Newsletter no. 9/2020 – Tax incentives for increasing company equity

Newsletter no. 9/2020 - Tax incentives for increasing company equity 

REFERENCES: GEO 153/2020; LAW 227/2015

 Newsletter no. 9/2020 – Tax incentives for increasing company equity

In the Official Gazette no. 817 from 4 December 2020 was published the Government Emergency Ordinance no. 153/2020 for introducing tax measures to stimulate companies to maintain / increase their equity. We present below the main provisions of this piece of legislation and how they are applied.


Corporate income tax and micro-enterprise tax cumulative discounts


In order to stimulate companies to maintain or increase their equity, GEO 153 introduces 3 types of cumulative discounts, depending on the fulfilment of certain conditions. These provisions enter into force on 01.01.2021 and will be applied for the corporate income tax / micro-enterprise tax computed for period 2021 to 2025.

We present in the following table the application conditions and the related tax discounts:


Condition to be met

Percentage increase of Adjusted Equity (CPA)

% tax discount



The equity is positive and more than 50% of the share capital





Condition 1 + The CPA annual increase percentage of:



It applies to annual CPA increase (e.g. 2021 over 2020, 2022 over 2021, etc.)

5% - 10%


10% - 15%


15% - 20%







Condition 1 + CPA increases compared to the 2020 CPA by:

5% in 2022


It applies to CPA increases over the 2020 CPA (e.g. 2022 over 2020, 2023 over 2020, etc.)

10% in 2023


15% in 2024


25% in 2025


Minimum discount



The discounts add up to one another.

Each condition met adds an additional tax discount.

Maximum discount (after 2022)




The adjusted equity (CPA) includes the following elements: share capital (account 1012), patrimony (accounts 1015-1018), capital premiums (account 104), legal reserve, statutory and other reserves from profits (account 106) and net result from previous periods (representing the positive difference between the credit and debit amounts of account 117). When computing the CPA these elements will be considered at their value in the annual financial statements. Please note that CPA does not include re-evaluation reserves (account 105) and current result (account 121).

After computing the CPA for each year, the annual increase percentage (CCPA year/prev.year) and the increase percentage over 2020 (CCPA year/2020) will also be calculated.

CCPA year/prev.year = (CPA tax computation year – CPA prev.year)/CPA prev.year x 100

CCPA year/2020 = (CPA tax computation year – CPA 2020)/CPA 2020 x 100

Giving the connection with the annual financial statements, in the period these incentives apply (2021-2025), the tax returns submission and payment deadlines for the annual corporate income tax and the micro-enterprise tax for the fourth quarter will now be extended until 25 June of the next year.


NOTE: Given that the discounts for meeting conditions 2 and especially 3 above apply in relation to the CPA for 2020, a low value CPA for 2020 could lead to a higher tax discount. In this regard, some companies may consider certain measures to reduce the CPA for 2020 (e.g. distribution of profits from previous years).



In 2020 a company’s equity is RON 100,000 (out of which RON 20,000 share capital) and its CPA is RON 70,000. In the next years, the CPA will be: RON 80,000 in 2021, RON 85,000 in 2022 and RON 75,000 in 2023. The share capital during this period will be at least RON 10,000, thus the 2% discount for meeting Condition 1 will be applicable each year starting 2021.

CCPA 2021/2020 = 14,3%, so Condition 2 is met with an increase of 10% - 15%, therefore an additional tax discount of 7% may be applied, the total discount amounting to 2%+7%=9%.


CCPA 2022/2021 = 6,3%, which means an additional discount of 6% as per Condition 2.

CCPA 2022/2020 = 21,4%, which is over 5% and therefore Condition 3 is also met for and additional discount of 3%. Therefore, in 2022 the total discount will be 2% + 6% + 3% = 11%.

CCPA 2023/2022 = -11,8%. An annual decrease of the CPA means that Condition 2 is not met.

CCPA 2023/2020 = 7,1%, which is under 10% for 2023 and thus Condition 3 is not met also for this year, the applicable final tax discount for 2023 being only 2% from meeting Condition 1.



In order to have an efficient communication, we established a direct link with the related department. For the subject of the current Update, the requests for tax consultancy may be sent to [email protected] with a brief description of the query. One of our consultants will answer or contact you shortly.



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