State Aid, Grants and Tax Incentives in Romania: Legal Guide for Foreign Investors

This guide is addressed to foreign investors evaluating Romania for new projects or expansions. It does not aim to turn you into a state aid lawyer, but to give you a clear mental map of the main types of incentives available, the legal framework you are operating in, and the practical risks and opportunities you should be aware of. The focus is on national state aid schemes and tax incentives that can be combined with EU funding, rather than on purely EU-managed programmes.

We will look at three key aspects:

• an overview of state aid schemes and investment grants available in Romania;
• eligibility conditions and the application process for the main schemes;
• monitoring obligations, claw-back risks and litigation with the authorities.

The references in this guide are primarily to the Romanian Ministry of Finance and investment promotion agency resources, as well as to EU state aid legislation and guidance, in particular the General Block Exemption Regulation (Regulation (EU) No 651/2014) and the Regional Aid Guidelines.

Overview of State Aid Schemes and Investment Grants

1. The EU state aid framework behind Romanian incentives

Any investment incentive granted by Romania that uses public resources and confers an economic advantage on a selective basis risks being classified as state aid under Article 107(1) TFEU. As a rule, state aid is prohibited unless it is compatible with the internal market and granted under conditions approved by the European Commission. The Commission has adopted a series of regulations and guidelines that define when aid can be considered compatible, especially for regional development and strategic investments. The most important instrument for investment projects is the General Block Exemption Regulation (GBER) No 651/2014, which declares certain categories of aid compatible with the internal market and exempts them from the prior notification obligation.

For regional investment aid, the GBER works together with national regional aid maps. These maps, approved by the Commission for each Member State, define which regions are eligible for regional aid and what the maximum aid intensities are. For the period 2022–2027, the regional aid map for Romania was approved by Commission Decision C(2021) 9750, confirming that around 89% of the Romanian population lives in areas eligible for regional investment aid, with maximum aid intensities for large enterprises between 30% and 60% depending on the region, and higher ceilings for small and medium-sized enterprises.

Romanian state aid schemes are designed and implemented to comply with this EU framework. This means that when you use a Romanian grant scheme, you are effectively using an instrument that is pre-cleared or exempted at EU level, provided you fit within its parameters.

2. National investment aid schemes managed by the Ministry of Finance

The backbone of Romania’s cash grant system for private investments consists of two large state aid schemes managed by the Ministry of Finance (formerly the Ministry of Public Finance). Both are designed as regional aid schemes under GBER 651/2014 and the Romanian regional aid map:

• Government Decision (GD) no. 807/2014 establishing a state aid scheme aimed at stimulating investments with major impact on the economy, focused mainly on large investment projects in high value-added activities.
• Government Decision (GD) no. 332/2014 establishing a state aid scheme to support investments that promote regional development through the creation of jobs, essentially a job-creation compensation scheme.

Under GD 807/2014, the objective is regional development through initial investments in high-tech fixed assets that generate products or services with high added value. According to the Applicant’s Guide for GD 807/2014, the total value of an investment project must be at least 4.5 million RON (roughly 1 million EUR), and the scheme is open to both new and existing enterprises of all sizes, subject to sectoral exclusions. The scheme’s overall budget runs into billions of RON and allows the issuance of financing agreements up to 31 December 2023, while payments of approved aid can continue until 2028.

Under GD 332/2014, the focus is on projects that generate new jobs at regional level. The official consolidated text and accompanying guides emphasise that the scheme supports initial investments which lead to the creation of new jobs, with a minimum threshold per project location and an obligation to maintain those jobs over a monitoring period (typically five years for large enterprises and three years for SMEs). In practice, the scheme has targeted larger job-creation projects, with documentation and scoring criteria reflecting both the number of jobs and the quality of the investment.

Both schemes are included in the budget programme “State aid for the financing of investment projects” and are implemented through competitive application sessions, where the Ministry of Finance evaluates proposals and issues financing agreements to successful applicants up to the available annual budget.

3. Other grants and financial support instruments

In addition to the two flagship schemes, investors may access other forms of public support, sometimes in combination with state aid schemes, sometimes as separate instruments:

• EU structural and investment funds implemented through the national and regional operational programmes (e.g. for research and development, innovation, energy efficiency, renewable energy, digitalisation). These programmes are typically managed by specialised managing authorities and intermediate bodies, not by the Ministry of Finance.
• National Recovery and Resilience Plan (NRRP) instruments, financed under the EU’s Recovery and Resilience Facility, covering digitalisation, green transition, transport infrastructure and health. Some of these components involve calls for projects where private investors can apply, often with state aid constraints in the background.
• Sector-specific schemes such as those for renewable energy (e.g. contracts for difference, investment grants for storage or grid reinforcement), research and development projects, or innovation clusters. These are usually administered by line ministries or specialised agencies.
• Financing from international financial institutions such as the European Investment Bank (EIB) or the European Bank for Reconstruction and Development (EBRD), sometimes combined with EU-funded guarantee or risk-sharing facilities.

