A new draft EGO provides further clarification on related companies

After months of entrepreneurs having no idea what the Ministry of Finance means by related companies, on 13 March 2024, a draft EGO appears on the Ministry of Finance’s website clarifying the notion of “related company”.
This new notion is a mix between the definition of related companies in Law 346/2004 and the definition of related parties in the Tax Code.

What clarifications are being made?

Two firms are considered to be related under the following conditions:

• the Romanian legal person holds in the other Romanian legal person, directly and/or indirectly, more than 25% of the value/number of the equity securities or voting rights or has the right to appoint or remove a majority of the members of the administrative, management or supervisory board of the other Romanian legal person;
• the legal person holds in the Romanian legal person which verifies the condition, directly and/or indirectly, more than 25% of the value/number of the equity securities or voting rights or has the right to appoint or remove a majority of the members of the administrative, management or supervisory board of the Romanian legal person(s);
• the Romanian legal person is related to another Romanian legal person if a person holds, directly and/or indirectly, more than 25% of the value/number of equity securities or voting rights or has the right to appoint or remove a majority of the members of the administrative, management or supervisory board of both the first legal person and the second legal person;
• the shareholder/associate of the Romanian legal person who holds, directly and/or indirectly, more than 25% of the value/number of equity securities or voting rights of this Romanian legal person, carries out economic activity through a: PFA, II, IF, other form of organisation of an economic activity, without legal personality. In the latter case, the income of the PFA/II/IF/other form of organisation of an economic activity without legal personality, recorded according to the accounting regulations, is cumulated with the income of the Romanian legal person/other related company.

In conclusion, irrespective of the entities’ business, if on 31.12.2023 an individual owns more than 25% in several companies, the definition of microenterprise clearly states that from 1 January 2024 only one of them can be a microenterprise.
However, according to this draft, all those companies are considered related companies and if on 31.12.2023 the cumulated income exceeds the threshold of 500.000 euro, all companies must be subject to corporate income tax from 1 January 2024.