Romania has published Law no. 30 of 10 January 2019, which amendments restriction on interest deduction rules. The amendments increase safe harbor threshold from the RON equivalent of EUR 200,000 to the RON equivalent of EUR 1 million.
It also increase in the percent deduction in excess of the safe harbor from 10% of the calculation basis (EBITDA) to 30% and the addition of provisions in relation to the right to carry forward excess borrowing costs where a taxpayer ceases to exist as a result of a merger or division, which includes that the excess costs are transferred to the newly created taxpayer in proportion to the assets transferred.
The amendment also alters the wording of one of the exemption provisions of the controlled foreign company (CFC) rules. It is provide that the insertion of CFC income will not apply where the CFC has its tax residence or is situated in an EU Member Country/ EEA country and carries on a substantive economic activity supported by staff, equipment, assets, and premises, as evidenced by relevant facts and circumstances. The new changes apply from 1 January 2019.