From the vantage point of a foreign investor, it is important to understand that these instruments may integrate state aid elements. Even when your immediate counterparty is a development bank or a programme authority, the same EU rules on aid intensity, eligible costs and cumulation will apply, and you will be asked to provide information similar to that required under national schemes.

4. Tax incentives complementing state aid

Besides cash grants, Romania offers a set of tax incentives that can significantly improve the after-tax return of an investment. While these are not formally “state aid” in the same way as the grant schemes, they must nevertheless comply with EU rules on selective advantages. Key incentives include:

• Additional deduction for research and development costs: companies can deduct an extra 50% of eligible R&D expenses from their taxable profit, effectively reducing the corporate income tax base.
• Corporate tax exemption for reinvested profit: profits reinvested in certain categories of technological equipment and assets may benefit from full exemption from corporate income tax, subject to conditions.
• Exemptions or reductions for specific sectors or regions, such as IT salary income exemptions for software developers (at the employee level) and local tax incentives granted by municipalities for significant investments in their territory, within the limits of the regional aid map.

While this guide focuses on grant schemes, a realistic investment assessment for Romania should treat state aid, tax incentives and EU programmes as pieces of the same puzzle. The optimal structure will often involve a combination of these tools, carefully calibrated to avoid breaches of cumulation rules and to preserve flexibility for future changes.

Eligibility Conditions and Application Procedure

Eligibility for Romanian state aid schemes is not just a matter of checking a few boxes; it requires a coherent story about the investor, the project and the region. The Ministry of Finance’s Applicant’s Guides for GD 807/2014 and GD 332/2014 are the primary references, but they are written in technical language and heavily cross-refer to EU law. The following sections translate those conditions into practical terms for foreign investors.

1. Who can benefit from Romanian investment aid?

The schemes under GD 807/2014 and GD 332/2014 are open to both Romanian and foreign-owned companies, as long as the beneficiary is a Romanian legal entity (company) established under the Companies Law. In practice, foreign investors usually set up a Romanian project company (SPV) or use an existing subsidiary. The key eligibility requirements typically include:

• Legal form: the applicant must be a company with legal personality (e.g. limited liability company or joint stock company), not an individual entrepreneur or simple partnership.
• Financial standing: the company must not be in difficulty within the meaning of EU state aid rules and must not be subject to insolvency or restructuring proceedings.
• Tax and social security compliance: no outstanding debts to the state budget or social security systems, or such debts must be rescheduled according to law.
• Clean record with regard to state aid: the applicant must not be subject to an outstanding recovery order following a Commission decision declaring earlier aid illegal and incompatible.
• Sectoral eligibility: the company’s activities must not fall within the excluded sectors (typically primary agriculture, fisheries, coal, steel and certain financial activities), as detailed in the scheme’s annexes.

For foreign investors, it is important to appreciate that the assessment is carried out at the level of the Romanian beneficiary, but the authorities will look through to group links when checking state aid cumulation and potential links to previous aid recovery cases.

2. Project-level eligibility: initial investment and new jobs

At the project level, both GD 807/2014 and GD 332/2014 are built around the EU concept of initial investment, as defined in the GBER. This typically means an investment in tangible and intangible assets related to:

• the setting up of a new establishment in Romania;
• the extension of the capacity of an existing establishment;
• the diversification of the output of an establishment into products not previously produced; or
• a fundamental change in the overall production process of an existing establishment.

Under GD 807/2014, the project must meet a minimum investment value. The latest Applicant’s Guide states that the total value of the investment project (eligible plus ineligible costs, excluding VAT) must be at least 4.5 million RON, determined by reference to an approximate 1 million EUR threshold. The scheme targets high-value manufacturing and services, with a list of excluded sectors and activities.

Under GD 332/2014, the emphasis is on job creation. The scheme requires that the investment leads to a net increase in the number of employees at the project location, above a baseline calculated as the average headcount in the 12 months preceding the application. The minimum number of jobs and related wage costs that must be supported over the monitoring period is specified in the current version of the scheme and associated guidelines. Earlier versions of the scheme referred to thresholds such as at least 10 or at least 100 new jobs, with a subset of disadvantaged workers; you should always consult the most recent Applicant’s Guide and legal text to confirm the current threshold applicable to your project.

