseCoopers) are members of the Chamber.
Audits performed by censors do not have to follow any
particular framework.
Securities Commission Requirements
Companies subject to regulations on securities (all of
which must be SAs) are required to appoint independent
external auditors (individuals or audit firms) who are
members of the Chamber. At least once a year, these
companies must submit an auditor's report to the
National Securities Commission.
Accountants and Law Firms
Details of major accounting and legal firms are provided in
Appendix VI.

Chapter 8
Taxation of Corporations
■ Standard corporate tax rate of 16%
■ Quarterly reporting and payment (monthly for banks)
■ Dividend tax of 10% on dividents paid to resident
legal persons and individuals
■ Micro-companies pay 3% of revenue earned
■ The fiscal year is the calendar year for all entities
8.1 Corporate Tax System
Companies
Romanian entities and foreign entities doing business in
Romania are liable for corporate income tax (profit tax).
The standard profit tax rate is 16%, applicable to both
Romanian companies and to foreign companies operating
through a permanent establishment in Romania.
The profit tax liability due by nightclubs and gambling
operations cannot be lower than 5% of the revenues
obtained from such activities.
Companies that have opted for the micro-company
regime (annual turnover up to EUR 100,000 and between
1 and 9 employees) are taxed at 3% of revenue earned,
up to and including the year in which they go beyond
these criteria, payable each quarter, by the 25th of the
month following the quarter for which the tax is paid.
Dividends
Dividend payments by a Romanian company to Romanian
residents, individual or corporation shareholders are
subject to 10% dividend tax.
If the payments abroad are made towards a beneficiary
resident in a country with which Romania has not
concluded a Double Taxation Treaty, the dividend
withholding tax is 15%. If the payments abroad are made
to a beneficiary resident in a country with which Romania
has concluded a Double Taxation Treaty and the
beneficiary of the payment makes available a fiscal
residence certificate, then the Romanian withholding tax
rates applicable for residents or the rates stipulated in the
Treaties would apply, whichever are more favourable.
After Romania's accession to the EU, dividends paid by a
Romanian company to another company (Romanian or
within the EU) will not be taxed if the beneficiary holds at
least 25% of the share capital of the Romanian company
for a minimum period of 2 years that ends on the date
when the dividends are paid.
Accounting and Fiscal Depreciation
The Fiscal Code makes an explicit distinction between
accounting and fiscal depreciation. For fixed assets
commissioned after 1 January 2004, fiscal depreciation is
to be computed based on the rules set out by the Fiscal
Code and deductibility will no longer depend on the level
of depreciation recorded in the accounts. Accelerated or
reducing balance depreciation methods may be used for
determining the fiscal depreciation while the accounting
depreciation method could be different (e.g. straight-line
method).
Companies are allowed to revalue their fixed assets at the
end of each year. Revaluation is compulsory if the
cumulative inflation rate exceeds 100% over the last three
consecutive years. The respective inflation rates for the
last three years were 17.8% (2002), 14.1% (2003) and
9.3% (2004). Therefore, for 2004 the cumulative inflation
over the last three years did not exceed the 100% limit.
The revaluation needs to be made on the basis of the
inflation index set by the National Institute of Statistics,
and on the market value established under the criteria
stipulated by law.
The Fiscal Code also states that the fiscal depreciation of
fixed assets existing in the company's records as of 31
December 2003 will be computed considering the net
book value of such assets at 31 December 2003 (i.e.
including any revaluation recorded until that date) and by
using the same depreciation methods as in the past
periods. The revaluation recorded in the financial
PricewaterhouseCoopers - Business Guide to Romania 2005 35

Chapter 8 - Taxation of Corporations
statements of the year 2003 would be the last revaluation
possible to be deducted through fiscal depreciation.
No revaluation of fixed assets made and recorded after 1
January 2004 would be taken into account for computing
fiscal depreciation.
Companies need to be prepared to keep a separate
record to reflect the distinct computation of the fiscal and
the accounting depreciation.
Territoriality
A company is considered resident if it is registered in
Romania or has the place of effective management in
Romania.
Representative Offices
A Representative Office can only undertake auxiliary or
preparatory activities. A Representative Office cannot
trade in its own name and cannot engage in any
commercial activity.
There is a flat tax of EUR 4,000 per fiscal year on
representative offices, payable in ROL using the exchange
rate valid on the payment date.
For representative offices of foreign companies in
Romania, incorporated during the first half of the year (1
January- 30 June) the tax is due by 20 June and is
proportional to the number of months of activity of the
representative office during that semester. The tax due for
the second half (the equivalent of EUR 2,000) must be
paid by 20 December.
In the situation in which a Representative Office is set up
or closed down during the year, the tax due for the
respective year is pro-rated for the months for which the
Representative Office operated in the respective fiscal
year.
8.2 Incentives
Profit Tax Legislation
■ Accelerated depreciation (i.e. up to 50% of the
acquisition value shown as deductible depreciation in
the first year, the remainder being equally spread over
the remaining useful life) can be used for technical
equipment, computers and peripherals without the
need for approval from the local tax authority.
The incentive is also applicable for assets acquired under
financial leasing agreements with ownership transfer
clauses applicable at the end of the contract.
36 PricewaterhouseCoopers - Business Guide to Romania 2005
Direct Investments
The law on direct investments with a significant impact on
the economy, enacted in July 2001, grants specific
incentives for cash investments of a minimum of
USD 1 million or equivalent. The incentives currently in
force are:
■ Customs duties exemption for specific
tangible/intangible goods imported as part of the
investment;
■ The investments benefit from a deduction of a 20% of
their value. The deduction shall be calculated during
the month when the investment is carried out, only
from a fiscal point of view;
■ Utilisation of accelerated depreciation for fixed assets,
except for buildings.
To benefit from these incentives, the investment must be
registered with the Romanian Agency for Foreign
Investments before its commencement. This investment
must be made against payments in ROL or in hard
currency and must be effectively accomplished within, at
most, 30 months from the date of registration.
The profit tax incentives granted under this law are
applicable until 31 December 2006. If an investment
qualifies for incentives granted by several laws, the
investor has to opt for one incentive regime.
Free Trade Zones
Taxpayers that operate under licenses in free trade zones
and have made investments by 1 July 2002 in depreciable
tangible assets used in the processing industry,
amounting to at least USD 1 million, benefit from profit tax
exemption until 31 December 2006. This incentive
ceases to apply if changes occur in the shareholding
structure of the taxpayer. A change is deemed to have
occurred in the shareholding structure if more than 25%
of the company's shares have changed hands during a
calendar year.
Until 31 December 2004, all other companies operating in
the free trade zones were liable to pay profit tax of 5% on
the taxable profits generated by activities performed in
these areas. From 1 January 2005 the standard rate has
been applied.
Disadvantaged Areas
Legal persons that have obtained a permanent investor
certificate in a disadvantaged area prior to 1 July 2003 are

exempt from paying profit tax throughout the existence of
the disadvantaged area.
Industrial Parks
For investments in made industrial parks before
31 December 2006, a supplementary deduction is allowed
out of the taxable profit, capped at 20% of the value of
investments in constructions or rehabilitation of
constructions, internal infrastructure and infrastructure for
connecting to the public utilities grid. The incentive is
granted in the month when the investment is finalised.
Taxpayers that benefit from the 20% deduction from the
acquisition value of the assets cannot benefit from this
incentive.
No property tax is due for buildings and constructions
located in the Industrial Park. Also, land within Industrial
Parks is exempt from land tax.
Oil and Gas Incentives
Under the Petroleum Law, which was amended last year,
there are specific incentives for companies operating in
the field of crude oil and gas exploration and extraction
that have obtained the Petroleum Licence before
September 2004. These incentives are applicable for the
period in which the Petroleum License is in force.
The Fiscal Code stipulates that taxpayers operating in the
field of exploitation of natural deposits are obliged to
establish provisions for rehabilitation of the exploitation
area, up to 1% of the difference between revenues and
expenses from exploitation, throughout the entire working
period of the exploitation of natural deposits. For
titleholders of petroleum agreements that conduct
petroleum operations in marine perimeters with waters
deeper than 100 metres, the provision for closure of oil
rigs, as well as for environmental recovery, is 10% of the
difference between revenues and expenses registered
throughout the duration of the petroleum exploitation.
In addition, under the Fiscal Code the tax depreciation of
buildings and constructions related to petroleum
operations whose useful life is limited to the duration of
the reserves, and which cannot be used for any purpose
after the reserves are depleted, should be calculated on
the basis of units of production, based on the exploitable
petroleum reserve.
8.3 Gross Income
Accounting Period
All entities doing business in Romania are required to
keep their accounts by calendar year. The Government
can approve a financial year that is different to the
calendar year. The fiscal year is considered to be the
calendar year.
Business Profits
The taxable profit of an enterprise is calculated as the
difference between the revenues derived from any source
and the expenses incurred in order to obtain these
revenues, throughout the tax year, of which non-taxable
revenues are deducted and to which non-deductible
expenses are added. Other elements similar to revenues
and expenses are considered when computing the
taxable profit.
The annual accounts are used as the basis for calculating
taxable profit (further details on required adjustments are
given below).
Capital Gains
Capital gains are taxed in the year in which they arise.
Capital gains obtained by a Romanian resident company
are included in ordinary profit and taxed at 16%. Capital
gains obtained by non-residents from the sale of real
estate located in Romania or on the sale of shares held in
a Romanian company are also taxable in Romania at
16%. The 10% tax rate for the sale of real estate located
in Romania and for capital gains on the sale of shares
held in a Romanian company has been cancelled as of 1
May 2005.
The provisions of Double Taxation Treaties prevail over the
provisions of domestic legislation.
Capital losses related to sale of shares are, in general, tax
deductible.
Interest, Royalties, and Service Fees
Interest, royalties and service fees are included in a
company's business profits for accounting purposes and
are subject to corporate profit tax at the normal rate.
Dividends
Chapter 8 - Taxation of Corporations
Dividends received by one Romanian company from
another Romanian company are non-taxable revenues.
PricewaterhouseCoopers - Business Guide to Romania 2005 37

