With a new president taking office in May and a shifting fiscal landscape, Romania is navigating a period of political and legal recalibration, according to Bancila, Diaconu si Asociatii Partner Adriana Dobre.
According to Dobre, the administration now confronts a major challenge in managing the budget deficit; discussions between the government and private sector are ongoing, with proposals including increased taxes, new taxes, and cuts in budgetary expenditure.
Shifting gears to focus on the judicial system, Dobre reports that the Constitutional Court has assumed an increasingly active role in the election process and the control of the alignment of legal enactments with the Constitution. “In recent case law, the court invalidated legislation that does not ensure a fair balance between public and private interests. For example, the Constitutional Court ruled that the solidarity tax on energy sector companies is unconstitutional for placing a disproportionate burden on a specific sector. The court argued that the state must establish a market regulation mechanism that allows it to support its role as a social state in a way that does not annihilate the right to private property. This rationale may also influence future litigation around other recently introduced taxes: tax on poles, an additional tax for companies from the oil and gas sector," Dobre elaborates.
“Furthermore, from 2022 until June 2025, the price for electricity consumption was capped for certain consumers as a protective measure.” As Dobre reports, the application of the capped fee provided by law “generated disputes between consumers and electricity suppliers, since energy suppliers applied the capped fee and failed to observe contractual provisions that regulated more favorable conditions for consumers. The courts of law sanctioned such practice.”
Focusing on the real estate sector, Dobre points out that it “was blocked in the last years by the refusal of the authorities to issue or adopt administrative documents necessary for developing projects.” According to her, "one notable ordinance introduced tacit approval procedures for the endorsements necessary for urban planning documentation and building permits to speed up the sluggish process generated by the failure of the authorities to observe the legal deadlines for solving requests. The new rules have already led to endorsements being issued in days rather than years," Dobre says.
Finally, Dobre focuses on tax disputes, mentioning the cancellation of tax on buildings. "Local councils are allowed to apply an additional quota up to 50% of the maximum level provided by the Fiscal Code for local taxes based on certain criteria which should be expressly provided and detailed, i.e., economic, social, geographical, urban planning, and budgetary needs. Many local authorities adopted additional quotas without offering proper justifications regarding the necessity to increase the tax and the destination of such additional amounts. Such practice affected the owners of nonresidential buildings, who were obliged to pay considerable amounts. This inconsistency has triggered numerous disputes, and courts ruled recently that exceeding the allowed quotas without explanation is not permissible; such conduct contravenes the principles of legality, fairness of taxation, fiscal equity, proportionality, and good administration," she explains. "The decision should bring greater clarity and discipline to local tax practices moving forward and, indeed, we have already started to witness some positive changes in the practice of local authorities," Dobre concludes.
