On the 27th of January, 2017 Government Emergency Ordinance no. 10/2017 for stimulating the registration of new small and medium-sized enterprises (“GEO no. 10/2017”) was published in the Official Gazette of Romania. GEO no. 10/2017, which entered into force on the 30th of January, 2017, introduces the “Start-up Nation – Romania” program, which is aimed to encourage the creation of new small and medium-sized enterprises by granting an aid of up to RON 200,000 (approximately EUR 44,500), representing up to 100% of the amount of the eligible expenses, to a number of maximum 10,000 beneficiaries annually.

The program comes as a means of encouraging the economic growth of the Romanian business environment. The reduction of active companies on the market, the harsh crediting conditions, as well as the increased risks of starting up a new business have had a negative impact on the Romanian economy. In accordance with the reasoning behind the ordinance, the Romanian Government considered it urgent to establish an aid scheme to restart the economic growth and stabilize the economy. Furthermore, it was considered that such an aid scheme would also positively impact the unemployment rate, as a higher number of active undertakings inevitably leads to the creation of new jobs.  

The aid granted under the Start-up Nation – Romania program falls under the provisions of the Commission Regulation no. 1407/2013 regarding the de minimis aid. According to these provisions, a state aid is compatible with the internal market if the total amount of de minimis aid granted per Member State to a single undertaking does not exceed EUR 200,000 over any period of three fiscal years.

The maximum amount granted by the Romanian state through the Start-up Nation – Romania aid scheme does not exceed the de minimis threshold established by the European Commission. Except if otherwise provided by the eligibility conditions, the applicants could cumulate the aid granted under this program with other state granted aids, up to the maximum amount of EUR 200,000 over a period of three fiscal years.

GEO no. 10/2017 stipulates certain general conditions that the undertakings must comply with in order to be eligible for applying for the Start-up Nation Romania program:

  • The undertakings must be set up after the ordinance has entered into force. This condition encourages the registration of new undertakings and marginalizes the currently active businesses. Interested applicants should seek to apply for the aid only in case of companies set up after the  30thof January 2017;
  • The beneficiaries must provide proof of employment for minimum 2 employees for an uninterrupted period of minimum 3 years from the moment of payment of the de minimis aid.  From the interpretation of the legal provisions it can be concluded that this condition only applies to the job position as such and does not preclude termination (irrespective of the reason) of a labour agreement prior to this term. A contrary interpretation would lead to an implicit impunity or immunity of the initial employees and it would deprive the parties to the employment relationship of the possibility to terminate the contract prior to the completion of the stipulated term (including the hypothesis of the resignation of the employee and the right of the employer to sanction the employee for committing a disciplinary offence).
  • The object of activity and the expenses of the beneficiary undertakings must not be specifically excluded by the Romanian and European legislation. Commission Regulation no. 1407/2013 stipulates a series of exclusions from the applicability of the EUR 200,000 de minimis threshold. If an undertaking operates both in the excluded sectors and in one or more of the sectors falling within the scope of the regulation, the regulation will apply for the latter (provided that the state ensures an efficient separation between the two sectors) so that the aid received would not be invested or used for the development of the prohibited activities.

The legislation stipulates that the eligibility conditions and eligible expenses, as well as a detailed application procedure, will be provided by a Government decision which will be submitted for approval in maximum 30 days from the moment when the ordinance entered into force. As GEO no. 10/2017 does not state a duration of the Start-up Nation – Romania program, such duration will be probably determined by the implementation decision.  At this moment, however, there is no public initial draft of the decision that could be consulted in order to further acknowledge the conditions required under the program.

Summarizing the above, it may be deemed that the Romanian authorities continue to implement national development programs dedicated to small and medium-sized enterprises, as it has done so in the past. The provisions of GEO 10/2017 come in addition to other dedicated enactments targeting this sector of professionals activating in the economy. The ordinance comes in line with Law no. 346/2004 regarding the stimulation of the creation and the development of small and medium-sized enterprises, which aimed, even since Romania started implementing the European acquis, to promote the development of small and medium-sized enterprises and to create a friendly business environment for the emerging undertakings.

It remains to be seen how the Start-up Nation – Romania program will evolve in the following years, but it is certain that the special attention that small and medium-sized enterprises receive both from the authorities and the participants to the economy give the possibility for new SMEs to continue to emerge and develop at an increased pace.