Discriminatory tax treatment of foreign companies to be reviewed by Romania, as requested by the European Commission

(Press release MEMO/13/122 of the European Commission, dated 21 February 2013)

The European Commission has officially asked Romania to amend its discriminatory tax treatment of foreign companies.

Under Romanian tax law, a foreign business with several establishments in Romania is subject to corporate taxation on each of the establishments individually, despite the fact that these do not have separate legal personality.

According to the Commission, this is a restriction contrary to the freedom of establishment set out in the EU Treaties.

If the legislation is not brought into compliance within two months, the Commission may refer the matter to the EU Court of Justice.

By  Venkatesh Srinivasan, Partner – Head of Tax, Ernst & Young 

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