The construction tax, approved by GEO 156/2024, will have a significant impact on the energy industry and other related sectors. The tax applies to legal entities that own or manage buildings for which no building tax is payable.

The tax will be calculated at a rate of 1% of the value of buildings owned by taxpayers on 31 December of the previous year, excluding buildings for which the tax has already been paid. According to consultant Gabriel Biriș, quoted by termene.ro, the entire energy industry-specific infrastructure, including power plants, industrial platforms and distribution networks, will be subject to this tax. Credit Swiss analysts have calculated that more than 600 million lei will be raised from the large listed companies alone, of which 290 million lei will come from OMV Petrom and 206 million lei from Hidroelectrica.

Estimates of the total revenue generated by the tax will only be possible after the publication of the implementing rules, which are due to be finalised in the next three months.

The energy industry, through the Federation of Energy Employers (FPE), warns that the new regulations need to be analysed and discussed with relevant industry stakeholders and employers to prevent a negative impact on the economy. In concrete terms, the FPE emphasises that the new tax regulation runs counter to national strategic objectives, in particular those related to energy transition and sustainable development. Areas such as renewable energy, natural gas production and critical infrastructure could be deeply affected. It also contradicts the Offshore Act’s provisions on legislative stability, undermining investor confidence.

Inadequate tax base

Taxing assets on a gross basis, without taking into account their wear and tear, is considered by the EPF to be the wrong economic approach. The Federation underlines that the tax base should be the remaining unamortised tax value, which better reflects the economic reality. The assets included in this category have normal useful lives of between 10 and 60 years, which means that the tax, applied annually, could reach 15-90% of the value of the asset, which is excessive and counterproductive.

Taxation of inactive assets

The inclusion in the tax base of dismantled, preserved or scrapped assets is considered by the FPE as an economically unjustified measure, which doubles the tax burden for companies in the process of modernising their infrastructure.

FPE calls for an urgent re-evaluation of the new regulations and the involvement of industry stakeholders in the decision-making process in order to prevent destabilisation of the economy and damage to Romania’s strategic objectives. In the past, certain types of constructions have been exempted from paying this tax. It remains to be seen whether such exemptions will be introduced again. According to the ordinance, the tax is to be paid in two equal instalments by 30 June and 31 October.

Tanczos Barna, the finance minister, has “expressly requested that the deadline for drafting the rules be 90 days”, during which time all industries affected by this new tax will be consulted, “starting from roads, starting from platforms, electricity infrastructure, communications infrastructure. It is a very complex area,” the minister added.