Chapter 8 - Taxation of Corporations
The dividends received by a Romanian company from a
foreign company are taxed at 16% in Romania. A tax
credit is available for the tax paid abroad.
After Romania's accession to the EU, dividends received
from a company within the EU should be non-taxable
revenues if the Romanian legal entity holds at least 25 %
of the capital of the company that distributes the
dividends for a minimum period of two years.
8.4 Deductibility of Expenses
Companies may deduct all expenses incurred in order to
obtain taxable revenues. The deductible rules from 1
January 2005 are, among others, as follows:
■ Expenses incurred by acquiring packaging throughout
the useful life established by the taxpayer;
■ Registration fees, subscription fees and contributions
due to the chambers of commerce and industry,
trade unions and employers associations.
Nonetheless, the deductibility of certain expenses is
limited, including :
■ Interest expenses exceeding an annual rate of 7% for
foreign currency loans contracted from entities other
than banks, financial institutions and leasing
companies (see below).
■ Representation expenses are limited to 2% of the
difference between taxable revenues and deductible
expenses, except protocol expenses.
■ Interest expenses and net foreign exchange losses if
the debt to equity ratio is higher than three. (see
below). Interest which is non deductible under this
rule can be carried forward to subsequent years.
■ Travel and accommodation expenses incurred in
Romania or abroad for employees and administrators
of the company are deductible only if the taxpayer
derives profit in the current year or in previous years.
■ Daily allowances for domestic and foreign travel is
deductible up to the level of 2.5 times the ceiling set
for public institutions and provided that the taxpayer
obtains profit in the current year or in the previous
years. If this condition is not met (i.e. the company
has losses) then such expenses are deductible at the
level of the ceiling set for public institutions (at about
EUR 3 day).
■ Marketing, market research, promotion, participation
in fairs and exhibitions are deductible. This deduction
is no longer conditioned by profits recorded by the
38 PricewaterhouseCoopers - Business Guide to Romania 2005
company in the current fiscal year and/or previous
years.
■ Losses recorded at the write-off of bad debts are only
deductible in one of the following cases: closing of
bankruptcy procedure, decease, dissolution or
liquidation of the debtor, major financial difficulties
that affect the debtor's entire patrimony.
■ Social expenses are deductible to the level of 2% of
the salary expenses. Maternity allowances, funeral
benefits and allowances for serious or incurable
diseases and prostheses, as well as expenses for
proper operation of certain activities or units that are
under taxpayers administration fall under this ceiling:
kindergartens, nurseries, health services supplied for
occupational diseases and work accidents until
admission to health establishments, museums,
libraries, canteens, sports clubs, clubs, hostels, as
well as the schools that are under the aegis thereof,
etc. Expenses for transporting employees to and from
the working place are no longer included in this
category.
■ Management and general administrative expenses
allocated by the foreign legal entity to the permanent
establishment are no longer limited to 10% of the
employees' salaries in order to be deductible. Instead,
additional requirements regarding the supporting
documentation for the expenses allocated by the
headquarters are stipulated.
■ Expenses effected on behalf of an employee for
private health insurance premiums and/or to an
optional occupational pension scheme within the limit
of EUR 200 per year per person.
In addition, a number of expenses are specifically nondeductible,
including:
■ Profit tax as well as tax on revenues obtained in
foreign countries.
■ Fines and penalties due to Romanian or foreign
authorities, as well as to non-residents based on
commercial agreements.
■ Expenses incurred for services (management,
consultancy, assistance), if no written agreements are
concluded and if the beneficiaries cannot justify the
necessity of receiving these services for their
authorised activity.
■ Expenses related to non-taxable revenues.
■ Sponsorship and patronage expenses (but the
taxpayers are granted a fiscal credit with the limit of
0.3% of revenue and 20% of the profit tax due).

■ Other salary and/or similar expenses (if not taxed at
the level of the individual).
■ Withholding tax paid on behalf of non-residents.
■ Insurance expenses, except for insurance against
work related accidents or insurance related to assets
owned, rented or leased by the taxpayer.
■ Bad debts expenses in excess of the deductible
provision (see below).
■ Expenses registered for accounting purposes that are
not substantiated with "justifying" documents.
■ Contributions to professional associations and nonguvernamental
(NGO) organizations. These expenses
were previously deductible for profit tax purposes
within EUR 2000.
Provisions and Reserves
Amounts used for setting up or increasing reserves or
provisions are deductible as follows:
■ Setting up or increasing the legal reserve fund to a
limit of 5% of the yearly accounting profit before tax
(with adjustments ) until it reaches 20% of the share
capital;
■ Provisions for doubtful debts on debts established
after 1 January 2004 are deductible within the limit of
20% of the accounting value of the provisions for
2004, 25% for 2005 and 30% for 2006, if the related
receivables simultaneously meet the following
conditions:
- are not collected for a period exceeding 270 days
from the due date;
- are not guaranteed by another person;
- are payable by a person who is not affiliated with the
taxpayer;
- were included in the taxable income of the taxpayer;
■ Starting from 1 January 2007, provisions for
accounting purposes are fully tax deductible if the
following conditions are met :
- receivables are booked after 1 January 2007;
- the debtor is a company declared bankrupt by a court
ruling;
- receivables are not guaranteed by another person;
- the debtor is not a related party;
- receivables were included in the taxable income of
the taxpayer;
■ Provisions for receivables recorded before 1 January
2004 are deductible within the limits stipulated by the
Fiscal Code for provisions established for receivables
recorded after 1 January 2004. In addition, two
conditions have to be met: bankruptcy proceedings
against the debtor have to be opened and the
provisions should not have previously been tax
deductible;
■ The reserves established by banks or other
authorised lending institutions, as well as by mortgage
companies, as provided for by their regulatory legal
framework (including the legal reserve and general
banking risk fund);
■ Technical reserves set up by insurance and
reinsurance companies, in accordance with their
regulatory legal framework;
■ Risk provisions for transactions carried out on the
financial markets, in accordance with the rules issued
by the National Securities Commission. Interest
Expenses and Foreign Exchange Gains and Losses.
Changes in the Destination of Reserves and
Funds
The reduction or cancellation of any provision or reserve
that were deducted from taxable profit, due to changing
the destination of the provision or reserve, distribution
towards shareholders in any form, liquidation, division,
merger or any other reason, is included in the taxable
revenues and taxed accordingly.
Thin Capitalisation Rules
Chapter 8 - Taxation of Corporations
The deductibility of interest and foreign exchange losses
is subject to certain limitations (including thin
capitalisation rules) as set out in the Romanian Fiscal
Code.
The first rule limits the deductibility of interest on loans
contracted with all parties not being financial institutions
(where financial institutions include banks, leasing
companies for leasing operations) to the limit of 7% for
loans in hard currency, and of the National Bank of
Romania's rate for ROL loans. Interest exceeding this limit
is non tax-deductible and cannot be carried forward in
future periods.
The second rule is the general thin capitalisation rule.
Since 1 January 2005, this rule states that if a company's
debt-to-equity ratio is higher than three or if the
company's equity is negative, interest expenses and net
foreign exchange losses from long-term loans (other than
from banks and financial institutions) are non-deductible.
PricewaterhouseCoopers - Business Guide to Romania 2005 39

Chapter 8 - Taxation of Corporations
Expenses assessed as non-deductible under this rule can
be carried forward to the following period and are
deductible under the same conditions, until fully
deducted.
Debt included in the calculation of the debt-to-equity ratio
is represented by all loans with a maturity period of over
one year. The equity includes share capital, reserves,
retained earnings, current year earnings and other equity
elements. Both debt and equity are calculated as the
average of values existing at the beginning and at the end
of the period in which profit tax is calculated.
Transfer Pricing
Romanian transfer pricing legislation requires that
transactions between related parties should be carried out
against market value. Romanian Tax Authorities have
started to take the OECD transfer pricing guidelines into
consideration when applying transfer pricing rules.
If the prices used between related parties are not at arm's
length, the Romanian Tax Authorities can adjust the
related revenues/expenses of the parties in order to
reflect the market value of the respective transactions.
However, the Romanian Tax Authorities will investigate
only the transactions carried out between a Romanian
entity and a foreign related party.
The tax legislation details transfer pricing methods the
taxpayers can apply when setting prices for transactions
between related parties: comparable uncontrolled price
method, cost plus method, resale price method,
transactional net margin method and profit split method.
Currently, there are no formal transfer pricing
documentation requirements stipulated in the legislation.
However, this is expected to change as Romanian Tax
Authorities are continuing to evaluate the impact of
transfer pricing on transactions between related parties.
Losses
Romanian companies are allowed to carry forward the
fiscal losses as declared in the yearly profit tax returns for
a period of five years based on a FIFO method. No
adjustment for inflation is allowed in this respect.
For foreign legal persons this rule applies only to revenues
and expenses attributable to their permanent
establishment in Romania.
40 PricewaterhouseCoopers - Business Guide to Romania 2005
8.5 Tax Computations
General Aspects
Tax returns have to be submitted on a quarterly basis
along with the appropriate tax payment, by the 25th of the
next month. Banks are obliged to pay tax and submit tax
returns on a monthly basis.
Non-resident companies deriving income from a real
estate property located in Romania or sale of shares held
in a Romanian company are required to submit a tax
return. Foreign companies can appoint a fiscal
representative to take care of such obligations. If a
Romanian company or a permanent establishment of a
foreign company in Romania pays the income to the nonresident
company, the payer of the income is obligated to
pay the capital gains tax. Sale-purchase contracts should
mention which party is liable for these obligations.
Consolidation
There is no system of group taxation in Romania.
Members of a group must file separate tax returns. There
are no provisions to offset the losses of group members
against the profits of other group members. The absence
of any provisions for group taxation and the 10% dividend
tax implies that the establishment of a holding company
in Romania is unlikely to be advantageous.
8.6 Other Taxes
Withholding Tax
Non-resident companies and individuals are subject to the
following withholding taxes if there are no overriding
provisions in international treaties:
■ 10% (16% as of 1 January 2006) withholding tax on
interest for term deposits; Also the withholding tax
applies on interest for demand deposits if the interest
rate exceed the reference interest rate quoted on the
inter-bank market for one month deposits
denominated in the relevant currency;
■ 20% from gambling by non-residents;
■ 15% (16% as of 1 January 2006) withholding tax on
other revenues derived from Romania, such as:
- royalties;
- dividends*);
- revenues from services if performed in Romania,
except for revenues from international transport
services;

