Fiscal facilities for construction companies
Fiscal facilities in the field of constructions remain a subject that concerns the legislative bodies in Romania. The incentives granted in the field of construction for the period January 1, 2019 – December 31, 2028.
The construction sector is a cornerstone of Romania’s economic development, driving growth and providing employment. To support and stimulate this vital industry, the Romanian government has introduced several fiscal facilities and incentives tailored specifically for construction and related activities. Here’s a detailed overview of the recent updates to these fiscal policies and how they can benefit companies operating in Romania’s construction sector.
How to benefit from the fiscal facilities for construction companies in Romania?
Benefit from the facilities provided for in art. 60, paragraph 5) of the Fiscal Code natural persons, for incomes made from salaries and assimilated to salaries provided for in art. 76 para. (1) – (3), in the period January 1, 2019 – December 31, 2028 inclusive, for which the following conditions are cumulatively met:
• employers carry out activities in the construction sector that include:
(i) 711 – Architecture, engineering and technical consulting services;
(ii) construction activity defined in CAEN code 41.42.43 – section F – Construction;
(iii) the fields of production of construction materials, defined by the following CAEN codes:
2312 – Processing and shaping of flat glass;
2331 – Manufacture of ceramic tiles and slabs;
2332 – Manufacture of bricks, tiles and other construction products from fired clay;
2361 – Manufacture of concrete products for construction;
2362 – Manufacture of plaster products for construction;
2363 – Manufacture of concrete;
2364 – Manufacture of mortar;
2369 – Manufacture of other articles from concrete, cement and plaster;
2370 – Cutting, shaping and finishing of stone;
2223 – Manufacture of plastic articles for construction;
1623 – Manufacture of other carpentry and carpentry elements for construction;
2512 – Manufacture of metal doors and windows;
2511 – Manufacture of metal constructions and component parts of metal structures;
0811 – Extraction of ornamental stone and stone for construction, extraction of calcareous stone, gypsum, chalk and slate;
0812 – Extraction of gravel and sand;
2351 – Manufacture of cement;
2352 – Manufacture of lime and plaster;
2399 – Manufacture of other products from non-metallic minerals n.e.c.;
• employers realize the turnover from the activities mentioned above and other activities specific to the construction field within the limit of at least 80% of the total turnover.
The facilities granted are the following:
– the minimum guaranteed salary is 4582 lei
– CAS 20.25 % and CAS 10% for a gross monthly income of up to 10,000 lei
– Amounts exceeding the ceiling of 10,000 lei will be taxed normally (CAS 25%, CASS 10%, income tax 10%).
The field of constructions and related activities (design, technical consultancy, etc.) is a field in which it is worth investing.
Boosting the Construction Sector: New Fiscal Facilities in Romania for 2024
Reduced Corporate Tax Rates
One of the key updates involves reductions in corporate tax rates for companies involved in specific construction activities.
- Specialized Tax Rates: Companies working on large infrastructure projects, such as highways, bridges, and public utilities, may benefit from reduced corporate tax rates. This reduction aims to enhance profitability and encourage further investment in major public works.
VAT Exemptions and Reductions
Value Added Tax (VAT) is a significant consideration for construction companies, and recent updates provide substantial relief.
- VAT Exemptions for Social Housing: Projects focused on social and affordable housing can benefit from VAT exemptions, significantly lowering the overall cost and making these projects more viable.
- Reduced VAT for Green Buildings: There are now reduced VAT rates for construction projects that meet specific green building standards, encouraging environmentally friendly construction practices.
Accelerated Depreciation of Equipment
To facilitate quicker capital recovery, Romania has introduced policies for accelerated depreciation.
- Faster Write-Offs: Construction companies can now depreciate machinery and equipment at an accelerated rate. This allows them to reduce taxable income more rapidly and reinvest savings into further business development.
Subsidies and Grants
Direct financial support is available in the form of subsidies and grants to promote growth and innovation within the construction sector.
- Innovation and Technology Grants: Companies investing in new construction technologies, such as Building Information Modeling (BIM) or advanced prefabrication techniques, can access subsidies designed to foster technological advancement.
- Energy Efficiency Subsidies: There are specific grants available for projects that incorporate energy-efficient designs and materials, supporting the drive towards more sustainable construction practices.
Employment and Training Incentives
To address labor shortages and skill gaps, the government has introduced various employment and training incentives.
- Tax Credits for Apprenticeships: Companies that engage in apprenticeship programs can benefit from tax credits. These programs are essential for developing a skilled workforce tailored to the needs of the construction industry.
- Training Subsidies: There are also subsidies available for companies that invest in the training and upskilling of their workforce, particularly in areas such as safety, new technologies, and sustainable building practices.
Public Infrastructure Tax Credits
Investment in public infrastructure is heavily incentivized through specific tax credits.
- Public-Private Partnerships (PPP): Companies involved in PPP projects for the development of public infrastructure such as schools, hospitals, and transportation networks can receive substantial tax credits. These incentives are designed to foster collaboration between the public and private sectors in delivering essential infrastructure.
- Urban Development Incentives: Tax incentives are also available for companies participating in urban renewal projects aimed at revitalizing older parts of cities, thus contributing to urban regeneration and modernization efforts.
Environmental and Sustainability Incentives
With a growing focus on sustainability, Romania offers several incentives to promote eco-friendly construction practices.
- Renewable Energy Projects: Construction companies involved in renewable energy projects, such as solar and wind farms, can benefit from tax breaks and other fiscal incentives aimed at promoting sustainable energy sources.
- Green Building Certifications: Projects that achieve recognized green building certifications can receive additional tax incentives, encouraging the adoption of sustainable construction methods.
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