In both schemes, the project must demonstrate economic viability, meaning that forecasts of turnover, profitability and cash flow support the idea that the investment can be sustained beyond the aid period and contribute to regional development.

3. Eligible costs and aid intensities

State aid is never granted as a percentage of total project costs in a generic sense; it is calculated by applying a regional aid intensity to a clearly defined set of eligible costs. For investment aid schemes like GD 807/2014, eligible costs typically include:

• the purchase or construction of buildings used for the project;
• the purchase of new plant and machinery, equipment and technological installations directly related to the project;
• intangible assets such as patents, licences, know-how and unpatented technical knowledge, to a certain proportion of total eligible costs.

For job-creation schemes like GD 332/2014, the eligible costs are usually the wage costs of the newly created jobs over a defined period (for example, two years from the date each job is created). Wage costs include gross wages plus mandatory social security contributions.

The aid intensity is the maximum percentage of eligible costs that can be covered by the grant. It depends on:

• the region where the investment is located (according to the Romanian regional aid map);
• the size of the enterprise (large, medium, small);
• in some cases, the type of project or sector.

For the 2022–2027 period, the regional aid map for Romania provides aid intensities for large enterprises ranging roughly between 30% and 60% in the least developed regions, with higher intensities for SMEs. Bucharest and parts of Ilfov County have reduced intensities or may be excluded, reflecting their higher level of development. These intensities apply both to national schemes like GD 807/2014 and to many EU co-financed programmes, so they define the outer limit of how generous an incentive package can be in a given location.

4. The application process step by step

Although each scheme has its specific calendar and documentation, the general path from idea to financing agreement is similar. For illustration, the process under GD 807/2014 and GD 332/2014 can be summarised as follows:

1. Pre-feasibility and eligibility screening: before drafting any application, the investor should perform an internal screening to check location, sector, project value, potential number of jobs and alignment with scheme requirements. At this stage, many investors consult informally with the Ministry of Finance or with InvestRomania, the government’s foreign investment promotion agency, to validate key parameters.
2. Preparation of business plan and financial projections: the Applicant’s Guides require a detailed business plan, including market analysis, project description, investment schedule, financial forecasts and sensitivity analysis. These documents must be consistent with the group’s wider strategy and financial capabilities.
3. Compilation of supporting documents: tax clearance certificates, company registration documents, group structure charts, declarations on state aid history, property documents (ownership or long-term lease) for the project site, environmental approvals or at least proof that the necessary processes have been initiated, plus any specific forms required by the scheme.
4. Submission of the application: applications are usually submitted during official calls or sessions announced on the Ministry of Finance website. The submission may be electronic, physical or both, depending on current procedural rules. It is important to respect deadlines strictly; late submissions are rejected.
5. Formal and substantive assessment: the Ministry checks the completeness of the file and may request clarifications or additional documents. It then performs a substantive assessment of eligibility, including checks on state aid cumulation, financial viability and compliance with EU regional aid rules. For job-creation schemes, scoring mechanisms may rank projects based on the number of jobs, wage levels, location and financial indicators.
6. Issuance of the financing agreement: if the application is approved, the Ministry issues a financing agreement setting out the maximum amount of aid, the eligible costs, the investment schedule, reporting obligations, payment conditions and monitoring period. The agreement is the binding legal instrument between the beneficiary and the state.
7. Implementation and payment: the beneficiary implements the project and submits payment claims based on actual expenditure and jobs created. The Ministry verifies the claims before releasing funds. Disbursements can be structured in several tranches, subject to achievement of milestones.

In practice, the most demanding parts for foreign investors are the preparation of the business plan in the required format, the alignment of internal decision-making timelines with the scheme calendar, and ensuring that the project does not start too early. Under EU rules, aid must have an incentive effect: the application must be submitted and a financing agreement signed before the start of works (as defined in the GBER), otherwise the project may become ineligible.

5. Practical structuring tips for foreign investors

Based on the logic of Romanian schemes and EU state aid rules, foreign investors can improve their chances of success by:

• Choosing the location strategically: aid intensities are higher in less-developed regions. A project that can be located in several cities should evaluate the long-term operational conditions and the impact on available aid.
• Right-sizing the project: pushing the investment value slightly above the minimum threshold under GD 807/2014 can open the door to substantial grants, but artificially inflating budgets can backfire during verification of eligible costs.
• Aligning group internal rates of return (IRR) with the incentive: showing that the project’s IRR is borderline without aid and clearly acceptable with aid helps demonstrate the incentive effect, especially for large multinational groups.
• Documenting decision-making: internal memos and board presentations comparing locations and showing that the availability of Romanian state aid influenced the decision can be persuasive in case of doubt about incentive effect.
• Planning for co-financing: aid rarely covers 100% of eligible costs, and many ineligible costs remain outside the scope. The investor must show that it can finance the non-aided portion from own resources or external financing without additional aid.