- revenues obtained from management, brokerage or
consultancy services, irrespective where the services
are performed;
- commissions;
- interest, other than mentioned under point 1 above.
Since 1 January 2005, income from brokerage services
supplied outside Romania is not subject to Romanian
withholding tax.
Revenues derived from interest on demand
deposits/current accounts opened with banks or other
credit institutions in Romania are tax exempt only if the
interest rate is lower than or equal to the reference
interest rate quoted on the inter-bank market for one
month time deposits, denominated in the relevant
currency.
Withholding tax due on payments in foreign currency
must be made at the exchange rate valid on the day the
tax is withheld.
Double Taxation Treaties signed by Romania may reduce
the withholding tax rate on the payments listed above,
based on a fiscal residence certificate made available by
the non-resident beneficiary of the payment. The reduced
rates vary according to the country to which the
payments are made, and according to the Double
Taxation Agreement applicable (see Appendix VII (a) and
VII (b)).
The notarised Romanian version of the tax residence
certificate can be submitted in the year when income is
derived or in the following year. The failure to provide the
tax residence certificate entails taxation as per the Fiscal
Code; settlement of the related tax (as per the conditions
of the relevant DTT) will be performed when the certificate
is provided. In practice, this procedure appears to be very
difficult.
*) The 15% dividend withholding tax applicable for both
non-resident individuals and companies is reduced to the
most favourable rate provided under the DTT and 10% if
the fiscal residency certificate is made available.
The following categories of income derived from Romania
by non-residents are exempt from withholding tax:
■ bonds issued by the Romanian government or
companies;
■ revenues from consultancy, technical assistance and
similar services financed by means of non
reimbursable funds and loans granted to the
Chapter 8 - Taxation of Corporations
Romanian state, or loans guaranteed by the
Romanian state;
■ prizes paid from public funds.
Property Tax
Building Tax
Building tax ranges between 0.5% and 1% of the
accounting value. This percentage is increased to
between 5% and 10% if the building has not been
revaluated in the last three years. It is recommended that
one always observes this provision when drawing up the
annual accounts and, if necessary, revaluates the
property.
Land Tax
Owners of land are subject to land tax which is
established at a fixed amount per square metre,
depending on location. Land located outside urban areas
will be subject to a tax of ROL 10,000/ha (approximately
0.25 EUR), irrespective of its category of usage and area.
Companies are not subject to land tax on land that is
used to host buildings or special constructions used for
agricultural activities. The land tax should be paid
quarterly.
Health Tax
The providers of advertising services for products such as
tobacco and alcohol pay a 12% health tax. The tax is
applied on the value of cashed advertising revenues.
There is also a 2% health tax due from legal entities who
obtain revenues from the production of alcohol (except for
producers of wines), as well as from traders who obtain
revenues from promoting products such as tobacco,
cigarettes and alcohol. This tax does not apply for beer
products.
Advance Tax Ruling
Companies qualifying as major taxpayers may request an
advance tax ruling issued by the Central Fiscal
Committee. The criteria and necessary documentation for
obtaining an advance tax ruling can be found in a
Government Decision.
Other taxpayers can request an advance tax ruling from 1
January 2007 onwards.
PricewaterhouseCoopers - Business Guide to Romania 2005 41

Chapter 9
Taxation of Individuals
■ A 16% flat tax rate applies on most individual
income types
■ Romanians domiciled in Romania are subject to
taxation on their worldwide income (except for
salaries received from abroad for services
performed abroad)
■ Romanians not domiciled in Romania and foreign
individuals, regardless of their domicile, are subject
to Romanian taxation only for income sourced in
Romania (from 2007 foreign individuals may be
taxed on their worldwide income if specific criteria
are met)
■ Foreign individuals are required each month to
calculate, declare and pay individual income taxes
for income from personal services performed in
Romania
■ Salary tax exemption for software engineers if
certain conditions are fulfilled
■ Dividends are subject to a 10% withholding tax
(15% for nonresidents)
■ Domestic interest income is subject to 1% until 31
May 2005, 10% until 31 December 2005, 16% after
1 January 2006
■ Capital gains derived from shares and real estate
transactions are taxed at different rates, depending
on conditions
9.1 Individual Income Taxpayers
Romania's individual income tax legislation defines
taxpayers as:
■ resident natural persons;
■ non-resident natural persons conducting independent
activities through a permanent establishment in
Romania;
42 PricewaterhouseCoopers - Business Guide to Romania 2005
■ non-resident natural persons conducting dependent
activities in Romania;
■ non-resident natural persons deriving specific income.
Criteria for qualifying as a resident are the following:
■ Domiciled in Romania, or
■ Centre of vital interests in Romania, or
■ More than 183 days in 12 consecutive months ending
in the calendar year concerned*.
* Residents (for second and third criteria above) for three
consecutive years are taxable on worldwide income as of
their fourth year of stay.
9.2 Taxable Income and Method of
Taxation
The following income is subject to Romanian income
taxation:
■ Income subject to 16% flat tax rate
a) Salary income
b) Income from independent activities
c) Income from transfer of usage rights
d) Pensions income (over ROL 9,000,000~EUR 250)
e) Income from agricultural activities
f) Income from prizes
(over ROL 6,000,000~EUR 167)
g) Other income subject to 16% flat tax rate
■ Income subject to other tax rates
h) Income from investments
i) Income from real estate transactions
j) Income from gaming.

Income Subject to 16% Flat Tax Rate
a) Salary Income
Salary is income in cash and/or in kind received by an
individual based on an employment agreement.
Income relating to salaries includes indemnities received
by members of the General Meeting of Shareholders and
of the Board of Directors and taxable benefits expressly
stipulated by specific Romanian legislation, which include
private use of company car and telephone.
The following individuals are considered taxpayers:
■ Employees of Romanian companies, branches and
representative offices of foreign companies; the
employer is liable to calculate, withhold and transfer
salary taxes, on a monthly basis;
■ Foreign individuals performing services in Romania
based only on a foreign employment agreement; they
are liable to submit a monthly tax declaration and pay
monthly income tax based on salary sourced in
Romania.
b) Income from Independent Activities
Income from independent activities includes:
1) income from freelance activities (authorisation
needed);
2) income from intellectual property rights;
3) income from commercial mandate and commission
agreement.
b.1) Freelance Activities
Income from freelance activities is assessed on the basis
of entries in the single entry bookkeeping ledgers that
providers of independent activities are obliged to keep.
Net income is computed as gross income less deductible
expenses.
For freelancers (both Romanians and foreigners), the
following are non deductible: fines, late payment penalties
(other than contractual penalties), donations, sponsorship,
and protocol expenses in excess of upper limits set by
law, per diem and other expenses exceeding limits
provided by current law.
Alternatively, certain categories of freelancers are taxed
on the basis of an income quota, as communicated yearly
by the Romanian Ministry of Finance.
Freelancers earning income from independent activities
have the obligation to make equal quarterly provisional
tax payments during the fiscal year.
b.2) Intellectual Property Rights
Chapter 9 - Taxation of Individuals
The payers of royalties must compute, withhold, and pay
a quota of 10% advance tax. The income is adjusted at
the end of the year, when the provider may deduct
expenses in a quota of 40% of the gross amount.
b.3) Commercial Mandates and Commission Agreements
A 10% withholding tax also applies for commercial
mandates or commission agreements. The income is
adjusted at the end of the year.
c) Rental Income
Gross annual income represents the income earned by
the owner during the year as stipulated in the rental
agreement registered with the Romanian tax authorities.
Net income is determined by deducting a 25% expense
quota from the gross income.
Individuals earning income from these types of activities
have the obligation to make quarterly provisional tax
payments during the fiscal year.
d) Income from Pensions
Pensions are taxable only for the amount that exceeds
ROL 9,000,000 (~EUR 250) per month.
e) Income from Agricultural Activities
The following activities are considered agricultural
activities:
■ flowers and vegetables farming and selling, in
greenhouses and/or in an irrigated system;
■ farming and selling of shrubs, decorative plants and
mushrooms;
■ vineyard farming.
f) Income from Prizes
Tax on income from prizes in excess of ROL 6,000,000
(~EUR 167) is withheld at source
g) Other Income Subject to 16% Flat Tax
Rate
The following types of taxable income are included in this
category:
■ insurance premiums incurred by a payer that has no
employment relationship with the beneficiary of the
insurance;
■ gains received from insurance companies as a result
of the insurance contract concluded between the
PricewaterhouseCoopers - Business Guide to Romania 2005 43

Chapter 9 - Taxation of Individuals
parties on "depreciation drawings" (trageri de
amortizare);
■ income granted to pensioners in the form of discounts
for certain goods, services and other entitlements,
under the clauses in the employment agreement or
under special laws;
■ income derived by natural persons in the form of fees
from commercial arbitration fees.
Income Subject To Other Tax Rates
h) Income from Investments
■ dividends
- 10% until 31 December 2005
- 16% after 1 January 2006
■ interest income:
- 1% until 31 May 2005
- 10% for deposits made as of 1 June 2005
- 16% for deposits made as of 1 January 2006
■ gains from transfer of securities:
- 1% in the following situations:
- on the capital gain derived from the transfer of
securities acquired before 31 May 2005,
respective of the date they are sold;
- on the capital gain derived from the transfer of
securities acquired and sold during the period
1 June 2005 - 31 December 2005;
- on the capital gain derived from the transfer of
securities acquired after 1 June 2005 and held
for at least 365 days;
- 16% on the earning obtained from the transfer of
securities acquired after 1 June 2005, sold after 1
January 2006 and held for less than 365 days.
As of 1 January 2006 capital gain from sale of securities
will be taxed at 16%, except for shares held at least 365
days or aquired before 31 May 2005 wich will be taxed
at 1%.
Starting 2006, the income in the form of capital gains
derived from the transfer of shares in listed companies will
be adjusted for capital losses at the end of the year.
■ capital gains derived from foreign exchange based
future contracts, as well as from any other similar
operations:
- 1% until 31 May 2005
- 10% as of 1 June 2005
44 PricewaterhouseCoopers - Business Guide to Romania 2005
- 16% as of 1 January 2006
i) Income from Real Estate Transactions
Taxable income from real estate transactions is
determined by subtracting the base value (price) of the
real estate property from its sales value. A 10% tax rate
applies as of 1 June 2005.
The income derived from the following real estate
transactions is tax exempt:
■ sale of residential real estate properties owned by the
seller for more than three years;
■ contribution in kind of real estate against share
capital;
■ sale of real estate properties obtained through the
state restitution process;
■ sale of real estate properties obtained by inheritance
or donation;
■ exchange of real estate properties.
As of 1 January 2006 income from real estate
transactions will be taxed at 16%.
j) Income from Gaming
Tax on income from gaming is determined by levying 25%
on the gross income, 20% for amounts up to ROL
100,000,000 (~EUR 2800).
The tax calculated and withheld upon disbursement is
final.
9.3 Tax-exempt Income
The main categories of tax-exempt income are:
■ Allowance for maternity leave, maternity risk and for
child care leave (up to 2 years) paid from SSC budget;
■ Salaries obtained by seriously disabled individuals;
■ Meal tickets;
■ Stock option plan advantages, at the moment of their
grant and exercise;
■ Amounts received for covering transport and
accommodation expenses incurred during
delegation/secondment;
■ Salary income related to the design and creation of
software (certain criteria needs to be observed);
■ Sponsorship and donations;
■ Inheritance;

■ Income from sale of movable and immovable assets
(with the exception of shares described as "capital
gains"), if not regularly made.
9.4 Deductions from the Annual
Income Tax
■ For the main job, in order to compute the taxable
income from salary, the following amounts are to be
deducted from the gross income:
- social security contributions;
- personal and family related deductions calculated as
per law;
- contributions to optional occupational pension
schemes, within the ROL equivalent of EUR 200
annually;
- trade union membership fees paid in accordance with
the relevant laws.
■ For each of the secondary jobs, the taxable income is
assessed as the difference between the gross income
and the social security obligations.
Taxpayers may dispose upon the destination up to 2% of
the annual income tax due for charitable purposes
(sponsorship).
9.5 Taxation of Non-residents
Chapter 9 - Taxation of Individuals
Non-resident individuals are also subject to taxation in
Romania on Romanian source income, other than
personal service income. The following withholding taxes
are applicable on payments made abroad, unless a
relevant double tax treaty states otherwise:
■ 10% on interest;
■ 15% on dividends, royalties, commissions,
management services, etc.;
■ 20% on income from gaming.
If the income is paid to a resident of a country with wich
Romania has concluded a Double Tax Treaty, the more
favorable treaty rate may immediately be applied if the
beneficiary provides a residence certificate.
PricewaterhouseCoopers - Business Guide to Romania 2005 45

