Amendments to the FDI regime in Romania

Government Emergency Ordinance no. 108/2023 (“GEO 108/2023”) provides for new amendments to Romania’s foreign direct investment (“FDI”) legal regime, which was majorly overhauled in April 2022 and further amended in June 2023.

GEO 108/2023 entered into force on 6 December 2023.

The following is a summary of the main legislative changes:

EU investments are subject to FDI screening

If prior to the adoption of GEO 108/2023, there were certain controversies mainly related to the investments from the European Union ("EU") subject to FDI screening, GEO 108/2023 extends the meaning of foreign direct investment and defines the EU investment.

Thus, the concept of EU investment means an investment of any kind made by an EU investor, with the purpose of establishing or maintaining lasting and direct links between itself and the undertaking for which the funds are intended for, with the purpose of carrying out an economic activity in Romania, including investments allowing effective participation in the management or control of an undertaking.

It is noteworthy that the effective participation in the management or control of an undertaking no longer represents a condition for defining a foreign direct investment but only a potential consequence of this.

Prior to GEO 108/2023, EU investments were only subject to FDI screening if the following cumulative conditions were met: (i) the investment was subject to merger control procedures, (ii) the investment involved a “sensitive” sector and (iii) the investment value for Romania exceeds EUR 2 million.

GEO 108/2023 provides that all EU investments, regardless whether they are subject to merger control procedures or not, are subject to FDI screening, provided that (i) the respective investment  exceeds EUR 2 million; and (ii) the investment falls under the list of sensitive sectors put forward by CSAT Decision no. 73/2012, which includes the security of citizens and communities; border security; energy; transport; supply of vital resources; critical infrastructure; IT and communication systems; financial, tax, banking and insurance activities; weapons, munitions, explosives, toxic substances manufacturing and circulation; industrial security; protection against disasters; protection of agriculture and environment; protection of state funded companies or of their management during privatization.

New Procedural Timelines

GEO 108/2023 provides that foreign or EU investors must provide all required information to the Commission for Examination of Foreign Direct Investments (“CEISD”) in a term of 15 calendar days as of the request. CEISD would issue their opinion in a term of 60 calendar days following a complete filing.

In case of a positive opinion from CEISD, the Competition Council shall issue the clearance decision within maximum 10 calendar days for the EU investments and in 30 calendar days for all the other foreign investments.

The FDI screening fee

According to GEO 108/2023 the fee for FDI (EU investments included) screening amounts to EUR 10,000, which shall be calculated at the exchange rate provided by the National Bank of Romania for the last day of the month preceding the submission of the application.

This tax shall be paid upon the submission of the file and shall be refunded if the CEISD finds that the FDI screening conditions for the respective investment are not met.