Tax benefits for establishing a holding company in Romania.

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In practice, there are groups of companies established by entrepreneurs, which were created ad hoc, exploring and exploiting business opportunities. Thus, inevitably, any entrepreneur who owns several entities, ends up wondering and analyzing the benefits of establishing a holding. The main question is, especially, where to establish such a company. Is Romania a favorable jurisdiction in this sense?

The end of 2022 represents a good opportunity improving in 2023 regarding the legal and fiscal organization of owned entities. This year more than others since we have a local and regional economic context that requires the analysis and exploration of any opportunities that could generate savings or a more efficient management of cash flows.

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We continue by listing the main elements to consider when analyzing the opportunity to incorporate a holding type entity in Romania.

To briefly define, a holding entity is a parent company that owns shares or controls other entities in the group and that, apart from owning and managing these interests, does not carry out any other type of commercial operations.

Establishing a holding entities makes sense for entrepreneurs who directly own shares in several entities. This way they can bring all these entities under the control and administration of one holding entity. However, in Romania, the holding entity does not benefit from a special regulation, having the same form as other companies.

From a fiscal point of view, Romanian legislation contains favorable fiscal provisions for the establishment of holding entities.

Favorable tax treatment for dividend income

One of the tax benefits mentioned by Romanian legislation is the favorable tax treatment provided for dividend income. The dividends collected by the holding entity from the operating companies may, under certain conditions, be non-taxable. The basic condition is that the holding owns, for an uninterrupted 1 year, minimum 10% of the share capital. The holding entity can implement a mechanism for redistribution and use of cash resources within the group much more efficiently.

Sale/transfer of shares are non-taxable

A second benefit to holding companies is that income from the sale/transfer of shares is not taxable. Of course, they need to meet certain conditions. Thus, the transfer of shares held in companies is carried out without significant fiscal costs. The income obtained from the liquidation of a company benefits from the same tax treatment. Within the holding, the law allows the implementation of various types of reorganizations, which benefit from favorable fiscal treatments.

Fiscal Consolidation

Another benefit provided by the fiscal legislation is offered from the perspective of fiscal consolidation. The legislation contains favorable provisions, that allow implementation of consolidations and obtaining compensations between payment obligations and possible fiscal losses. Possibly, amounts owed for VAT to be reimbursed.

Implement employee remuneration and loyalty structures

The fiscal legislation offers another element that could be relevant in the decision of implementing a holding in Romania. It refers to the possibility of implementing various employee remuneration and loyalty structures. (example: stock-option plans or share plans). Romanian legislation allows the implementation of such structures in Romania, both being favorably regulated from a fiscal point of view.

Low setup and administration costs

Last but not least, a major benefit for establishing a holding company are the establishment and administration costs. These costs are less expensive in Romania, compared to other jurisdictions.

Therefore, we can conclude that Romania has a beneficial fiscal legislation for establishing and managing holding entities by entrepreneurs.

How can Szilaghi Consulting help you start your online gambling business?

Choosing a gambling licensing jurisdiction is quite difficult, to begin with. Given the sheer number of factors that need to be considered by gambling operators, the choice is overwhelming.

Szilaghi Consulting has been providing services to the online and offline gambling industry for over 18 years. We have helped our clients make the right choices, realize their visions, overcome obstacles and, above all, succeed. We offer transparency and efficiency and we commit to always acting only in your interest.

Our experience in obtaining online and offline gambling licenses differentiates us from the competition. We cover all your needs, from the incorporation of the gambling company, the creation of fiscal and compliance structures, to obtaining the gambling license.

You are invited to schedule a consultation with us. We like to communicate with our customers, troubleshoot their problems, and offer solutions. We invite you to contact us today to discuss this with one of our agents. Let us help you take your business to the next level.

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Szilaghi Consulting
Calea Dorobantilor 89, Bl X3, Sc 1, Ap 2, Cluj Napoca, CJ, 400609, Romania