Law no. 120/2015 regarding the stimulation of individual investors, known as business angels, regulate the conditions under which individuals named individual investors, business angels, can benefit from tax incentives as a result of acquisition of shares through investments in micro and small enterprises which fulfill the following conditions:
◦ are established as limited liability companies under art. 2 of the Company Law no. 31/1990;
◦ are autonomous enterprises under the Law no. 346/2004;
◦ are not in default, insolvency or bankruptcy and the procedure of arrangement with creditors or the liquidation of the company has not been opened.
In order to benefit from these facilities, any person can become an individual investor through the following cumulative conditions:
◦ is a person outside the company and becomes the associate of the company by cash contribution to the capital of the company, resulting in the issuance of new shares in their favor;
◦ invests an amount between EUR 3,000 and EUR 200,000, equivalent in RON at the National Bank of Romania from the date of transaction in the company whose associate he becomes through the acquisition of shares; the acquisition of shares takes place through the capital increase as provided in the preceding paragraph, and the amount invested will be paid through the banking system in Romania and will be recorded in the company’s accounts according to the law; what’s more, these cumulative amount limits apply regardless of the number of investors;
◦ the investment is done strictly to fulfill the core activity of the company and the business plan for which the business angel will invest;
◦ does not have records in the tax record issued by the competent authorities at the time of investment;
◦ can not hold, as a result of the investment, in their own name or through intermediaries, more than 49% of the share capital of the company concerned;
◦ is incapable or has been convicted for crimes against property through disregard of confidence, corruption, embezzlement, forgery of documents and tax evasion offenses, or for offenses under Law no. 31/1990.
In case more individuals become business angels under the aforementioned conditions, tax incentives may be granted for a maximum of 49% of the share capital of the company concerned in proportion to the percentage of shares held.
The business angel is exempt from income tax as dividends for a period of 3 years from the acquisition of shares, for dividends on shares acquired by obtaining the associate status thereof by his contribution in cash to the company's share capital.
The individual investor is exempt from tax on gains from redemption of shares in an open investment fund if the transfer of shares occurs after a period of at least 3 years after the acquisition.
The investor can surrender his shares in a closed society alongside the investment paid to the company to another individual investor who at the date of acquiring the rights of participation was not an associate.
These facilities will be granted if the following conditions are met:
◦ the business angel does not alienate the shares before the expiry of 3 years from the date of acquisition;
◦ the articles of incorporation, submitted to support the application for registration of the capital increase by issuing new shares in the Trade Register, contains clauses which stipulate that participation in the profits and losses of associates will become proportional to the percentage of shares held by each associate, and that decisions on the business plan and giving up profit sharing related to the investment made will be taken with the agreement of all partners;
◦ the company and associates don’t use the share premium at the capital increase and don’t distribute it to shareholders for a period of 3 years from the date of registration of the individual investor in the trade register;
◦ the company has no debts to the general consolidated budget at the date of the surrender of shares by the business angel.
If you would like to obtain additional information regarding the tax facilities granted to individual investors, also known as business angels, do not hesitate to contact our team of lawyers within the Darie, Manea & associates law firm who will provide you with legal, specialized information on the matter, as well as representation before the competent authorities if required.