Chapter 10
Indirect Taxation
Value Added Tax
■ The standard VAT rate is 19% and the reduced VAT
rate is 9%
■ VAT payment exoneration for import of equipment
and certain raw materials (included in a list)
■ No physical payment for VAT reverse charge
■ Simplification measures for certain transactions
■ Only companies registered for VAT purposes in
Romania are entitled to reclaim VAT
■ VAT reimbursement within 45 days
Excise Tax
■ Tax warehouseas suspensive regime
10.1 Value Added Tax (VAT)
Scope of VAT
The operations included in the scope of VAT are those for
which the following conditions are fulfilled:
■ They represent the supply of goods or services in
return for a payment or an operation assimilated
thereto;
■ The deemed place of supply is in Romania;
■ They are performed by taxable persons;
■ They result from economic activities.
The import of goods is also within the scope of VAT.
A taxable person is any person conducting economic
activities anywhere in an independent manner, irrespective
of the purpose or result of those activities.
46 PricewaterhouseCoopers - Business Guide to Romania 2005
Customs and International Trade
■ Romania has adopted the Harmonised System for
the denomination and classification of goods (HS),
which is a six-digit code nomenclature and detailed
at eight-digit codes in line with the Combined
Nomenclature applied by EU countries
■ Romania is an associate member of the EU, EFTA
and CEFTA and has signed free trade agreements
with Albania , Bosnia-Herzegovina, Israel,
Macedonia, Moldova, Serbia and Montenegro and
Turkey
■ A wide range of products can be imported or
exported without an import/export license.
Nonetheless, import licenses are required for
commodities such as oil, certain chemical products,
and weapons
■ Import of goods with preferential origin (i.e. EU) are
not subject to customs duties
Place of Supply
The rules for establishing the place of supply for goods
and services (and therefore the place of VAT taxation) are
similar to those stipulated in the EU 6th VAT Directive.
Taxable Regimes
Standard rate
The standard VAT rate is 19% and is applied to all
supplies of goods and services, including imports, not
qualifying for an exemption (with or without credit) or for
VAT reduced rate.
Reduced rate
The reduced VAT rate is 9% and is applied to medicine
for human and veterinarian use, books, newspapers and
periodicals, accommodation in hotels or in areas with a

similar function, cinema tickets, admission fees at
museums, historical monuments, zoos and botanical
gardens, fairs and exhibitions, supply of school manuals,
supply of prostheses and orthopaedic products.
Exemption with credit
There are also operations that are exempt with credit
(deduction right) for input VAT:
■ export of goods, transport and related services;
■ goods sold through duty-free shops;
■ international transport of passengers;
■ certain operations performed in free trade zones and
free harbours;
■ supply of goods to a bonded warehouse and related
services;
■ services provided in connection with goods placed
under customs suspensive regimes;
■ supply of goods and services under projects financed
through grants, and supplies to diplomatic missions.
Exemption without credit
VAT exemption applies to a range of activities including
banking, financial, insurance, lease of certain real estate
properties. The exemption also applies for medical,
veterinary, and social assistance and educational activities
if provided by the licensed entities.
Import VAT
Import of goods
Supply of foreign goods, which are placed under
suspensive customs regimes, is an operation outside the
scope of VAT.
VAT on imported goods is due at the date of their
customs clearance. In certain circumstances, the
companies can benefit from VAT payment exoneration -
see below.
The taxable amount for VAT purposes for imported goods
is the customs value, to which are added customs duties,
customs commissions, excise duties (if applicable) and
accessory expenses, such as commissions, packing,
transport and insurance costs occurring subsequent to he
entry of goods into Romania until their first destination.
Services
Services provided by offshore entities to Romanian
companies with a deemed place of supply in Romania,
are subject to Romanian VAT. A reverse charge
mechanism applies if non-residents do not opt to appoint
a fiscal representative. The VAT reverse charge should not
be physically paid, but only shown in the VAT return as
both input and output tax, provided that the beneficiary is
registered as a VAT payer.
The beneficiaries registered as VAT payers are also
required to issue self-invoices for VAT purposes for the
services subject to VAT reverse charge.
Fiscal Representation
Offshore entities can appoint a fiscal representative for
VAT purposes in Romania if they provide services to
Romanian entities with a deemed place of service supply
in Romania, except for the services that have the place of
supply at the beneficiary's headquarters (e.g. consultancy,
marketing services).
Once registered, output VAT charged on the goods and
services supplied in Romania are accounted for through a
monthly VAT return submitted by the fiscal representative.
A foreign business can recover input VAT charged by the
local suppliers in the monthly VAT returns.
If the non-resident does not appoint a fiscal
representative in Romania then the Romanian beneficiary
has to apply VAT under the reverse charge mechanism.
Non-residents are required to appoint a fiscal
representative in Romania for any supply of goods in
Romania.
VAT Incentives
The VAT payers can benefit from VAT payment
exoneration in customs for the import of industrial
machinery, technological equipment, installations,
equipment, measurement and control devices,
automations imported for investments, as well as farming
machinery, means of transportation and certain raw
materials (included in a list issued by the Ministry of
Public Finance). VAT exoneration can be applied only
based on a VAT exoneration certificate issued by the local
tax authorities where the VAT payer is registered.
Simplification Measures
Chapter 10 - Indirect Taxation
In the case of sale-purchase transaction with land,
buildings or part of buildings, wasted materials, scrap iron
and non-ferrous metals, and wood, between VAT payers,
VAT is not actually paid. This VAT will only be shown by
both the seller and the buyer in the VAT return and VAT
ledgers as both output and input tax.
PricewaterhouseCoopers - Business Guide to Romania 2005 47

Chapter 10 - Indirect Taxation
Taxable Amount
The VAT payers are allowed to adjust the output VAT if the
counter value of the goods or services supplied cannot be
cashed because of the declared bankruptcy of the client.
The initial output VAT can also be adjusted for price
decreases or increases and for return of goods.
Non-deductible Input VAT
VAT related to goods and services that are not purchased
for the purpose of business is not deductible.
If the VAT payer performs both taxable and exempt
operations, the 'input VAT' can be recovered based on the
following criteria:
■ the input VAT directly attributable to VAT-able
transactions is fully deductible;
■ the input VAT directly attributable to exempt
transactions is fully non-deductible;
■ the input VAT related to both VAT-able and exempt
transactions is subject to pro rate.
VAT Compliance
Taxable persons must keep complete and detailed
records for the computation of VAT liability.
As a general rule, the fiscal period is the calendar month
but for VAT payers with previous year-end turnover did
not exceed EUR 100,000, the fiscal period is the calendar
quarter.
VAT returns should be submitted to the tax authorities by
the 25th of the month following the fiscal period; the VAT
is due by the same date. The VAT return should be
submitted using an electronic carrier (floppy disk).
Taxable persons not registered as VAT payers are required
to pay VAT and to submit a special statement on services
received from non-residents, which have the deemed
place of supply in Romania. These obligations must be
fulfilled by the 25th of the month following the one when
the services were supplied.
If a company is in a VAT reimbursable position, it must
tick the VAT refund box on the VAT return to request the
refund. Alternatively, the balance can be carried forward
against VAT liabilities reported in future returns. The
refund requests must be processed by the tax office
within 45 days from submission. Large tax payers (as
classified by the law) are entitled to obtain a refund on
request, with a subsequent inspection (i.e. a "fast
refund"). Other taxpayers may be entitled to a "fast
48 PricewaterhouseCoopers - Business Guide to Romania 2005
refund" (i.e. without prior inspection) but only after a
complex risk analysis.
If the VAT is not reimbursed within the legal term
(i.e. 45 days) taxable persons would be entitled to ask for
interest, currently standing at 0.06% per delay.
10.2 Customs and International Trade
Customs Duties
The Romanian Customs Import Tariff is based on the
Harmonised System for the denomination and
classification of goods, and is in line with the Combined
Nomenclature adopted by EU member states (eight-digit
code).
Customs duties are expressed as a percentage applied to
the customs value - i.e. they are ad valorem taxes.
With the exception of agricultural and food products,
which have a specific tariff regime, the rates of customs
duties vary from 0% to 30% depending on the type and
characteristics of the goods. Examples of rates are given
in Appendix IX.
Preferential customs duty rates apply for goods
originating in EU, EFTA and CEFTA countries, as well as
with countries with which Romania has signed bilateral
free trade agreements (Albania, Bosnia&Herzegovina,
Israel, Macedonia, Moldova, Serbia&Montenegro and
Turkey). The trend is heading towards the elimination of
customs duties for goods originating in these trade blocs
or countries. However, in order to benefit from
preferential customs duties, importers have to present at
the customs office a valid proof of preferential origin.
Also, preferential customs duty rates apply for certain
goods originating in developing countries that are
members of P16 and GSTP.
Temporary Import Relief
Inward Processing Regime (IPR): If raw materials,
components or accessories are imported into Romania for
processing and subsequent re-export of the finished
products, customs duty relief is available through IPR.
Processing covers the full assembling and manufacturing
process. Under this regime importers can opt either for a
duty suspension system (no payment is due for the import
duties, but generally, the customs debt has to be
guaranteed) or for a duty draw-back system (the import
duties are to be paid at the import date, but the customs
duties are reimbursed when the finished products are reexported).
Also, an exemption from the obligation to

