The European Commission has formally asked Romania to stop the discriminatory tax treatment of foreign legal entities.
According to Romanian present tax law, resident legal companies can deduct business expenses related to generating interest income. This results in only their net income being taxed. But legal entities that do not have a permanent establishment in Romania, which is established in another European Union or European Economic Area state, cannot benefit from such a deduction.
“It sees no valid justification for this different tax treatment, and considers it to be discriminatory and a restriction on the free movement of services” said the EU commission.
