Romania 2026: What Foreign Buyers Must Know, FDI Screening, Merger Control and Tax Changes for Cross‑border M&A

International M&A Romania activity has entered a distinctly different regulatory phase in 2026. A package of legislative reforms, spanning foreign direct investment screening, merger control procedure and fiscal policy, has reshaped the way cross‑border acquirers plan, negotiate and close transactions involving Romanian targets. For private equity sponsors, strategic buyers and in‑house counsel running deal processes, the practical effect is that timelines are longer, notification obligations are broader, and purchase‑price mechanics must now account for revised dividend withholding and minimum‑capital rules. This guide maps each reform to concrete deal phases and provides the checklists practitioners need to avoid costly delays or blocked closings.

TL;DR, Three actions every foreign buyer should take now:

1. Run an FDI screening pre‑assessment before signing the letter of intent, sector and threshold triggers have widened.
2. Map the merger control notification window against the FDI review timeline to avoid sequential suspension of closing.
3. Re‑model post‑closing dividend flows and holdco structures to reflect 2026 fiscal changes before agreeing on purchase price.

Quick Checklist for Foreign Buyers: Pre‑LOI, Signing and Closing

The following checklist condenses the practical steps discussed throughout this article. Each phase carries distinct regulatory and commercial tasks that, if missed, can derail a Romanian M&A 2026 transaction.

Pre‑LOI Phase

• Sector sensitivity scan. Determine whether the target operates in a sector designated as sensitive under Romania’s updated FDI screening regime (energy, defence, telecommunications, critical infrastructure, media, food security, health or data processing).
• Threshold preliminary check. Assess whether the contemplated stake crosses any foreign direct investment notification trigger, including step acquisitions that aggregate prior holdings.
• Competition authority pre‑contact. Where the deal may also trigger merger control, initiate informal pre‑notification contacts with the Consiliul Concurenței to gauge filing complexity.
• Tax structure outline. Model the target’s distributable reserves and expected post‑closing dividend flows under the 2026 withholding regime before issuing the LOI.

Pre‑Signing Phase

• Draft FDI notification dossier. Prepare the notification file, including corporate ownership charts, source‑of‑funds documentation and the operational description of the target’s activities within sensitive sectors.
• Align SPA conditions precedent. Ensure the SPA includes separate conditions precedent for FDI clearance and merger control clearance, with tailored drop‑dead dates reflecting statutory review periods plus a practical buffer.
• W&I insurance scoping. Engage insurers early, underwriters need to assess the regulatory‑risk profile, and policy exclusions for government‑ordered remedies must be understood before signing.

Pre‑Closing Phase

• Submit parallel filings. File FDI notifications and merger control notifications concurrently where permitted, and track each authority’s review clock independently.
• Escrow and break‑fee triggers. Confirm that escrow release mechanics and break‑fee payment obligations align with the regulatory outcome (clearance, conditional clearance or prohibition).
• Post‑closing integration planning. Prepare the corporate restructuring steps (capital increases, dividend distributions, management appointments) that will follow closing, ensuring compliance with the new minimum‑capital and corporate‑form rules.

FDI Screening in Romania: The 2026 Reform Explained

Romania’s FDI screening framework, initially implemented under Government Emergency Ordinance No. 46/2022 and its subsequent amendments, was significantly overhauled in early 2026. The reform aligns Romania more closely with the EU FDI Screening Regulation (Regulation (EU) 2019/452) and expands the scope of transactions subject to mandatory prior notification. For any party engaged in international M&A Romania transactions, understanding these changes is now a gating item for deal execution.

How the 2026 Reform Changed Thresholds

The amended legislation lowered the ownership thresholds that trigger a mandatory notification and broadened the definition of “foreign investor” to capture indirect acquisitions routed through EU intermediate holding companies. The reform also introduced step‑acquisition aggregation, meaning successive minority purchases that individually fall below the threshold are combined when assessing whether the notification obligation arises.

Sectors Considered Sensitive

The 2026 amendments codified an expanded list of sectors in which FDI screening Romania obligations apply. Industry observers expect enforcement to be particularly active in the following areas:

• Energy and critical raw materials, including electricity generation, transmission and distribution, as well as oil and gas extraction.
• Defence and dual‑use technology.
• Telecommunications and 5G infrastructure.
• Healthcare and pharmaceutical manufacturing.
• Food security and agricultural land above defined area thresholds.
• Media and data processing, broadened to include cloud infrastructure providers and entities holding large volumes of personal data of Romanian citizens.

