Romanian car companies have at their disposal, after the adoption of the European Green Deal, a series of fiscal facilities and financing sources that can play an important role in cushioning the impact of the necessary investments, say Gabriel Pătru, Manager and Paul Evi, Senior Consultant, Direct Taxation , Deloitte Romania.

According to Deloitte, the tax facility for research and development is one of the most important support measures for innovative companies, which involves providing additional 50% deductions for expenses for such activities, the possibility of applying accelerated tax depreciation for used machinery and equipment in research and development, as well as the income tax exemption in the first ten years of activity for taxpayers who carry out exclusively research and development activities. The tax exemption for reinvested profit applies to the part of the profit used for the purchase of technological equipment, software and licenses, in compliance with certain conditions provided by Law 227/2015 on the Fiscal Code, as subsequently amended and supplemented.

Taxpayers in the automotive industry may also be interested in the various tax depreciation methods available for new production lines, in this case accelerated or degressive tax depreciation, both of which play a significant role in mitigating the impact of investments over a longer period of time, thus, reducing the pressure on cash flows at the time of investment.

Last but not least, it is important to note that with the adoption of the European Green Deal, the European Union is launching an arsenal of financial instruments designed to help achieve these ambitious goals. The EU’s multiannual budget for 2021-2027, together with the EU’s Next Generation Instrument, which funds Member States’ recovery and resilience plans, amounts to just over € 2 trillion, of which 30% is for sustainable investment as part of European Green Deal.

Therefore, companies in the Romanian automotive industry will have access to multiple financing options for activities such as: developing their own research and development capabilities or initiating partnerships and collaborations with research actors, through regional operational programs and the Intelligent Growth Operational Program, Digitalization and Financial Instruments; energy efficiency and the production or use of renewable energy, through the Sustainable Development Operational Program, the National Recovery and Resilience Plan or the Modernization Fund.

Also, in addition to the financing options offered by the EU, the companies in the automotive sector still have at their disposal sources of financing with a tradition in the field, respectively the state aid schemes developed by the Ministry of Finance.

One of these is the state aid scheme established on the basis of Government Decision 807/2014, in order to support investments with major impact on the economy and which finance the construction and acquisition of equipment, technological lines and intangible assets associated with the establishment of a new production unit or expansion of the the capacity of an existing one. There is also the state aid scheme established on the basis of Government Decision 332/2014, which promotes regional development by creating jobs and which finances salary costs for a period of 24 months from the creation of each individual position, for those investments which generates at least 100 new jobs per location.

In addition, the Ministry of Finance is preparing a third state aid scheme to be considered, in order to stimulate strategic investments, worth more than 500 million lei, in several key areas, including the automotive, aerospace and pharmaceutical industries.

At the same time, it is important to note that, starting with January 1, 2022, a new map of regional aid came into force, which establishes their intensity applicable in each county. Thus, the state aid that the applicants can benefit from varies between 30% of the investment value, in the flag counties of the Western region, and maximum 60%, in most of the counties from Muntenia and Moldova. Bucharest is excluded from funding, given that state aid is directed to the less developed regions of the country (with a GDP/capita below 75% of the EU average).