Romania – Major Tax and Administrative Reforms

Effective 1^st of January 2026, Romania has introduced significant legislative changes impacting three key areas of corporate governance: legal entity inactivity and dissolution; dividend distribution and loan repayment restrictions; and share capital requirements and share transfer rules.

New Provisions for Legal Entity Inactivity and Dissolution

Entities may now be declared inactive for two reasons:

• Failure to maintain an active payment account in Romania or with the State Treasury
• Failure to file financial statements within five months of the statutory deadline

Tax authorities are now required to initiate dissolution proceedings for inactive companies, regardless of whether outstanding tax liabilities exist.

New Provisions for Dividend Distribution and Loan Repayment Restrictions

The revised framework introduces stricter financial governance requirements:

• Dividends must be settled quarterly before companies may issue loans to shareholders or related parties.
• Dividend distribution is prohibited when a company’s net assets fall below 50% of subscribed share capital. Distribution may resume only when the minimum legal threshold is restored.
• Current-year profits must first be applied to offset accumulated losses before any dividend payments.
• When net assets fall below half of subscribed capital:
  • Companies cannot repay shareholder loans.
  • If this situation persists for two consecutive years, shareholder loans must be converted to equity through a capital increase.
  • Certain investment funds and professional investors are exempt.

New Provisions for Share Capital Requirements and Share Transfers

• Limited liability companies (LLCs) with turnover exceeding 400,000 RON must maintain a minimum share capital of 5,000 RON.
• Newly incorporated LLCs must have a minimum capital of 500 RON.
• For the transfer of controlling stakes:
  • Sellers must obtain a tax clearance certificate or provide guarantees covering existing tax liabilities.
  • Guarantees may be enforced if tax debts remain unpaid within 60 days of registration.
  • The Trade Registry will not process transfers without tax clearance or approved guarantees.

Who Must Comply?

Key Compliance Deadlines

Legal entity inactivity and dissolution

• Companies failing to reactivate within one year will be dissolved
• Entities declared inactive before the 1^st of January 2026 were granted 30–90 days to reactivate.
• Entities with temporary inactivity registered at the Trade Registry must reactivate immediately upon expiry of the declared inactivity period.

Dividend distribution & loan repayment restrictions

• Net assets must be restored by the end of the financial year in which the deficiency is identified.

Share capital requirements

• Existing LLCs have two years to reach the new minimum share capital threshold.

Required Actions

Risks of Non-Compliance

Legal entity inactivity & dissolution:

• Risk of court-ordered dissolution.

Dividend and loan repayment restrictions:

• Joint liability for unpaid tax liabilities up to the value of the loan granted or repaid.
• Fines ranging from RON 10,000 to RON 200,000 for:
  • prohibited dividend distributions
  • failure to restore net assets in the year the issue was identified
• Fines ranging from RON 40,000 to RON 300,000 for failure to restore net assets within two years.

Share capital requirements and share transfers:

• Potential court-ordered dissolution for non-compliance.

How Mercator® by Citco (Mercator) Can Help

Mercator can support clients with:

• Opening payment accounts
• Preparing corporate resolutions for dividend distribution
• Filing financial statements
• Assessing financial position and implementing corrective measures
• Supporting share capital increases and documentation for share transfers

For assistance, please contact mercator@citco.com