Navigating Tax & VAT Changes: Analysis of GEO no. 31 for Microenterprises in Romania

The Romanian fiscal legislation governing microenterprise income taxation has witnessed significant amendments with the enactment of GEO no. 31 of 2024. This article provides a structured analysis of the regulatory modifications, focusing on the maintenance of taxable income ceilings, criteria for identifying related companies, and revisions in Value-Added Tax (VAT) exemptions, offering insights into their implications for taxpayers and entities.

Maintenance of Taxable Income Ceilings for Micro-enterprises

The fiscal legislation applicable to the taxation of income obtained by micro-enterprises maintains the ceiling for taxable income at €500,000. Individuals have the right to own only one micro-enterprise, whether through direct or indirect ownership. However, when determining the €500,000 euro ceiling, it’s essential to consider that this limit also includes the income of some ‘related’ companies. GEO no. 31 of 2024 defines the concept of ‘related’ companies concerning microenterprise income taxation.

Regulation of Related Companies in Microenterprise Income Taxation

According to GEO no. 31 of 2024, companies are considered “related” if one of the following scenarios applies:

  • If a Romanian legal entity holds more than 25% of participation titles or voting rights in another Romanian legal entity, directly or indirectly, or has the authority to appoint or remove the administrator or the majority of board members, an affiliation relationship exists between the two companies. Additionally, the owner of the participation titles has decision-making power over the other company.
  • When a Romanian legal entity is owned by another Romanian legal entity with over 25% ownership of participation titles or voting rights, directly or indirectly, or if the owning entity holds the right to appoint or remove administrators or the majority of board members, an affiliation relationship persists. The owner of the participation titles retains decision-making authority within the analyzed company.
  • An affiliation exists between a Romanian legal entity and another entity if a person, directly or indirectly, holds more than 25% ownership of participation titles or voting rights and has the authority to appoint or remove administrators or the majority of board members in both entities. If this person is also a Romanian legal entity, the verifying entity accumulates their income. Additionally, if the owner of the participation titles is also a Romanian legal entity, their income is accumulated within the €500,000 ceiling.
  • A Romanian legal entity is affiliated if it has one or more shareholders/associates with over 25% ownership of shares or voting rights, directly or indirectly, and these shareholders/associates engage in economic activities through authorized natural persons/individual enterprises/family enterprises/other forms of organization without legal personality. In this scenario, the income recorded according to applicable accounting regulations is accumulated with that of the Romanian legal entity or other related enterprises. When determining the €500,000 ceiling, the income from independent activities of company participants, such as authorized trades or free professions, is also considered.

Implications for Taxpayers and Entities

The regulatory framework requires a thorough evaluation of income aggregation, including revenues from related entities and independent activities of stakeholders. For example, individuals involved in authorized professions must report their gross self-employment income, contributing to the overall revenue pool for microenterprise taxation.

Additionally, declarations for fiscal vector modification for the year 2024 must be submitted by April 15, 2024. Adhering to regulatory criteria throughout the fiscal year emphasizes the importance of retrospective analysis using December 31, 2023, data to ensure compliance with legislation.

Revisions in VAT Exemptions

There have been notable changes in VAT exemptions related to supplies to public hospitals, including the removal of exemptions for certain activities through legislative measures. Prior to the enforcement of these changes, there were differing interpretations of procedures among hospitals, highlighting uncertainties in regulatory execution.

Starting from March 29, 2024, VAT collection becomes mandatory for certain types of supplies, leading to changes in compliance standards in the healthcare sector. However, exemptions remain for specific supplies to hospitals owned by entities with non-profit objectives, promoting alignment with societal welfare goals.

To sum it up, the regulatory amendments within GEO no. 31 of 2024 signal a shift in fiscal governance, necessitating proactive engagement and diligence from stakeholders to ensure compliance and mitigate regulatory risks.

For further guidance, feel free to contact Eurofast experts in Romania at

Cristina Radu
Country Manager
Eurofast Bucharest