Timeline, Suspension Risk and Remedies

Once a complete notification is filed, the screening authority has a statutory period of 45 calendar days for a preliminary assessment. If the authority identifies concerns, it may open an in‑depth review lasting up to an additional 90 calendar days. During the review period, the transaction may not be completed, closing is suspended. In practice, the combined timeline from notification to clearance (including pre‑filing preparation) commonly extends to four to six months for transactions in sensitive sectors.

Remedies may include conditions such as maintaining local operational headquarters, restrictions on data transfers outside Romania, commitments to preserve employment levels, or limitations on the disposal of strategic assets for a defined period post‑closing. In the most serious cases, typically involving defence or critical‑infrastructure targets, the authority retains the power to prohibit the transaction entirely. Failure to notify a transaction that falls within scope can result in fines of up to 10% of the worldwide turnover of the acquirer, and the transaction may be declared void.

Merger Control Romania: Issuer Rule Changes, Timing and Strategy

Alongside FDI screening, Romania’s merger control regime administered by the Consiliul Concurenței (the Romanian Competition Council) remains a parallel gating mechanism for international M&A Romania transactions. Amendments effective in 2026 have refined the notification thresholds and introduced procedural changes that affect deal timelines and pre‑notification strategy.

Notification Thresholds

A concentration must be notified to the Competition Council where the combined aggregate worldwide turnover of the undertakings concerned exceeds EUR 10 million and where at least two of the undertakings concerned each achieved turnover in Romania exceeding EUR 4 million in the financial year preceding the transaction. The 2026 amendments clarified that the turnover test applies on a consolidated basis, including turnover of the entire group to which the acquirer belongs, a change that captures more mid‑market PE bolt‑on acquisitions than under the prior rules.

Pre‑Notification vs. Post‑Closing Strategies

Romania operates a mandatory pre‑closing notification system: the transaction may not close until clearance is obtained. Early indications suggest that acquirers who engage in informal pre‑notification discussions with the Competition Council can significantly shorten Phase I review times. Pre‑notification submissions, which are not formally regulated but are encouraged by the Council, allow the authority to identify potential competitive concerns, request additional information and narrow the scope of the formal filing before the statutory clock begins.

Review Timelines

Interaction With FDI Screening

A critical planning consideration for deal structuring Romania timelines is that merger control clearance and FDI clearance run on independent statutory clocks. Neither authority is bound by the other’s timeline, and neither clearance is conditional upon the other’s outcome. The likely practical effect is that acquirers should file both notifications simultaneously immediately after signing and should draft SPA conditions precedent that require both clearances before the long‑stop date. Failing to plan for concurrent review can result in sequential delays that push closing well beyond the originally anticipated timeline.

Typical Remedies and Conditions

Where the Competition Council identifies competition concerns, it may accept behavioural or structural commitments. Behavioural remedies in recent Romanian cases have included obligations to maintain supply agreements with third parties, while structural remedies have involved the divestiture of overlapping business lines. The Council has the power to impose fines of up to 10% of the undertakings’ turnover for failure to notify or for gun‑jumping (completing the transaction before clearance).

Tax Changes Affecting Cross‑Border International M&A Romania Transactions

Romania’s 2026 fiscal package introduced several changes that directly alter the economics of cross‑border acquisitions. For acquirers modelling purchase prices, exit returns and holding structures, these amendments require immediate recalibration.

Dividend Tax Changes

The standard dividend tax rate applicable to distributions from Romanian companies was adjusted under the 2026 Fiscal Code amendments. Dividends paid to non‑resident corporate shareholders that do not benefit from the EU Parent‑Subsidiary Directive exemption are now subject to a withholding rate of 8%. For distributions that qualify under the Directive (where the parent holds at least 10% of the Romanian subsidiary’s share capital for a continuous period of at least one year), the exemption from withholding remains available, but the one‑year holding period is now applied strictly, with anti‑avoidance provisions targeting structures designed primarily to access the exemption.

The practical implication for international M&A Romania deal models is significant. A buyer acquiring a Romanian target through a newly established EU holding company will not benefit from the Parent‑Subsidiary Directive exemption on dividends distributed within the first 12 months following the acquisition. This creates a timing wedge: early post‑closing distributions to fund acquisition debt service or return capital to investors will be subject to full withholding.

Minimum Share Capital and LLC Rules

The 2026 amendments to the Romanian Companies Law (Law No. 31/1990, as amended) increased the minimum share capital requirement for SRLs (the most common vehicle for M&A targets) and introduced enhanced disclosure obligations for beneficial ownership. The increased minimum capital affects SPAs by requiring buyers to confirm, as a condition to closing, that the target’s registered capital meets the new threshold. Where it does not, a post‑closing capital increase will be required, and this cost should be factored into the purchase price or addressed through a price‑adjustment mechanism.

