Additional support measures under the fiscal- budgetary package adopted by the Romanian Government in the context of COVID 19

The Emergency Government Ordinance no. 29/2020, published in the Official Gazette no. 230 of 21 March 2020, details the financial support measures enacted by the Romanian Government for supporting the economy and companies affected by the spread of COVID-19. The measures were anticipated in Fiscal-budgetary measures to support the economy and companies affected by the spread of COVID-19 virus, approved in the Government meeting on Wednesday, 18 March 2020 and are now presented on the basis of the published form of the ordinance.

For an assessment of the state aid type of measures enacted to support SMEs as well as for details on the qualification as SME please refer to our articles State guarantees and interest subsidies for investments and loans/ working capital credit lines and Small and medium-sized enterprises – Does your company belong to this category?

Additional support measures for entities in financial difficulties include:

  1. Deferred payment for utilities and rent for SMEs holding the emergency situation certificate

During the emergency state, SMEs that had to cease their activity either in whole or in part due to measures implemented by public authorities, can benefit from payment deferrals of utilities (electricity, natural gas, water, telephony services and internet) and rent for their headquarters and secondary office premises.

This is particularly useful to SMEs that were obliged through the two military ordinances (1/2020 and 2/2020) to suspend their activity: such as: cinemas, theaters, sports clubs, spas, dentist practices, retailers located in commercial centers hosting more operators (such as shopping malls, commercial galleries attached to super/hyper markets- the suspension of activity measure does not apply to sale of food, pharmaceutical or veterinary products or to cleaning services operating in such commercial centers), etc.

Prerequisite: the SME must obtain an emergency situation certificate issued by the Ministry of Economy, Energy and Business Environment. At the time of this newsletter, the procedure for issuance of this certificates has not yet been published.

The interpretation “payments deferrals” is likely to be contested. The landlords will argue that the rent for the period when the activity was ceased should be paid by the tenants. On the contrary, the tenants will argue that the purpose of the Emergency Government Ordinance no. 29/2020 is to help the SMEs and therefore, it should apply the rules and principles of the Civil code, where all the obligations (including the one of paying the rent) are suspended.

  1. Invitation to renegotiate and to adapt. Limitation of possibility to claim contractual force majeure against SMEs

It is likely that both SMEs and their contractual partners will have major difficulties in performing their contractual obligations in the current global context. In an attempt to support continuity of businesses, the Government requested that parties actually try to renegotiate their contracts and adapt them to the extraordinary economic realities triggered by the emergency state and to have supporting documentation of such attempts.

Only in cases where such negotiation failed, counterparties to ongoing contracts (other than utilities and leasing contracts) with SME-s holding emergency situation certificates issued by the Ministry of the Economy, Energy and Business Environment may claim force majeure in relation to the SMEs.

Actions of public authorities actions applied in relation to COVID – 19 pandemic that affect the activity of SMEs may be deemed force majeure events. The impact of such measures must be demonstrated with an emergency situation certificate. The measures taken by authorities in accordance with the decree of the Romanian President declaring the state of emergency on the Romanian territory cannot be deemed unpredicted.

  1. Family medicine cabinets and dentist medical practices may also benefit from the utilities and rent payment deferrals

Additional condition for applicability- there should be no more than 20 persons performing activities within such medical practices. The Government is expected to issue the criteria allowing applicability of these deferrals.

Additional potential beneficiaries include national sport federations and sport clubs holding a sport identity certificate, directly affected by the measures adopted by authorities. Further criteria for establishing the beneficiaries should be issued through Government decisions.

  1. Extended deadline for submitting Declarations on ultimate beneficial owners (“UBO Declarations”)

Prior to the Emergency Ordinance 29/2020, companies had the obligation to submit UBO Declarations in three key moments:

  • upon incorporation of a new company;
  • annually, within 15 days from approval of yearly financial statements; and
  • within 15 days from changes to the UBO or their details.

According to Emergency Ordinance 29/2020 during the emergency state the obligation to submit UBO Declarations is suspended and the term referred to in letters (ii) and (iii) is extended with three months from the end of the emergency state.

As to the obligation under letter (i), depending on the Trade Registry Office receiving the registration request, companies may find themselves in the situation where they must file the UBO Declaration as at this moment there seem to be different interpretations.

  1. Extended payment deadline for certain taxes

The payment deadline for land and building tax and, also, the tax for transportation means is extended from 31 March 2020 to 30 June 2020, during which time the support measures established by the local councils will continue to apply.

  1. Restructuring the budgetary payment obligations

The debtor intending to restructure its budgetary payment obligation can notify the relevant authority between 1 February – 31 July 2020. The deadline for submission of the intent for restructuring is extended until 30 October 2020.

  1. No interest and late payment penalties will be calculated throughout the duration of the emergency state and for 30 days thereafter

For fiscal obligations falling due as of the effective date of the emergency ordinance and unpaid by the end date of the measures provided by the emergency state, no interest and late payment penalties as per the Fiscal Procedure Code will be calculated or payable. This support measure will be maintained for an additional 30 days as of the end of the emergency state.

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