Corporate / M&A

Romania: New Law on Angel Investing and Tax Relief Opportunities for Business Angels

Will the New Law on Angel Investing Contribute to the Long Expected Elevation of Romanian Start-Ups?

Current financing environment

As in other East – European countries, small and medium – size companies in Romania have, in previous years, been faced with a shortage of financing resources, and have been forced to rely mainly on personal resources to grow their businesses. In an environment where banks have been increasingly reluctant to lend to small or mid-size companies and where private equity funds have focused their investments on stable and mature businesses, start-ups have experienced significant difficulties in securing financing.

However, a number of high net – worth individuals have been acting as business angels by using their own money to finance various innovative businesses.

Against this background, in May 2015 the Romanian Parliament passed a law dealing with angel investing and the tax benefits granted to angel investors.

New law on angel investing

Effective June 2015, the new Law on Angel Investing (Legea nr. 1202015 privind stimularea investitorilor individuali – business angels) regulates tax relief opportunities for business angels who invest in micro-or small-size companies.

The Romanian law on Angel Investing allows any individual to become an angel investor in relation to a micro or small-size company, irrespective of the company’s net worth or certification. For an investment to qualify for the benefits granted by the Law, the following conditions must be met:

(i) the target company should be a limited liability company (societate cu raspundere limitata), which is statistically the most common form of incorporation for start-up companies (over 80% of existing companies);

(ii) the business angel should not be “connected” with the company;

(iii) the value of the investment should range between Euro 3,000 and Euro 200,000; and

(iv) the shareholding of the business angel should not exceed 49% of the share capital of the target company.

Tax relief for business angels

Investments in start-up companies – and generally in non-listed companies – often carry high risks, and tax relief has been introduced to compensate to a certain extent for them. The current tax scheme offers relief for both income tax and capital gains tax which have generally been welcomed by the business community.

In particular, the Law on Angel Investing offers the following tax breaks:

(i) Business angels are exempt from the tax on dividends for a period of three years from the investment. In practical terms, this exemption may be less relevant for an individual looking to become an angel investor, as the Law on Angel Investing was promoted in parallel with the new Romanian Fiscal Code (effective 1 January 2016), which provides for a significant decrease of the tax on dividend for all shareholders, from the current rate of 16% to 5%. Additionally, since business angels typically seek investment opportunities in start-ups, the likelihood of distributable profits during such period is rather remote to begin with.

(ii) Business angels are further exempt from capital gains tax for share disposals initiated at least three years after the investment.

Business angels may also syndicate their investment in a given target, but in such cases the overall value of dividend tax reliefs may not exceed the value of the syndicated investment.

The Law on Angel Investing also sets forth various conditions applicable to the tax relief, such as the requirement that there be no outstanding tax liabilities for a target company at the time of a share transfer, and the requirement that there be express provisions in the articles of association regulating the pro-rata participation of the shareholders in the profits and losses of a target company and the requirement that votes on the business plan and profit distribution be unanimous.

Practical aspects

Five months after the enactment of the Law on Angel Investing the relevant application process for business angels to reap the promised tax benefits and the ways to avoid potential forfeiture of the benefits remain unclear. Nonetheless, the combination of potentially fast – growing sectors such as IT, medical services and tourism as well as the enactment of laws meant to stimulate investments in a market – segment that has been poorly served by traditional financing methods is expected to result in an overall increase of start-ups, with potentially strong returns for the angels taking business risks.

The current tax scheme offers relief for both income tax and capital gains tax which have been welcomed by the business environment.

România: Noua lege privind investitorii individuali - business angels si oportunitatile de scutiri fiscale pentru investitori individuali

Va contribui noua lege privind investitiile individuale la mult asteptata dezvoltare a societatilor de tip Start-Up?

Mediul de finantare actual

Asemenea situatiei din alte tari est-europene, intreprinderile mici si mijlocii din Romania s-au confruntat in anii precedenti cu o deficienta de resurse de finantare, fiind fortate sa se bazeze in principal pe resursele proprii pentru a-si dezvolta afacerile. Intr-un mediu in care bancile au fost din ce in ce mai reticente in a acorda imprumuturi intreprinderilor mici si mijlocii si in care fondurile private equity si-au concentrat investitiile asupra afacerilor stabile si mature, societatile nou-infiintate au experimentat dificultati semnificative in a-si asigura finantarea.

Cu toate acestea, un numar de persoane cu resurse financiare consistente au actionat ca investitori individuali prin folosirea propriilor fonduri pentru a finanta diverse afaceri inovative.