guarantee import duties could be obtained under the first
option (i.e. the IPR with duty suspension system).
Outward Processing Regime (OPR): The OPR customs
regime allows for the export of raw materials to be
processed abroad and subsequent re-import of the end
products with partial or full customs duty relief. This
regime also applies for goods or equipment sent abroad
for repair and/or modernisation.
Bonded Warehouse Regime (BWH): The BWH is a
customs regime allowing for temporary suspension of
payment of import duties on foreign goods stored in
warehouses until the date they are taken out of the
warehouse. Both goods owned by foreign entities, and
goods purchased initially by the Romanian titleholder of
the BWH authorisation, can be placed under the BWH
customs regime.
If the ownership over the foreign goods remains with a
foreign entity when the goods are introduced into the
BWH, and subsequently the goods are sold to Romanian
customers, the customers will become importers
responsible for customs import formalities, and liable for
the related import duties. If the goods are sold by the
foreign owner to customers outside Romania and reexported,
no import duties are due in Romania.
If the Romanian titleholder of the BWH authorisation
becomes the owner of foreign goods introduced into the
BWH, he has to perform the customs import formalities
and pay the related import duties before removing the
goods from the BWH.
No import duties are due however if the goods placed
initially in a bonded warehouse are placed under other
suspensive customs regimes (IPR, OPR, temporary
admission, transit, etc).
Generally, a guarantee is requested by the customs
authority in order to assure the effective payment of
import customs duties. However, this is not compulsory
for certain products, as an exoneration in this respect
could be obtained based on specific documentation.
The BWH regime also allows for storage of Romanian
goods intended for export, until they are effectively taken
out of the country.
Temporary Admission Regime (TA): Goods that are
introduced into Romania in order to be temporarily used
and later returned to the foreign owner are granted total
or partial relief from customs import duties. Total relief
means no payment or guarantees are requested by the
customs authorities in connection with the customs
import duties (i.e. customs duties, VAT and excise duties,
if applicable). Partial relief means the customs authorities
will levy a monthly portion of 3% of the customs duty and
the importer should provide a guarantee covering the
difference.
Customs Duties Incentives
Direct Investment Incentives
As mentioned in Chapter 8, direct investments of at least
USD 1 million are subject to customs duty exemption for
specific new tangible and intangible goods imported as
part of the investment. Examples of approved goods are
listed in Appendix X.
Goods contributed to share capital
Import duties (i.e. customs duties, VAT and excise duties,
if applicable) exemption applies to capital assets and
equipment upon the transfer to Romania of a business
activity that has ceased abroad, provided that certain
conditions are fulfilled. Generally, the assets must have
been effectively used for at least 12 months prior to the
cessation of the activities in the country from which they
have been transferred, and the assets have to be
imported into Romania within 12 months from the
cessation of the activity outside Romania.
Leasing Regulations
Chapter 10 - Indirect Taxation
Details of the corporate and withholding tax implications
of leasing are found in Chapter 8.
Current assets introduced into Romania by Romanian
lessees based on financial or operational leasing
contracts concluded with foreign leasing companies are
assigned, from a customs perspective, Temporary
Admission customs regime with total import duty relief
(including excise tax, if applicable), and, consequently, no
payment or guarantees are requested by the customs
authorities in connection with import duties.
Romanian leasing companies benefit from import duties
exemption on import of current assets based on leasing
contracts concluded with Romanian beneficiaries.
However, under both of these alternatives, the import
duties become payable at the end of the leasing
agreement, computed according to residual value. The
leasing legislation provides, for import duty purposes, for
a minimal residual value of 20% of the entry/acquisition
value of the goods. Specific provisions apply in relation to
the excise duties for leased cars - i.e. the taxable amount
for excise duties is the entry value of the entry/acquisition
value of the cars.
The duration of the leasing contract should be at least
one year and it cannot exceed seven years.
PricewaterhouseCoopers - Business Guide to Romania 2005 49

Chapter 10 - Indirect Taxation
Parts and components imported by Romanian leasing
companies and used for manufacturing products that are
subsequently subject to domestic leasing agreements,
benefit from import duty exemption upon importation.
Verification of the Declared Customs Value
The customs value is determined and declared by
importers in accordance with the provisions of the WTO
Customs Valuation Agreement (i.e. the Agreement
pertaining to the implementation of Article VII of the GATT
Agreement).
The customs authorities have implemented a procedure of
control of the declared customs value of imported
commodities, basically using certain risk criteria (such as
geographical criteria, sensitive products criteria). If the
goods meet one of these risk criteria, the importer is
allowed to remove the goods from the customs office,
provided that the import duties are paid on the declared
customs value and guaranteed up to a level established
by the customs authorities based on statistical values.
The customs authorities may perform the control of the
customs value either during the customs clearance
process (as mentioned above) or during a post-import
audit (the customs authorities are entitled to perform such
an audit during a five-year period from the date of import
- i.e. the prescription term for customs operations).
Import Restrictions
In an attempt to liberalise import-export transactions,
Romania does not generally impose specific measures,
values or quantitative quotas on imports and exports from
or to other countries (except for certain agricultural and
food products). Therefore, a wide range of products can
be imported/exported without a license being required or
other commercial measures being imposed.
However, import/export licenses from relevant authorities
are required especially for commodities that are
considered as potentially dangerous for human health or
for the environment (such as certain chemical products,
certain types of waste and scrap) for commodities the
end-use of which is controlled (such as explosives) or for
products which could conceivably have a dual use (i.e.
both civil and military).
Customs Regime for Individuals
Imports: Exemption from import duties (i.e. customs
duties, VAT and excise duties, if applicable) is granted
under certain conditions for personal belongings brought
50 PricewaterhouseCoopers - Business Guide to Romania 2005
by foreign individuals who change their residence or
domicile in Romania, or who establish a secondary
residence in Romania. The exemption is also granted for
personal goods brought in Romania as a result of
marriage or legacy.
Travellers - either Romanian or foreign individuals - are
allowed to bring into the country the following items
without payment of import duties: limited quantities of
pharmaceuticals, personal jewellery, books, publications,
one litre of alcoholic drinks which exceed 22% by volume
or 2 litres of other alcoholic drinks, 2 litres of wine, 200
cigarettes or 50 cigars, 50 ml of perfumes, 250 ml of eau
de toilette and any other goods for personal use with a
total value of less than EUR 175. For quantities exceeding
those mentioned above (except for alcoholic drinks,
tobacco and perfumery items which must not exceed the
mentioned quantities), import duties become payable and
the applicable rates are those provided by the Romanian
customs import tariff.
Exports: Romanian and foreign individuals are also
allowed to take the items specifically mentioned above
out of the country without payment of customs duties.
10.3 Other Indirect Taxes
Excise Duties
There are two categories of products: products for which
the excise regulations are harmonised with EU legislation
(i.e. alcohol, cigarettes, mineral oils, electricity) and other
excisable products (i.e. coffee, natural furs, jewellery,
perfumes and some electrical domestic appliances such
as microwave ovens, video cameras, and air conditioning
units). Examples are listed in Appendix XI.
The first category of excisable products can be produced,
transformed, held, received or dispatched under a duty
suspension arrangement only in a tax warehouse, which
should have prior approval from the tax authorities. Tax
warehouses for storage purposes can be authorised only
for alcoholic beverages subject to marking and for areas
for oil sea terminals and warehouses for mineral oil
producers, provided that the ownership of the mineral oil
remains with the producers.
The movement of these excisable products under a duty
suspension arrangement has to be made based on the
administrative accompanied document (AAD).
The production, holding and movement of excisable
products under duty-free suspension arrangements is
subject to guarantee, except when the excisable products

are transported between tax warehouses belonging to
the same authorised tax warehouse keeper.
The current excise tax rates for alcohol, cigarettes and
mineral oils are below the minimum mandatory levels
established by the EU legislation but will be gradually
increased to these minimums by the EU Accession date.
Transitional periods have been agreed for certain products
(e.g. cigarettes, unleaded oil, diesel oil).
Clearance Fees
Chapter 10 - Indirect Taxation
A customs commission of 0.5% is applied to the declared
customs value of imported goods. However, the 0.5%
customs commission has been eliminated for imported
goods originating in EU, EFTA, and CEFTA countries, as
well as for goods originating in Albania, Bosnia and
Herzegovina, Israel, Lithuania, Serbia and Montenegro
and Turkey, and it has been reduced to 0.25% for goods
originating in Macedonia.
PricewaterhouseCoopers - Business Guide to Romania 2005 51

Chapter 11
Fiscal Procedure
Provided by David & Baias, correspondent law
firm of PricewaterhouseCoopers in Romania
■ New principles introduced such as: the rule of good
faith, the right of the taxpayer to express its point of
view, the confidentiality of information
■ Tax registration within 30 days from the
incorporation date
■ For 2005 the late payment penalties 0.5%/month
and late payment interest 0.06 %/day
A new Fiscal Procedure Code entered into force on 1
January 2004 that unifies former legislation regulating tax
audits, collection of budget receivables, as well as
legislation on tax returns, tax assessment and tax
jurisdiction. It applies to taxes and duties payable both to
the state budget and local budgets, as well as to custom
duties and payables from contributions, fines and other
amounts treated as revenues to the state budget or other
budgets. The Romanian Government has also issued
norms containing detailed legal provisions for the
implementation of the Fiscal Procedure Code.
The Romanian Parliament has also enacted a new law
governing the procedure for challenging administrative
acts (including those of the tax authorities), which entered
into force at the beginning of 2005.
11.1 General Principles
Several important principles governing the relations
between taxpayers and tax authorities have been
enacted. These principles are the rule of good faith, the
right of the taxpayer to express its point of view, tax
secrecy (confidentiality of information) and the active role
of the tax authorities in advising taxpayers on the correct
application of tax legislation.
52 PricewaterhouseCoopers - Business Guide to Romania 2005
The fiscal legislation is to be construed in a uniform and
non-discriminatory manner. To this end, the Central Fiscal
Commission has been established as the only entity
empowered to issue official interpretations of the tax
legislation.
As a rule, revenues are subject to taxation regardless of
whether they are generated by legal or illegal activities.
Liability of Other Persons
Shareholders, directors, managers and other persons may
be held liable for the duties of the taxpayer under certain
circumstances (e.g. persons provoking the insolvency of
the debtor by transferring the ownership over the debtor's
assets or hiding such assets; persons acquiring in bad
faith the debtor's assets within three years of the debtor's
insolvency). As a general rule, the liability of the
shareholders may not extend beyond the value of their
contribution to the share capital (except for the cases
listed in this code).
Rules Governing Evidence
Specific rules apply insofar as burden of proof is
concerned. Taxpayers should thus produce evidence
sustaining the facts included in tax declarations, whilst tax
authorities should base their tax decisions on a factual
and legal perspective.
Persons bound to provide relevant information to the tax
authorities and persons who may refuse to provide
information are also mentioned in the Fiscal Procedure
Code. Special obligations are imposed on the banks that
are required to communicate on a monthly basis data
regarding the names of individuals opening or closing
accounts.
Fiscal Administrative Acts
Specific rules apply to the preparation and serving of acts
issued by the tax authorities to the taxpayers. The code

also stipulates the elements that should be included in the
fiscal administrative acts.
Fiscal Domicile
The concept of fiscal domicile is defined, as applying to
both individuals and legal persons. This concept is
essential in defining both the tax jurisdiction and tax
registration obligations.
Tax Jurisdiction
The deadline allowed for submitting objections against
fiscal administrative acts is now 30 days. If the fiscal
administrative act fails to meet certain formal
requirements, the deadline is three months. The plaintiff is
allowed to withdraw the complaint without losing the right
to file a new complaint within the legal deadlines. If the
taxpayer is not satisfied with the solution of the tax
authorities, it may file a claim with the court within six
months from the day the solution was announced. The
deadline may be extended on serious grounds up to one
year from the day the solution was issued.
Other Rules
Any request by the taxpayer must be processed and
answered by the tax authorities within 45 days. Should
the authorities fail to answer within this deadline the tax
payer may file court claim for such a failure.
11.2 Specific Tax Procedures
Tax Registration
The categories of persons required to perform tax
registration within 30 days from the date of incorporation.
The form and contents of the tax registration applications
are regulated.
Tax Returns and Tax Assessment
Another fundamental change is that penalties for failing to
submit tax returns in due time (computed previously as a
percentage of the due tax) have been eliminated.
Chapter 11 - Fiscal Procedure
The new form and contents of the tax returns,
specifications in the tax assessment decisions and the
limitation period applicable to the assessment of tax
liabilities have also been established.
The status of limitations for tax authorities assessing
additional tax liabilities is five years as of 1 January of the
year following the one when the taxable events occurred.
Tax Audit
The procedure for conducting tax audits is also regulated.
The control minutes finalising the procedure have been
replaced with tax audit reports, based on which the tax
assessment is made. The tax audit report is
communicated to the tax payer along with the tax
assessment.
Collection of Budgetary Receivables
Detailed rules apply to the payment methods, payment
deadlines, the applicable penalties and interests, the
enforcement of budgetary receivables and complaints
against the enforcement procedure. The off set between
the taxpayer's receivables against the budget and the
budgetary receivables prevails over restitution. The off set
is allowed for liabilities to or from different budgets,
provided that a certain off set order is observed.
For 2005 the late payment penalties are 0.5%/month and
late payment interest is 0.06%/day. The Government can
establish the level of the late payment interest every year
based on the reference interest rate published by the
NBR.
The status of limitations for collecting budgetary liabilities
is five years from the year following the one when the
right to collect the relevant liabilities had arose.
PricewaterhouseCoopers - Business Guide to Romania 2005 53

