Hot topic in future real estate investments: Romania’s assistance plan for market sectors

In its assessment on recovery and resilience plans, the European Commission allocated to Romania a pre-financing instalment amounting to €1.85bn for implementing its National Recovery and Resilience Plan (NRRP) that has to comply with the criteria set out by the Commission. The Romanian government and the competent authorities are keen to ensure the timely implementation of the given measures, under a rather tight calendar and the pressure of potential consequences if the fulfillment of milestones and targets imposed by the Commission is non-satisfactory.

Under these circumstances, considerable legislative changes are expected to occur to implement the operational agreements concluded with the European Commission for this purpose and to speed up the procedure of allocating public procurement contracts and absorption of European funds.

Considering the tight deadlines set for the completion of the whole process and the need to actually implement reforms meant to support the absorption of funds through NRRP, the Romanian government is prioritising the supplementation and amendment of the legal framework approving the NRRP and is creating the institutional and operational mechanisms at the national level.

Companies conducting or intending to set up businesses in Romania should keep up to date, as some of these legislative changes may have a real impact on their business.

Below are three key topics on measures intended to facilitate an easier way of doing business in Romania, while supporting the green and digital transitions, as well as enhancing socio-economic and institutional resilience.

Simplified procedures for companies

Entering the Romanian market will be much easier to achieve after the measures are implemented. The expected reform sets goals of simplification, debureaucratisation and digitalisation as per Component 9 (Business Support, Research, Development and Innovation) – Reform 1.

The existing legal framework will be amended, facilitating both registration and exit from the Romanian market, as well as the interactions with the labour authorities. The main pieces of legislation which are likely to be significantly amended are the Companies Law no 31/1990, Trade Registry Law no 26/1990, Decree Law no 122/1990 on the authorisation and functioning in Romania of foreign companies and representatives offices of foreign companies and economic organisations, and the Labour Code.

The process for setting up a company will take no more than 24 hours, allowing companies to file the documentation with the Trade Registry via a digital platform. The procedure for the authorisation of representative offices of foreign companies is intended to be simplified as well. Also, the procedures regarding the exit from the Romanian market will be easier to navigate, as all the documentation required for corporate-related matters will be rendered fully digital.

Along with other measures for a simplified running of working points and for complete digitalisation of the procedures regarding labour reporting obligations for companies, the new legislative package is expected to reduce the time spent to set up a company as well as the related bureaucracy, and to have a positive impact on the day-to-day running of a business.

From a the regulatory point of view, changes are expected in relation to the licensing and authorisation process, which is now rather bureaucratic and time-consuming. This is to be overcome by incorporating all into a single law of a unique industrial license.

The envisaged outcome is to reduce by half the deadlines for obtaining a license, to set up a unique point of contact with the competent authorities, to remove some burdening and time-consuming procedures for renewal and to implement the possibility of tacit approval for certain types of licenses.

Reform 1 must be fully implemented by December 2025, while the deadline for the sole industry license law is set to December 2022.

Impact on construction, investments and green energy

While simplified procedures and shorter terms may have a positive impact on the market and will help with reducing bureaucracy, future investments in real estate are also in need of a clear, well centralised and organised code of laws, and a long-term steady legal framework.

The codification of the construction legislation is expected to come into force by the end of March 2023, and aims to link and collate at least ten legislative acts into a single piece of legislation, ie the Code of Spatial Planning, Urbanism and Construction.

As per the NRRP, the envisaged Code of Spatial Planning, Urbanism and Construction also includes legal provisions intended to facilitate air quality improvements, increasing energy efficiency and setting a uniform set of standards to be applied throughout the country. The entire process for the issuance of building permits will be time-reduced by 50% (from 270 days to 135 days).

The digital transition is impacting the construction field as well, as a new data platform will centralise the digitalised maps and the whole urban planning process will be public (this includes access to the most recent spatial and territorial planning documents). The deadline for rendering the platform functional is by the end of June 2023.

The new code of laws is also relevant under Component 5 (Renovation Wave strategy, whereby the European Commission is aiming to double the rate of energy-efficient renovations in the next ten years) – Reform 1 and Component 10 (Local fund – with five main reforms and six main types of investments, with a total budget of €2.1bn through which the administration to be able to carry out the necessary development) – Reform 5.

Further, reforms promoting sustainable transport include the decarbonisation of road transport, green taxation, incentives for zero-emission vehicles, and a modal shift to railways and water transport. The plan also has a strong focus on improving the energy efficiency of private and public buildings, in accordance with the European Commission’s target of hitting net-zero emissions by mid-century.

Industry sectors such as agriculture, forestry and energy production might be impacted by provisions regarding the protection and conservation of certain areas. It is expected that by the end of 2025 a set of legislative changes to occur in relation to Component 2 (Forests and Biodiversity Protection) – Reform 2.

Simplified interactions with the public authorities

Navigating through the intended measures, the following ones related to public procurement are worth mentioning:

  • The maximum extension period for drawing up the procedure report or interim report could be reduced from 80 days to 30 days (for open and restricted tendering), 15 days (for the simplified procedure and the non-publication of a contract notice) and, respectively 50 days (for competitive negotiation and competitive dialogue).
  • Eliminating the obligation to provide a fiscal certificate for all secondary offices/working points. A statement made by the successful bidder that it is not in breach of its obligations to pay taxes or social security contributions replaces the fiscal certificate the winning economic operator had to provide to demonstrate it fulfilled the exclusion conditions regarding the payment of taxes or social security contributions.
  • The public contractor is obligated to publish the decision for the cancellation of allocation procedures in a shorter time-limit – from three working days to one working day.
  • Eliminating the obligation to communicate to the other party involved in the appeal procedure before the National Council for Solving Complaint (CNSC) a copy of the supporting documents attached to the complaint, under the sanction of rejecting the complaint on the grounds of late filing; the parties having only the obligation to communicate a copy of the complaint.
  • The contracting authority must cancel an act/issue/adopt an act necessary to restore legality as a result of a CNSC/court decision in a shorter time frame – from twenty working days to ten working days.
  • Last but not least, the obligation for the contracting authorities/contracting entities to sign the contract with the winning bidder who was subject to a favourable decision by CNSC, irrespective of whether the decision has been challenged in Court.

It is noticeable the fact that among these measures, the National Public Procurement Strategy shall include further digitalisation and upgrades of the public procurement electronic system (SEAP).