In acest context, Parlamentul Romaniei a adoptat in Mai 2015 o lege privind investitiile individuale si beneficiile fiscale acordate investitorilor individuali.

Noua lege privind stimularea investitiilor individuale

In vigoare din iunie 2015, noua lege privind stimularea investitorilor individuali — business angels (Legea nr. 1202015) reglementeaza posibilitati de scutiri fiscale pentru investitorii individuali care investesc in microintreprinderi sau in intreprinderi mici.

Aceasta lege permite oricarei persoane sa devina un investitor individual al unei microintreprinderi sau al unei intreprinderi mici, indiferent de puterea financiara sau de eventualele acreditari ale potentialului investitor individual. Pentru ca o investitie sa se incadreze in beneficiile acordate de lege, trebuie indeplinite urmatoarele conditii:

1. Societatea tinta trebuie sa fie o societate cu raspundere limitata, care din punct de vedere statistic reprezinta cea mai intalnita forma de organizare pentru societatile nou-infiintate (peste 80% din societatile existente);

2. Investitorul individual nu trebuie sa aiba “legaturi” (preexistente) cu societatea;

3. Valoarea investitiei trebuie sa fie cuprinsa intre 3.000 euro si 200.000 euro; si

4. Participatia investitorului individual nu trebuie sa depaseasca 49% din capitalul social al societatii tinta.

Scutiri fiscale pentru investitorii individuali

Investitiile in societati nou-infiintate – si in general in companii nelistate – implica adesea riscuri ridicate, iar scutirile fiscale au fost introduse prin noua lege pentru a compensa intr-o anumita masura riscurile inerente unei astfel de investitii. Facilitatile fiscale introduse prin noua lege ofera scutiri atat pentru impozitul pe venit, cat si pentru impozitul pentru castigurile din capital, scutirile fiind in general apreciate de catre comunitatea de business.

In special, Legea privind stimularea investitorilor individuali ofera urmatoarele facilitati fiscale:

(i) Investitorii individuali sunt scutiti de la plata impozitului pe dividende pe o perioada de trei ani de la momentul investitiei. In termeni practici, aceasta scutire ar putea fi mai putin relevanta pentru persoanele care intentioneaza sa devina investitor individual, devreme ce Legea privind stimularea investitorilor individuali a fost adoptata in paralel cu Noul Cod Fiscal (in vigoare de la 1 ianuarie 2016), act normativ ce reglementeaza o micsorare substantiala a impozitului pe dividende pentru toti asociatii, de la 16% cat este cota actuala, la 5%. In plus, din moment ce investitorii individuali cauta in mod traditional oportunitati de a investi in societati nou-infiintate, probabilitatea existentei unor profituri distribuibile intr-un asemenea interval de timp este de la bun inceput redusa.

(ii) Investitorii individuali sunt de asemenea scutiti de la plata impozitelor pe castigurile din capital obtinute din instrainarea partilor sociale, daca instrainarea a intervenit dupa cel putin la trei ani de la data investitiei.

Investitorii individuali pot de asemenea sa isi unifice investitiile intr-o anumita societate tinta, dar in astfel de cazuri valoarea totala a facilitatilor fiscale acordate in legatura cu impozitul pe dividende nu poate depasi valoarea investitiei efectuate de către toţi investitorii individuali-business angels.
Legea privind stimularea investitorilor individuali stabileste de asemenea diverse conditii aplicabile scutirilor fiscale, cum ar fi cerinta de a nu exista obligatii fiscale scadente in sarcina unei societati tinta la momentul unui transfer de parti sociale, necesitatea de a exista prevederi exprese in actul constitutiv referitoare la participarea proportionala a asociatilor la profiturile si pierderile inregistrate de o societate tinita si cerinta ca hotararile organelor societatii referitoare la planul de afaceri si la distribuirea profiturilor sa fie luate cu unanimitate de voturi.

Aspecte practice

Dupa cinci luni de la adoptarea Legii privind stimularea investitorilor individuali, procedura prin care investitorii individuali se pot bucura de scutirile fiscale promise si modalitatile practice de optimizare a acestor beneficiilor raman inca neclare. Cu toate acestea, pe fondul existentei unor sectoare cu potential ridicat de dezvoltare, cum ar fi cele de IT, servicii medicale si turism, este de asteptat ca adoptarea unei legi menite sa stimuleze investitiile sa aiba drept efect o crestere generala a investitiilor, cu un potential de profit semnificativ in beneficiul investitorilor individuali.

Facilitatile fiscale introduse prin noua lege ofera scutiri atat pentru impozitul pe venit, cat si pentru impozitul pentru castigurile din capital, scutirile fiind in general apreciate de catre comunitatea de business.