Chapter 12
PricewaterhouseCoopers
in Romania
Coopers & Lybrand and Price Waterhouse established
their Romanian operations in 1991 and 1993, respectively,
and at the time of their global merger in 1998 had
developed substantial practices. Having continued to
expand its services and knowledge of Romania's
business environment, today PricewaterhouseCoopers
provides the highest level of professional services to
international and Romanian enterprises. Overseen by
eight partners and employing 450 specialists and support
staff, PricewaterhouseCoopers operates in Romania and
Moldova from a network of four offices in Bucharest,
Timisoara, Cluj-Napoca and Chisinau.
The combination of local experience and a one-firm
culture enables PricewaterhouseCoopers to provide
advice that is consistent. In addition, its global standards
are responsive to local conditions and requirements.
Engagements are generally staffed by a combination of
Romanian specialists, with knowledge of local conditions
and regulations, and international consultants, who have
expertise in tackling issues faced by international
enterprises and who are practised in dealing in the
Romanian environment. The key element of
PricewaterhouseCoopers' success in Romania is the
quality of its staff, to whom partners are committed to
providing the most up to date management training
throughout their careers.
Service lines include:
■ Assurance Services: external and internal audit,
financial and accounting reviews and investigations;
regulatory consulting; training courses;
■ Advisory Services includes:
- Performance Improvement: Internal Control & Risk
Management, Compliance with Regulation and
Standards, Optimisation of Business Processes and
Organisational Structure, Sustainability Solutions,
Reporting and Performance Management Systems, IT
Management.
54 PricewaterhouseCoopers - Business Guide to Romania 2005
- Transactions: financial due diligences, feasibility
studies and preparation of business plans, mergers
and acquisitions, project finance and privatisation,
valuation and strategy, post-deal services;
- Crisis Management: business restructuring, judicial
reorganisation and bankruptcy, voluntary liquidations,
dispute analysis and investigation services;
■ Tax Services: all aspects of inbound investment into
Romania, corporate structuring of investments and
trading activities, international tax planning, indirect
taxation (customs and VAT), individual taxation and
human resources advisory;
■ Legal Services are provided by David & Baias, the
correspondent law firm of PricewaterhouseCoopers in
Romania, who advise on all significant areas of law,
including corporate law, mergers and acquisitions,
project finance and privatisation, and litigation
representation;
Assurance Services
The Assurance Services practice comprises
internationally-trained Romanian and foreign auditors. All
Assurance Services staff are familiar with local and
international accounting practices. As part of our longterm
development strategy, PricewaterhouseCoopers
Romania requires its local auditors to obtain an
internationally recognised professional qualification in
accounting (UK ACCA) to enhance their understanding of
International Financial Reporting Standards.
PricewaterhouseCoopers' knowledge and experience
gained over the period of reform in all of the former
Eastern European countries, enables its specialists not
only to advise on audit and non-audit matters, but also to
put them in context and to advise on the likely impact that
the pace and direction of economic and financial change
will have on a commercial activity in Romania.
As a result of its long-term presence,
PricewaterhouseCoopers Romania has developed strong

elationships with key contacts, including government
ministries and leading professional organisations. These
relationships enable the firm to be well placed to assist in
resolving queries on accounting, reporting and related
regulatory issues.
Available services include:
audits in accordance with IFRS or other recognised,
generally accepted auditing standards; compilation of
financial statements in accordance with International
Financial Reporting Standards (IFRS) or other recognised
accounting standards (US or UK GAAP); compliance
audits (Security Commission and National Bank of
Romania); regulatory consulting; internal audit; training in
IFRS, Statutory Accounting Rules and others.
For further information please contact:
Vasile Iuga (vasile.iuga@ro.pwc.com)
Dinu Bumbacea (dinu.bumbacea@ro.pwc.com)
David Fuller (david.fuller@ro.pwc.com)
Alexandru Lupea (alexandru.lupea@ro.pwc.com)
Advisory Services
The Advisory Services practice provides three types of
services:
Performance Improvement: The Performance
Improvement Department within PricewaterhouseCoopers
is dedicated to helping clients improve their financial and
operational performance. Our Group works closely with
other advisory practices in the firm to assist clients in
meeting their most pressing challenges. The Performance
Improvement Department numbers over 7,000 experts in
90 countries and over 30 people in Romania, all of them
having extensive knowledge of the local business
environment.
The assistance we provide is targeted at strengthening
management control, increasing operational effectiveness
and thereby increasing shareholder value. We know from
experience that improving performance requires
companies to focus on four distinct aspects: business
model, financial drivers, management system and value
creation system.
In our experience, projects are judged a success when
the expected business benefits are clearly defined up
front and when the project is managed to demonstrate
achievement of those business benefits. By employing
this principle in our methodologies, the PwC Performance
Chapter 12 - PricewaterhouseCoopers in Romania
Improvement team strives to provide superior value to our
clients.
Transactions: Transaction Services refers to assistance
with and executing all types of financial transactions,
providing advice on mergers and acquisitions,
privatisations, financial and operational due diligence,
value advisory and business valuation including real
estate and asset valuation, feasibility studies and
business plans, market analysis, project finance (including
Public-Private Partnership schemes), finance raising and
post-deal services.
PricewaterhouseCoopers provides a full range of services
to guide clients through complex business transactions,
and supports companies through every aspect of a
transaction, from identifying the appropriate acquisition or
divestiture candidates to assisting with deal structuring
and capital sourcing. A wide range of privatisation
services including lead advisory, target identification,
company profiles, analysis of privatisation options, and
transaction support are available, as well as assistance
and support for companies seeking new capital, or
companies involved in an acquisition, divestiture,
restructuring or shareholder buyout. Services in relation
to transactions, such as identification and evaluation of a
transaction through due diligence, structuring services,
market analysis and post-deal services are provided.
The Transactions Department numbers over 4,700 experts
worldwide and around 10 in Romania.
Crisis Management: Crisis Management services involve
corporate recovery and turnaround, optimised exits,
insolvency/liquidation, as well as dispute analysis and
investigations.
PricewaterhouseCoopers was Romania's first Big Four
consulting firm to develop a dedicated team of
professionals specialised in business recovery and
insolvency. It advises on and implements a complete
range of solutions for business recovery situations,
corporate bankruptcy and implementation of large-scale
turnarounds for underperforming corporations. The
practice has extensive experience in the management of
underperforming loan portfolios, as well as in divestment
of the underperforming assets of a business (optimised
exits) in order to extract or preserve the optimum value for
shareholders.
Dispute analysis and investigations practice involves
corporate investigations, fraud risk management,
background research of entities, computer forensics and
cybercrime investigations, as well as investigations of
insolvency and bankruptcy, together with intellectual
property.
PricewaterhouseCoopers - Business Guide to Romania 2005 55

Chapter 12 - PricewaterhouseCoopers in Romania
The Crisis Management network accounts for over 2,500
experts worldwide and around 10 in Romania.
For further information please contact:
Dinu Bumbacea (dinu.bumbacea@ro.pwc.com)
Emilian Radu (emilian.radu@ro.pwc.com)
Tax Services
PricewaterhouseCoopers Romania's tax advisory practice
comprises international and local tax experts, and
customs, VAT, individual taxation and human resources
specialists. This is the country's largest tax consultancy,
with specialists in all areas of tax, including:
Corporate Taxation. The Team has extensive experience
in advising clients based on Romanian laws and their
interpretation by tax authorities, as well as their
interrelation with international regulations and treaties.
PricewaterhouseCoopers' specialists are highly qualified
to advise on all aspects of inward investments in
Romania, and the structuring of those investments in
terms of profit tax, withholding tax, dividend tax and local
tax regulations. The team provides proactive advice on
international tax planning and structuring; mergers and
restructuring, and undertakes company health checks and
due diligence projects, as well as assistance with tax
authorities (during tax inspections, and lodging of
objections).
Indirect Taxation. With group members that include
specialists from Romania's Finance and Foreign Affairs
ministries, as well as the Customs Department,
PricewaterhouseCoopers' indirect tax specialists have
extensive experience in resolving complex issues related
to indirect taxes, customs procedures and foreign trade.
Services available include VAT consultancy and tax
reviews; VAT planning and efficiency schemes for
domestic and cross-border operations; assistance with
standard and fast VAT refund procedures; assistance
during tax inspections; support and advice during
appeals. Customs consulting includes tax planning for
minimising import duties; implementation of temporary
customs regimes; authorised exporter status and
simplified customs procedures implementation; use of
bonded warehouses and customs-free trade zones;
intellectual property rights; obtaining import/export
licences; assistance during customs clearance and audits;
support during customs litigation or complaints.
56 PricewaterhouseCoopers - Business Guide to Romania 2005
Human Resources Services. PricewaterhouseCoopers
HRS brings together all of the professionals working in the
human resource consulting arena - specialists in
individual tax, payroll, benefits, assessment, education,
equity, reward, staffing, regulatory, legal, and process
management - offering clients an unmatched breadth and
depth of local and global expertise. Available services
include individual advice, ranging from assistance with
obtaining work and residence permits, to advice and
assistance with all matters regarding Romania's personal
income taxation legislation; salary surveys; outplacement,
and human resources audit.
Legal Services
Legal Services are provided to clients by David & Baias,
PricewaterhouseCoopers correspondent, but fully
independent, law firm. Its lawyers are qualified to give
advice in a multitude of areas that include advising
multinational companies and local businesses on how to
structure their investments and activities in Romania, inter
alia foreign investments, banking, securities and financing,
privatisation, mergers and acquisitions, legal audit,
corporate structures, competition, trade practices,
intellectual property, and employment.
For further information please contact:
Rene Bijvoet (rene.bijvoet@ro.pwc.com)
Mihaela Mitroi (mihaela.mitroi@ro.pwc.com)
Edwin Warmerdam (edwin.warmerdam@ro.pwc.com)

