Tax incentives for business angels

Written by: Bridgewest

Tax_incentives_for_business_angels.jpgIndividuals who invest in micro-enterprises in Romania will benefit from a number of tax exemptions starting with July this year. These investors, also known as business angels, will be able to benefit from tax incentives after acquiring shares in Romanian companies through investments in small and micro enterprises. Our Romanian accountants can give you details about tax incentives, if you want to invest in Romania.

Legal provisions for the tax exemptions

Law no. 120/2015 regarding the stimulation of individual investors - known as business angels - was published in the Official Gazette, Part I, no. 382 of June 2, 2015 and will come into force on July 17, 2015. Individuals who invest in certain types of companies will benefit from several tax breaks. The conditions that need to be fulfilled by the companies are:
- to be limited liability companies, as defined in the Company Law;
- to be independent companies;
- not in insolvency or bankrupt.
The tax benefits for the individual investors (business angels) are:
- exemption from the taxation on dividends for a period of three years,
- exemption from the tax on the gains derived from the transfer of shares, provided that the transfer takes place after at least three years after the shares were acquired.
Investors should know that the total value of the exemptions cannot be larger than the value of the investment made by all of the business angels.

Conditions for individual investors

In order to benefit from the tax breaks, business angels must cumulatively meet several conditions:
- the investor is not related to the company and becomes its associate by cash contributions to the company’s share capital, thus acquiring shares in the company;
- he or she invests an amount between 3.000 EUR and 200.000 EUR, the equivalent in Romanian lei at the National Bank of Romania exchange rate from the day the deposit is made;
- the investment is carried out strictly for the purpose of fulfilling the company’s main activity objective and according to the company’s business plan;
- he or she does not have a criminal record;
- he or she cannot hold more than 49% of the company’s share capital as a result of the said investment.
For more information about the provisions regarding fiscal advantages for business angels in Romania, you can contact our Bucharest accounting firm.