Energy is the major topic in Romania, with updated regulations on energy trading and offshore gas production already being in place, and the business sector hoping for a legal framework on hydrogen projects, according to Ijdelea & Associates Managing Partner Oana Ijdelea.
"The most relevant changes that either already happened, or are expected to happen soon in Romania, both from a political and legal standpoint, are related to the energy sector," Ijdelea notes. "We are past the halfway mark for 2022, and yet, we are still uncertain about the energy crisis. Neither our government nor the EU has a clear long-term strategy for associated risks." However, she adds, "whatever will happen in the energy sector in the upcoming period will be the main driver of the economic growth or recession in the next five to ten years and this will ultimately impact everybody, irrespective of their income, their activity or whether they are individuals or legal entities."
"In that respect," Ijdelea says, "very early this year, Romania started passing several legal updates, including capping gas prices and demanding from suppliers to increase their storage capacities to the maximum level. However, the legislation did not fully take into account all players in the chain – the government is supposed to compensate suppliers for the difference between capped and market prices, however, there are no provisions for traders." According to her, now "the Minister of Energy has a deadline of September 1 to propose the legislation that would implement supplemental taxation on energy and gas traders. It appears that liberalization of the market is no longer welcomed or accommodating for the government, and we will likely see more regulations in this area."
Another important enactment in energy, according to Ijdelea, is an amendment of the fiscal part of the offshore law. "Initially, it was only applicable to offshore gas producers but now has been extended to deep-field onshore gas producers," she notes. "Additionally, the deductibility of upstream investments was increased from 30 to 40%. The other stability provisions are also included in the law and will be applicable from January 2023, giving some space for further legal amendments."
Other than that, Ijdelea says, "the government officials say that we are well prepared for winter, but the main actors on the market are not that confident. The industry sees very targeted rules, rather than approaching the chain in a more holistic way," she highlights. "In addition, the introduced price caps for gas fields can be also regarded as an export ban and might contradict EU regulations."
"It is also noteworthy that the European Commission approved under EU state-aid rules a support scheme for developing hydrogen projects under the NRRP in early August," Ijdelea adds. "For now, despite funding being available, Romania lacks a specific strategy and coherent legal framework enabling hydrogen projects, including its production, transportation, transmission, and storage."
Not related to energy, according to Ijdelea, other noteworthy updates are related to the fiscal code, passed in July 2022. "The amendments extend the exemption from paying a profit tax for those profits that are reinvested in production activities," she notes, adding that "the tax exemption on income for micro-enterprises has also been extended to entities in the banking sector, gambling, oil, and gas, as long as they meet the relevant criteria. From January 2023, the tax on dividends will also increase from 5% to 8%." Finally, Ijdelea notes that "the tax on real estate will no longer be based on the type of owner but rather on the type of property. And taxes will be determined based on the evaluation reports of public notaries, instead of the ones of local authorities."