Appendices

Appendix I Government Ministries
Minister Ministry Phone Fax
Calin Constantin Anton Popescu - Tariceanu Prime Minister 313 1450 312 2436
Mihai Razvan Ungureanu Foreign Affairs 230 2071 230 7489
Ene Dinga European Integration 301 1502 336 8509
Ionel Popescu Public Finance 410 3400 312 2509
Monica Luisa Macovei Justice 410 7272 312 4023
Teodor Atanasiu National Defence 410 3400 410 6876
Vasile Blaga Administration and Interior Affairs 310 3072 313 0423
Gheorghe Barbu Labour, Social Solidarity and Family Affairs 313 6267 312 5268
Ioan-Codrut Seres Trade and Economic Affairs 231 0262 312 0513
Gheorghe Flutur Agriculture, Forestry, Waters and Environment 307 2424 307 8554
Sulfina Barbu Waters and Environment 410 0215 410 0282
Gheorghe Dobre Transport, Constructions and Tourism 222 3636 312 0772
Mircea Miclea Education, Research and Youth 315 5099 315 5099
Monica Octavia Musca Culture and Religious Affairs 222 3723 223 4951
Mircea Cinteza Health 307 2500 314 1526
Zsolt Nagy Communications and Information Technology 336 1961 336 1961
Calls from outside Romania should be prefixed by the international dialling code, then 40 for Romania and 21 for
Bucharest.
Appendix I
PricewaterhouseCoopers - Business Guide to Romania 2005 59

Appendix II
Appendix II Major Banks Operating in Romania
Bank Phone
■ ABN Amro Bank Romania 202 0400
■ Alpha Bank Romania 209 9999
■ BCR (Romanian Commercial Bank) 312 1678
■ Banca Comerciala Ion Tiriac 302 5600
■ Banca de Export Import a Romaniei EXIMBANK 336 4185
■ Banca Romaneasca 312 1601
■ Banca Romana pentru Dezvoltare - Groupe Societe Generale 301 6100
■ Banca Transilvania 40 264 407 150
■ Banc Post 336 1124
■ Banque Franco Roumaine, Paris - Bucharest branch 223 3040
■ CEC (Romanian Savings Bank) 311 1119
■ Citibank Romania 210 1850
■ EBRD (European Bank for Reconstruction and Development) 330 2900
■ Egnatia Bank 303 2100
■ Emporiki Bank Romania 310 3955
■ Finansbank Romania 301 7100
■ Frankfurt Bukarest Bank AG, Frankfurt am Main - Bucharest branch 250 1003
■ HVB Bank Romania 203 2222
■ ING Bank N.V Amsterdam - Bucharest branch 222 1600
■ National Bank of Greece, Athens - Bucharest branch 330 5661
■ Piraeus Bank 303 6900
■ Raiffeisen Bank 323 0031
■ UniCredit Romania 330 2900
■ Volksbank Romania 303 9300
Calls from outside Romania should be prefixed by the international dialling code, then 40 for Romania and 21 for
Bucharest.
60 PricewaterhouseCoopers - Business Guide to Romania 2005

Appendix III Hotels and Restaurants
Bucharest has seen a significant increase in the number of hotels and restaurants in recent years. Here is a
selection:
Hotels Phone
■ Athenee Palace Bucharest Hilton (*****) 303 3777
■ Crowne Plaza Bucharest (*****) 202 1000
■ Intercontinental (*****) 310 2020
■ JW Marriott Grand (*****) 403 0000
■ Howard Johnson Grand Plaza (*****) 201 5000
■ Bucuresti (****) 312 7070
■ Continental (****) 638 5022
■ Sofitel (****) 224 3000
■ Class (****) 233 2814
■ Gallery (****) 411 4185
■ Lebada (****) 255 0281
■ Lido (****) 314 4930
■ Majestic (****) 310 2720
■ Parliament (****) 411 9990
■ Dalin (***) 335 5541
■ Erbas (***) 232 6856
■ Helvetia (***) 223 0566
■ Ibis (***) 222 2722
■ Minerva (***) 311 1550
■ Opera (***) 312 4857
■ Sky Gate (***) 203 6500
■ Caro (***) 208 6100
■ Best Western Parc (***) 224 2000
■ Ambasador (***) 315 9080
■ Duke (***) 212 5344
■ Still (***) 233 3971
■ Rembrandt (***) 322 9491
Calls from outside Romania should be prefixed by the international dialling code, then 40 for Romania and 21 for
Bucharest.
Appendix III
PricewaterhouseCoopers - Business Guide to Romania 2005 61

Appendix III
Restaurants Phone
■ Al Casolare (Italian) 225 4186
■ Amsterdam Grand Cafe 313 7580
■ Aquarium 211 2820
■ Barka Saffron (Indian/International) 224 1004
■ Basilicum (Italian) 222 6779
■ Bistro Atheneu (International) 313 4900
■ Bistro de l'Institut Francais (French) 212 0853
■ Byblos (International) 313 2091
■ Balthazar (French/Asian) 212 1460
■ Cafe Royal Brasserie (International) 303 3777
■ Casa Caragiale (French/International) 211 1518
■ Casa Doina (Romanian/International) 222 3179
■ Casa Vernescu (Romanian/International) 231 0220
■ Casa M (Italian) 233 2632
■ Casa Di David (Italian) 232 4715
■ Capriciosa (Italian) 230 1192
■ Cucina (Italian) 403 1902
■ Die Deutsche Kneippe (German) 679 2363
■ Darclee (French) 224 3000
■ Gallery (Greek) 211 5899
■ Jaristea (Romanian) 335 3338
■ Kiraly Csarda (Hungarian) 230 4203
■ McMoni's (International) 224 2676
■ Mesogios (Mediterranean) 313 4951
■ Noblesse (French) 230 5406
■ Piccolo Mondo (Middle Eastern cuisine) 222 5755
■ La Provence (French) 243 1777
■ Silviu's (Italian) 410 9184
■ Trattoria Il Calcio (Italian) 0722 134299
■ Trattoria Roma (Italian) 210 8157
■ Tandoor (Indian) 222 1855
■ La Villa (French) 224 1505
■ White Horse (English/International) 231 2795
Calls from outside Romania should be prefixed by the international dialling code 40 for Romania and 21 for
Bucharest.
62 PricewaterhouseCoopers - Business Guide to Romania 2005

Appendix IV Chart of Accounts* - for companies applying
OMF 94 or OMF 306/2002
Class 1 Capital Accounts
101- 107 Capital and Reserves
117 Retained Earnings
121; 129 Profit for the Year; Profit Distribution
131 Subsidies
151 Provisions for Risks and Expenditures
161- 169 Long-term Loans and Associated Accrued Interest
Class 2 Fixed Assets Accounts
201- 208 Intangible Assets
211- 214 Tangible Assets
231- 234 Assets in Construction
261- 269 Financial Investments
280- 281 Accumulated Depreciation for Fixed (Intangible and Tangible) Assets
290- 296 Provisions for Fixed Assets Depreciation
Class 3 Inventories Accounts
301- 308 Raw Materials and Materials Inventory
331- 332 Work in Process
341- 348 Products
351- 358 Inventory Held by Third Parties
361- 368 Animals
371- 378 Goods for Resale
381- 388 Packaging
391- 398 Provisions for Depreciation of Inventories and Work in Progress
Class 4 Third Party Accounts
401- 408 Accounts Payable and Similar Accounts
409- 419 Accounts Receivable and Similar Accounts
421- 428 Personnel and Similar Accounts
431- 438 Social Security Funds and Other Similar Accounts
441- 445 State Budget, Special Funds and Other Similar Accounts
446- 448 Other Debts and Claims on State Budget
451- 458 Intercompany and Associates
461- 462 Sundry Debtors and Creditors
471- 473 Adjustment Accounts
Appendix IV
PricewaterhouseCoopers - Business Guide to Romania 2005 63

Appendix IV
481- 482 Internal Settlements
491- 496 Provisions for Bad and Doubtful Debts
Class 5 Treasury Accounts
501 Short-term Financial Investments
502- 509 Marketable Securities - Shares and Bonds
511- 519 Bank Accounts and Short Term Loans
531- 532 Cash and Equivalents
541- 542 Letters of Credit and Advances
581 Cash in Transit
591- 598 Provisions for Depreciation of Treasury Accounts
Class 6 Expense Accounts
601- 608 Cost of Raw Materials, Materials and Goods
611- 628 Cost of Services Performed by Third Parties
635 Taxes, Duties and Similar Disbursements
641- 645 Personnel Expenses and Associated Costs
654- 658 Other Operating Expenses
663- 668 Financial Expenses
671 Exceptional Expenses
681- 688 a Depreciation and Provision Expenses Including Inflation Adjustment Expenses
691- 698 Income Tax Expenses
Class 7 Revenues Accounts
701- 708 Turnover: Revenues from Sales of Products, Goods and Services Performed and Others
711 Inventory Variation
721- 722 Revenues from Fixed Assets Production
741 Revenues from Operating Subsidies
754- 758 Other Operating Revenues
761- 768 Financial Revenues
771 Exceptional Revenues
781- 788 a Revenues from Provisions and Inflation Adjustment Gains
791 Revenues from Deferred Income Tax
* Several accounts included below are optional.
a - Inflation adjustment expenses and revenues are not included in the simplified chart of accounts under Order
306/2002.
64 PricewaterhouseCoopers - Business Guide to Romania 2005

Appendix V Major Differences between OMF 94 (for filing with
the Ministry of Public Finance) and IFRS
Accounting Component/Principle OMF 94 differences to IFRS
1. Accounting for hyperinflation
1.1 Hyperinflation ■ Not applied. However, Romania is no longer considered to be
hyperinflationary from 1 July 2004.
2. Consolidation
2.1 Basis of consolidation ■ Not applied for 2003 and 2004 financial statements.
Major differences between RAR and IFRS
Accounting Component/Principle OMF 306 differences to IFRS
1. Accounting periods ■ All financial years are based on calendar year. The accounting
Law provides that the Government could approve, based on a
Ministry of Finance proposal, another period for the financial
year.
2. Consolidation ■ Annual financial statements incorporate results of an individual
company.
3. Fixed Assets
3.1 Property, plant and equipment ■ Up until the end of 2004, carrying amount could be subject to
revaluation according to Ministry of Finance norms.
Subsequently, Companies may perform revaluations as
prescribed by IFRS, however these no longer carry a tax
effect.
3.2 Depreciation ■ Useful lives are fixed under law.
4. Investments ■ Usually carried at historical cost with no fair value adjustment.
5. Accounting for deferred taxation ■ Not required.
6. Accounting for hyperinflation ■ Not required.
7. Related party disclosure and ■ Usually not included in practice.
contingency disclosure
8. Financial instruments ■ IAS 39 is not applied; financial assets are shown at cost less
impairment provision.
Appendix V
PricewaterhouseCoopers - Business Guide to Romania 2005 65