Monitoring, Claw-back Risks and Litigation with Authorities

Receiving a financing agreement is not the end of the story; it is the beginning of a multi-year relationship with the Romanian authorities. State aid must be monitored, and non-compliance can lead to claw-back (recovery) of amounts already paid, sometimes with interest. For foreign investors, understanding these risks upfront is essential for realistic project planning and internal governance.

1. Monitoring obligations during the implementation and post-implementation periods

Both GD 807/2014 and GD 332/2014 include detailed provisions on monitoring. The Applicant’s Guides and Payment Guides published by the Ministry of Finance specify the documents and reports that beneficiaries must submit periodically. Typical obligations include:

• Regular implementation reports detailing the status of investments, milestones achieved, and any deviations from the initial plan.
• Financial documentation such as invoices, contracts, payment orders and accounting records proving that eligible costs have been incurred and fully paid by the beneficiary.
• Employment reports for job-creation schemes, including breakdowns by positions, wages and status, to confirm that the required number of new jobs has been created and maintained.
• Tax and social contributions statements evidencing that the company continues to be in good standing with fiscal obligations and that wage costs claimed as eligible are actually incurred.
• Notifications of changes concerning ownership, group structure, project scope or location, which may require prior approval or lead to adjustments in the aid amount.

Monitoring typically extends beyond the last payment. For regional aid, there is usually a minimum maintenance period (for example five years after completion of the investment for large enterprises), during which the assets and jobs created must remain in place and the project must not be relocated outside the assisted region. If the beneficiary moves the project too soon or significantly downsizes it, the aid can be partially or fully recovered.

2. Typical triggers for claw-back of state aid

Claw-back (recovery) of aid is not automatic; it occurs when the authorities determine that the conditions under which the aid was granted are no longer fulfilled or were never fulfilled. Common scenarios include:

• Underperformance on investment or job commitments: the beneficiary fails to complete the investment within the agreed timeline, or creates fewer jobs than committed, or does not maintain them for the required monitoring period.
• Use of assets for non-eligible activities: equipment or facilities co-financed through state aid are used predominantly for excluded activities or in another region, contrary to the approved project description.
• False or incomplete information: material inaccuracies in the application or reporting documents, especially concerning financial data, group structure, or previous state aid received, can lead to a finding that the aid was granted on a false premise.
• Relocation of the project: moving the aided activity from one EU region to another within a certain period can trigger recovery under the Regional Aid Guidelines and the terms of the financing agreement.
• Non-compliance with cumulation rules: if the beneficiary has obtained multiple forms of aid for the same eligible costs (for example, combining a national grant with an EU-fund grant and a local tax exemption) and the combined aid intensity exceeds the regional ceiling, the excess aid must be recovered.

In all these cases, the Romanian authorities are under an obligation, as a matter of EU law, to recover any incompatible or misused aid with interest. This obligation flows from the primacy of EU law and is enforced by the European Commission through monitoring and infringement procedures.

3. How recovery decisions are implemented

If the Ministry of Finance or another competent authority concludes that aid must be recovered, it will issue an administrative act (decision) specifying the amount to be repaid, the calculation method and the deadline for repayment. The legal basis for recovery is found both in national legislation (including the Government Decisions themselves and the Fiscal Procedure Code) and in EU law.

Key features of the recovery process include:

• Calculation of aid to be recovered: depending on the breach, the authority may reduce the aid proportionally or require full repayment. For example, if only part of the investment has been completed, aid may be recalculated based on eligible costs actually incurred. If a serious misrepresentation is identified, full recovery is likely.
• Interest from the date aid was made available: under EU rules, recovery must include interest calculated from the date the aid was first put at the disposal of the beneficiary until the date of recovery, using the reference rate methodology published by the Commission.
• Enforcement mechanisms: if the beneficiary does not repay voluntarily, the authorities may use standard tax enforcement tools (attachment of bank accounts, seizure of assets) because recovered state aid is treated similarly to tax debts.

