Romania announces state aid to tackle fall out from the coronavirus outbreak

On 21 March 2020, the Romanian government passed Government Emergency Ordinance no. 29 (GEO), which sets down measures to protect small and medium-sized support companies during the COVID-19 outbreak. These measures are listed below.

Financing facilities

The GEO creates the following framework for granting state guarantees by the Ministry of Public Finance (MPF):

• For small and medium-sized enterprises (SMEs), the MPF offers guarantees of up to 80% of the value of the financing within the following maximum limits of the loan:

o Working capital loans – a maximum amount equal to the average working capital of the respective SME in the last two fiscal years, but not more than RON 5 million;

o Investment loans – a maximum amount of the financing of RON 10 million.

RON 10 million is the maximum cumulative value of state-guaranteed financing that can be granted to an SME for working capital and investments.

• For micro enterprises or small companies, the MPF offers guarantees of up to 90% of the value of the financing within the following maximum limits of the loan:

o Maximum value of the financing – RON 500,000 for micro-enterprises and RON 1 million for small businesses.

o Working capital loans – a maximum amount equal to the respective company's average working capital for the last two fiscal years, within the limits mentioned above.

The MPF will also subsidise 100% of the interest for the loans to be guaranteed, both for micro, small and medium-sized enterprises and those under state aid or a de minimis scheme associated with this programme.

The above-mentioned state aid programme will run until 31 March 2021. However, the government may extend this deadline until April 2022 if estimated economic growth for April 2021 to 2022 will be below the recorded economic growth in 2020.

The maximum duration of the financing is 120 months for investment loans, and 36 months for working-capital loans. The credit lines may be extended by a maximum of 36 months, following which, in the last year of extension, they will be reimbursed.

Deferred payments

During the state of emergency in Romania, companies holding a state of emergency certificate will also benefit from deferred payment for utilities (e.g. electricity, natural gas, water, telephone services and internet), and deferred payment of rent for premises used as headquarters and secondary offices.

In order to benefit from the above, companies must obtain from the Ministry of Economy, Energy and Business Environment a certificate attesting to the fact that they have suffered economic loss due to the COVID-19 pandemic. They must also meet other specific economic criteria.

Force majeure

For agreements concluded before the GEO was issued, if a company undergoing the circumstances described above holds a state of emergency certificate, the contractual counterparty cannot invoke force majeure until after the parties have attempted to renegotiate the contract to adjust it to the current situation. Any attempt to renegotiate must be supported by an exchange of documents between the parties, conducted by any means including electronic communication.

Tax and fiscal measures

The GEO also establishes tax and fiscal measures aimed at relieving the economic burden caused by the COVID-19 pandemic including:

• Restructuring of tax liabilities due to public authorities;
• The suspension or non-commencement of enforcement procedures for outstanding tax liabilities;
• No interest and fees will be accrued for fiscal debts during the state of emergency until a 30-day period after the end of the state of emergency.

More detailed information on the tax and fiscal measures can be found here.

Employment

The government is also covering technical unemployment benefits on behalf of companies who have sent their employees home and suspended their activities due to restrictions imposed by authorities for limiting the coronavirus outbreak, or financial problems caused by the Covid-19 crisis. More detailed information on the conditions under which companies can benefit from this aid can be found here.

For more information on Romania's measures in response to the COVID-19 pandemic and how companies can benefit from these measures, contact your regular CMS advisor or one of our local CMS experts: Horea Popescu, Cristina Popescu, Claudia Nagy and Bogdan Buta.