Appendix VI
Appendix VI Accountants and Law Firms
Accountancy firms and tax consultants Phone
■ PricewaterhouseCoopers 202 8500
■ Audiconsult 336 9088
■ BDO Conti Audit 335 3364
■ Deloitte & Touche 222 1661
■ Ernst & Young 402 4000
■ KPMG 336 2266
Law firms Phone
■ David & Baias 202 8770
■ Linklaters, Miculiti, Mihai & Asociatii 307 1500
■ Salans 312 4950
■ Musat & Asociatii 223 3717
■ Nestor Nestor Diculescu Kingston Petersen 201 1200
■ Popescu & Asociatii (Stephenson Harwood) 312 2425
■ Gide Loyrette Nouel 223 0310
■ Stoica & Asociatii 336 7010
■ Voicu & Filipescu 314 0200
■ Wood, Dumitrescu & Asociatii (Hall Dickler) 222 8888
Calls from outside Romania should be prefixed by the international dialling code, then 40 for Romania and 21 for
Bucharest.
66 PricewaterhouseCoopers - Business Guide to Romania 2005

Appendix VII (a) Double Taxation Agreements
Double Taxation Agreements to which Romania is a party:
Albania
Algeria
Armenia
Australia
Austria
Azerbaijan
Bangladesh
Belarus
Belgium
Bulgaria
Canada**
China
Costa Rica
Croatia
Cyprus
Czech Republic
Denmark
Ecuador
Egypt
Estonia*
Ethiopia*
Finland
France
Georgia
Germany**
Greece
Hungary
India
* - Not yet in force.
** - In force from 1 January 2005.
*** - Applicable for Serbia & Montenegro.
Indonesia
Iran*
Iraq
Ireland
Israel
Italy
Japan
Jordan
Kazakhstan
Korea (Republic)
Kuwait
Latvia
Lebanon
Lithuania
Luxembourg
Macedonia
Malaysia
Malta
Mexico
Moldova
Mongolia
Morocco
Namibia
Netherlands
Nigeria
North Korea
Norway
Pakistan
Philippines
Poland
Portugal
Qatar
Russian Federation
Slovakia
Slovenia
South Africa
Spain
Sri Lanka
Sudan
Sweden
Switzerland
Singapore
Syria
Thailand
Tunisia
Turkey
Ukraine
United Arab Emirates
United Kingdom
United States
Uzbekistan
Vietnam
Yugoslavia***
Zambia
Chapter X -
Appendix VII (a)
PricewaterhouseCoopers - Business Guide to Romania 2005 67

Appendix VII (b)
Appendix VII (b) Withholding Tax Rates of Some Major DTAs
Country Commissions (%) Dividend (%) Interest (%) Royalty (%)
Non Treaty 15 15 5/15 15
Australia X 5/15 10 10
Austria X 15 0/10 10
Belgium 5 5/15 10 5
Bulgaria X 10/15 15 15
Canada X 5 10 5/10
Cyprus 5 10 10 5
Czech Rep X 10 7 10
Denmark 4 10/15 10 10
Estonia* 2 10 10 10
Finland X 5 5 2.5/5
France X 10 10 10
Germany X 5/15 0/3 3
Greece 5 20/45 10 5/7
Hungary 5 5/15 15 10
Ireland X 3 3 3
Israel X 15 10/15 10
Italy 5 10 10 10
Japan X 10 10 10/15
Korea 10 7/10 0/10 7/10
Luxembourg 5 5/15 0/10 10
Malta 10 5/30 5 5
Moldova X 10 10 10/15
Netherlands X 0/5/15 0 0
Norway 4 10 10 10
Poland 10 5/15 10 10
Portugal X 15 10 10
Russia X 10/15 15 10
Singapore X 5 5 5
Slovakia X 10 10 10/15
South Africa X 15 15 15
Spain 5 10/15 10 10
Sweden 10 10 10 10
Switzerland X 10 10 0
Turkey X 15 10 10
Ukraine X 10/15 10 10/15
UK 12.5 10/15 10 10/15
US X 10 10 10/15
*Estonia DTA will enter into force during 2005; X - Not stipulated.
68 PricewaterhouseCoopers - Business Guide to Romania 2005

Appendix VIII Individual Income Tax Calculation
Monthly calculation of individual income tax and social security contributions due on
local employment contracts:
ROL EUR
Gross Salary (assumed) a 40,800,000 1,000
Benefits in Kind (assumed) 8,160,000 200
Total Gross Salary 48,960,000 1,200
Employee
Due Social Security Contribution b (capped - 9.5%) 4,375,225 107.24
Health Fund Contribution (6.5%) 3,182,400 78
Unemployment Fund Contribution (1%) 408,000 10
Total Social Security Contribution due by Employee 7,965,625 195,24
Deductions 0 0
Taxable Salary 40,994,000 1,004.75
Individual Income Tax 6,559,040 160.76
Retaining of Benefits in Kind 8,160,000 200
Net Salary (cash) 26,275,335 644
Employer
Due Social Security Contributions (capped - 22%) 10,132,100 248.34
Unemployment (3%) 1,468,800 36
Health Fund Contribution (7%) 3,427,200 84
Accident Risk Fund (0.5%) 244,800 6
ITM (0.25%) 122,400 3
Total Social Security due by the Employer 15,395,300 377.34
Total Costs Incurred by the Employer 64,355,300 1,577.34
a - The exchange rate used in this calculation is EUR 1 = ROL 40,800.
b - The Social Security Contribution is capped at five times the average national salary estimated for 2004
(amounting to ROL 9,211,000, or EUR 225).
Appendix VIII
PricewaterhouseCoopers - Business Guide to Romania 2005 69

Appendix IX
Appendix IX Customs Duties
Rates applicable to:
Product or Standard Reduced Preferential rates a applicable for products originating in:
Group of Products Rate [%] Rate
applicable
in 2005
IT equipment ex b ex ex ex ex ex ex ex ex ex ex ex ex
Cars
■ cc 1,000-3,000 cm 30 ex ex ex ex ex ex ex ex ex ex ex ex
■ cc over 3,000 cm 30 ex ex ex ex ex ex ex ex ex ex ex ex
Office equipment
■ Office items made
of plastic materials
20 ex 8 ex ex ex ex ex ex 15 ex 8 ex
■ Envelopes, boxes, etc. 15 ex ex ex ex ex ex ex ex ex ex ex ex
Telecommunications 0 - 8 ex ex ex ex ex ex ex ex ex ex ex ex
Coffee 50 5; 25 5;25 ex ex ex 5;25 ex 5;25 5;25 ex ex 5;25
Beer 280 110 110 110 77;110 110 110 55;110 110 110 ex 110 110
(Only applicable within a quota)
Chocolate products 206 45 45 45 45 45 45 43..2 45 ex ex 15 45
Pharmaceuticals -
containing vitamins
10 5 2 ex ex ex ex ex ex 3.8 ex ex ex
Exploration and
exploitation equipment
■ Plastic flexible piping 20 20;ex ex ex ex ex ex ex ex ex ex ex ex
■ Pumps for liquids 10 10;ex ex ex ex ex ex ex ex ex ex ex ex
■ Components of
drilling equipment
10; 15 ex ex ex ex ex ex ex ex ex ex ex ex
a - Indicates customs duties applicable to the goods that have their origin in the places shown.
b - Exemption.
70 PricewaterhouseCoopers - Business Guide to Romania 2005
Albania
Bosnia
Herzegovina
Bulgaria
CCzzech Rep..
Croatia
EEFTTA
EEUU
Lithhuuanniia
Israell
Maceedoonniia
Poolannd
Mooldoova
Sllovakiaa
SSerbbia
MMonnteneegroo
Turkey

Appendix X Import Duty Exemptions
Description of equipment
1 Water tube boilers
2 Furnaces and ovens
3 Machinery for filling, closing, sealing or labeling bottles, cans, boxes; machinery for capsulling; machinery
aerating beverages
4 Packing or wrapping machinery
5 Lifting, handling, loading or unloading machinery, specially designed for underground use (mining
extraction)
6 Milking machines
7 Bakery machinery; bakery and biscuit ovens
8 Brewery machinery
9 Machinery for the preparation of tea or coffee
10 Machinery for the preparation or manufacturing of drinks
11 Machinery for finishing paper or paperboard
12 Printing machinery
13 Machines for extruding, carding, combing, spinning and twisting textile materials; dry-cleaning machines
14 Machine tools of a kind used in the manufacture of semiconductor wafers or devices
15 Machine-tools for drilling, boring, milling, threading or tapping
16 Machine-tools for working metal by forging, hammering, or die-stamping
17 Machine-tools for working stone, ceramics, concrete, asbestos-cement or like mineral materials;
concrete or mortar mixers
18 Machines for making optical fibres and pre-forms thereof
19 Machinery for working rubber or plastics or for the manufacture products of these materials
20 Machinery for preparing or making up tobacco
21 Rope or cable-making machines
22 Concrete mixer-lorries, concrete-pumping vehicles
23 Instruments and appliances used in medical, surgical, dental sciences; x-ray apparatus; medical or
laboratory sterilisers
24 Gas, liquid or electricity supply or production meters
25 Automatic regulating or controlling instruments and apparatus
26 Machine tools for working wood, cork, hard rubber, hard plastic or similar hard materials
27 Radio, TV emitters and antennas
28 Satellite communications devices and spare parts
29 Radio relays
30 Electrical motors
Appendix X
PricewaterhouseCoopers - Business Guide to Romania 2005 71

Appendix XI
Appendix XI Excise Tax for Domestic and Imported Products
Crt
No Products or Group of Products Excise Rate
1 Beer EUR 0.74 hl/1 degree Plato
3 Sparkling wines EUR 34,05/hl of product
4 Intermediate products EUR 51,08/hl of product
5 Cigarettes EUR 9,10/1,000 cigarettes +30%
minimum value is
EUR 19,92/1000 cigarettes
6 Smoking tobacco EUR 29,51/kg
7 Green coffee EUR 680/ton
8 Roasted coffee EUR 1,000/ton
9 Natural fur clothes (excepting rabbit, sheep, goat) 45%
10 Crystal products 55%
11 Jewellery made of gold and platinum, exclusive of wedding rings 25%
12 Premium, regular and normal fuel EUR 480/ton
13 Unleaded fuel EUR 425,06/ton
14 Diesel fuel EUR 307,59/ton
15 Electricity for commercial purposes EUR 0,14/MWh
16 Electricity for non-commercial purposes EUR 0,30/MWh
17 New cars:
■ gas fuel 1 - 11%
■ diesel 1 - 11%
Second - hand cars
■ gas fuel 2,5 - 32%
■ diesel 2,5 - 32%
18 Perfumery products 10% - 35%
19 Video players or recorders and audio racks 20%
20 Tape recorders or CD players 20%
21 Video cameras 30%
22 Digital photo cameras 30%
23 Microwave ovens 20%
24 Air conditioning equipment 20%
25 Weapons 100%
26 Yachts 50%
27 Motor boats 30%
72 PricewaterhouseCoopers - Business Guide to Romania 2005

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