For foreign investors, recovery can have reputational and financial consequences beyond the immediate amount owed. Group-wide financing arrangements, covenants and even disclosure obligations may be affected. This reinforces the need for conservative planning and ongoing compliance monitoring inside the company.

4. Administrative and judicial remedies against adverse decisions

Beneficiaries are not powerless when faced with an adverse decision. Romanian law provides for administrative and judicial remedies, though the timelines are strict and the standard of review can be demanding. In general, the following steps are available:

• Administrative contestation: many decisions (for example refusal to grant aid, reduction of aid amount, or recovery orders) can first be challenged through an administrative complaint to the issuing authority or to a higher authority, within a short time limit (often 30 days). This is an opportunity to clarify facts, submit additional evidence or correct misunderstandings without going to court.
• Judicial review: if the administrative complaint is rejected or if the investor chooses to bypass it where allowed, the decision may be challenged before the competent administrative court. The court will review the legality of the decision, including whether the authority correctly interpreted and applied national and EU law, respected procedural rights and sufficiently justified its conclusions.
• Interim measures: in some cases, it may be possible to request suspension of enforcement of a recovery order pending the outcome of litigation, subject to conditions such as providing security.

However, when national authorities are implementing a binding recovery decision of the European Commission (e.g. a decision finding that a scheme or an individual grant constitutes incompatible aid), the scope for national courts to depart from the Commission’s findings is limited. The proper avenue to challenge such a Commission decision is an annulment action before the General Court of the European Union, usually lodged by the Member State or in some cases by the beneficiary if directly and individually concerned.

5. Managing disputes and compliance from an investor’s perspective

From a practical perspective, foreign investors should build dispute-prevention and dispute-management mechanisms into their state aid strategy:

• Maintain a centralised aid register at group level: because cumulation rules apply across schemes and Member States, it is crucial to track all aid received by each entity and project, including de minimis aid.
• Keep a complete documentation archive: all applications, financing agreements, correspondence, reports, invoices, payroll records and board decisions relating to the project should be archived and easily accessible for at least the duration of the monitoring period plus a buffer.
• Designate an internal compliance owner: a person or team should be responsible for monitoring ongoing compliance with aid conditions, preparing reports and coordinating responses to authority requests.
• Engage with authorities proactively: where significant changes in project parameters arise (timeline, scope, ownership), it is safer to inform the Ministry and seek formal approval or clarification rather than hope that the change will go unnoticed.
• Consider legal and economic advice early: involving state aid lawyers and economic experts during structuring and application can prevent costly mistakes, especially for complex, multi-jurisdictional projects.

Conclusion: Using Romanian Incentives Strategically and Safely

Romania offers a relatively rich menu of state aid schemes, investment grants and tax incentives that can materially improve the economics of foreign investment projects. Cash grants under GD 807/2014 for large, high-value investments and under GD 332/2014 for job-creating projects can reach significant amounts, especially in less-developed regions with higher aid intensities. When combined with R&D tax incentives, reinvested profit exemptions and EU-funded programmes, they can tilt the scale in favour of choosing Romania over alternative destinations.

At the same time, these incentives are embedded in a dense web of EU and national state aid rules, monitored by both the European Commission and Romanian authorities. The price of non-compliance can be high: recovery of aid with interest, reputational damage and protracted litigation. For foreign investors, the key to leveraging Romanian incentives safely is to approach them as part of a broader legal and tax strategy, rather than as an afterthought.

A disciplined investor will therefore:

• map out all potential aid and incentives early in the project design phase,
• select locations and structures that are both operationally sound and compatible with the regional aid map,
• prepare robust business plans and internal decision-making documents that clearly demonstrate the incentive effect,
• treat the financing agreement as a long-term compliance contract, not just a funding windfall, and
• allocate internal and external resources to monitor obligations and manage interactions with the authorities over the entire project life cycle.

With this mindset, state aid, grants and tax incentives in Romania can become a stable pillar of your investment case, rather than a source of uncertainty. The legal framework is complex but predictable for those who take the time to understand it and to work within its boundaries.

Key resources and further reading

• Romanian Ministry of Finance – GD 807/2014 scheme page and Applicant’s Guides
• Romanian Ministry of Finance – GD 332/2014 scheme page and Applicant’s Guides
• InvestRomania (ARICE) – official foreign investment promotion portal
• Regulation (EU) No 651/2014 (GBER) – General Block Exemption Regulation
• European Commission – State aid legislation and regulations overview
• Investment Climate Statement for Romania (U.S. Department of State)
• Investing in Romania – overview of state aid programmes and tax incentives
• European Commission press release on the 2022–2027 regional aid map for Romania