The role of Research and development activity in the economy - investment prospects and fiscal and legal implications

The research and development activity has the potential to contribute to a sustainable development of the Romanian economy and, for this reason, the stimulation of investments in this field and the involvement of companies in projects with a high degree of innovation are essential for improving the competitiveness of local companies in relation to external competitors.

But Romania ranks last in the European Union in terms of budget allocations for research and development, and companies do not have enough information about the solutions they have available to invest more effectively in projects of this kind.

In the first hand, it is about the fiscal facilities granted by the state for research and development activities and, on the other hand, the funding opportunities for this sector.

R&D tax incentives for research & development activities in Romania

R&D CIT incentives

• Full CIT exemption for companies performing exclusively R&D activities for the first 10 years of activity
• 50% extra-deduction for CIT purposes for an indefinite period
  of time applicable to eligible costs incurred in relation to R&D
  activities - saving of 8% of the costs incurred.

Funding opportunities for the Research and Development and Innovation sector, 2021-2027

Most R&D-specific funding to be made available in the following period is either through the Regional Operational Programs or through the Smart Growth, Digitalization and Financial Instruments Operational Program, with a few key aspects also provided through Romania's National Recovery and Resilience Plan.

Funding is generally to be made available predominantly to SMEs, with large enterprises benefitting from some options (generally as partners to SMEs in multi-entity projects).

Many of the R&D-specific funding options to be made available in the following period will favor (through additional scoring during project assessment or through additional incentives) those investments that propose the development and testing of innovative technologies and solutions for the green transition and circular economy.