Over this winter season, Romania has seen substantial legal changes to various aspects of its wider legal framework – from FDI and competition to consumer protection and taxation – according to Nestor Nestor Diculescu Kingston Petersen Partner Alina Radu.
“The winter months have been particularly active in terms of legal changes,” Radu begins. “The main areas affected are the foreign direct investments framework, competition, taxation, and consumer protection. Each of these areas has seen substantial amendments for the legal environment in Romania,” she outlines.
To begin with, Radu elaborates that the “European regulation on the screening of FDIs in the union has been a significant driver starting from 2022. Recently, Romania amended its legislation to require all foreign investments above EUR 2 million to undergo screening,” she reports. Somewhat surprisingly, she notes that “this includes investments from both EU and non-EU entities. Additionally, there's a new screening tax of EUR 10,000, refundable if the notification wasn't necessary – it’s a considerable change, including in the merger control aspect of competition law.”
Moving on, Radu delves into the changes to the competition law framework. “In competition law, the major modification concerns the attorney-client privilege. Previously applied by default, it now requires clients to justify the privileged character of their correspondence with attorneys,” she explains. “This change is currently a topic of debate and may face constitutional court scrutiny.”
Moreover, Radu reports significant changes to the taxation framework, especially concerning fiscal legislation. “Businesses with a turnover higher than EUR 50 million must now pay the greater between 16% of their profit or 1% of their turnover in tax. Another crucial development is the implementation of electronic invoicing, requiring all invoices to be issued and stored in a centralized system monitored by tax authorities,” she says. “This move, while technologically advanced, poses challenges for businesses in terms of compliance and potential blockages in the system,” she opines.
When it comes to consumer protection legislation, Radu reports that the “implementation of the Directive 2020/1828 for the protection of collective consumer interests is particularly noteworthy.” It enables certain qualified entities to file legal actions on behalf of consumers against abusive practices in various industries. “This year, we expect to see the formation of these entities, which will significantly impact how consumer rights are defended,” she says.
Finally, she touches upon renewable energy as one of the hottest sectors in Romania right now. “Renewable energy is becoming increasingly important in Romania. We're seeing a lot of investor interest in this sector, as well as banks’ interest in financing renewable energy projects,” she reports. “It’s an area ripe for development and will likely see substantial activity this year,” Radu concludes with optimism.