Withholding Considerations for Asset Deals

Asset deals (as opposed to share deals) in Romania trigger VAT on the transfer of individual assets unless the transfer qualifies as a “transfer of a going concern” (TOGC) exempt from VAT. The 2026 amendments narrowed the TOGC exemption by requiring that the transferee continue to operate the same economic activity for a minimum period of 24 months following closing. For acquirers planning post‑closing integration or restructuring, this condition may not be satisfied, resulting in a significant VAT cost that must be modelled in the purchase price allocation.

Purchase Price Mechanics: Worked Example

Consider a scenario in which a non‑EU private equity fund acquires 100% of a Romanian SRL through a newly incorporated Luxembourg holding company. The target has EUR 5 million in distributable reserves. Under the 2026 rules:

• Dividend distribution within 12 months of closing: The Luxembourg holding company does not yet satisfy the one‑year holding‑period requirement. The distribution of EUR 5 million is subject to 8% withholding, a cost of EUR 400,000.
• Dividend distribution after 12 months: Assuming the Parent‑Subsidiary Directive exemption applies, the withholding drops to 0%. The effective saving on delayed distribution is EUR 400,000.
• Impact on purchase price: If the buyer’s model relies on an early dividend to service acquisition debt, the EUR 400,000 withholding is an additional cost of the transaction that should either reduce the enterprise value or be allocated to the seller as a pre‑closing distribution obligation.

Deal Structuring and SPA Drafting Tips for 2026

The combined effect of widened FDI screening, concurrent merger control review and revised tax rules demands more careful deal structuring Romania practice than in prior years. SPA drafting must accommodate longer timelines and greater regulatory uncertainty.

Conditions Precedent and Drop‑Dead Dates

• Separate CPs for each clearance. Draft distinct conditions precedent for FDI clearance and merger control clearance. Do not combine them into a single “regulatory approval” condition, each has different statutory timelines and different appeal mechanisms.
• Tiered drop‑dead dates. Set an initial long‑stop date that accommodates Phase I review for both authorities (approximately six months from signing), with an automatic extension provision of three to four months if either authority opens an in‑depth review.
• Remedy commitments cap. Include a clause specifying the maximum level of remedies the buyer is obligated to accept to obtain clearance, preventing the buyer from being forced to divest material parts of the target simply to meet a regulatory condition.

W&I Insurance Considerations

Warranty and indemnity insurance remains widely available for Romanian transactions in 2026, but underwriters are increasingly scrutinising regulatory risks. Standard W&I policies exclude losses arising from a government‑ordered prohibition or remedial condition. Industry observers expect that bespoke policy endorsements may be available to cover break‑fee losses triggered by a regulatory block, but pricing for such coverage has increased. Buyers should factor insurance costs into deal economics early.

Escrow and Break‑Fee Drafting

• Reverse break fee. Where the buyer’s FDI profile presents a material risk of rejection, sellers should negotiate a reverse break fee payable if the transaction is prohibited for regulatory reasons attributable to the buyer.
• Escrow for tax adjustments. Place a portion of the purchase price in escrow to cover potential post‑closing tax liabilities (particularly VAT reclassification risk on TOGC transactions and dividend withholding adjustments).
• Interim operating covenants. Include robust covenants governing the target’s operations between signing and closing, as the extended regulatory review period increases the risk of material adverse changes.

Practical Timelines: Combined FDI, Merger Control and Closing Roadmap

Mapping FDI screening and merger control review onto a deal timeline is the single most common area where cross‑border acquirers underestimate complexity in Romanian M&A 2026 transactions. The table below provides a consolidated roadmap.

For a standard transaction in a sensitive sector requiring both FDI and merger control clearance at Phase I level, acquirers should plan for a signing‑to‑closing timeline of approximately four to six months. Transactions that trigger in‑depth review from either authority may take nine to twelve months from signing to closing.

Key Takeaways and Next Steps for International M&A Romania

The 2026 legislative reforms have made Romania a jurisdiction where cross‑border deal execution demands earlier preparation, tighter coordination between regulatory workstreams and more sophisticated financial modelling. The key takeaways for foreign buyers are:

• Start the FDI pre‑assessment before signing the LOI. The widened thresholds and expanded sector list mean more transactions are caught, and the consequences of failure to notify are severe.
• File FDI and merger control notifications concurrently. Sequential filing adds months to the timeline and creates unnecessary closing risk.
• Re‑model dividend flows and holdco structures. The 8% withholding on early distributions and the stricter Parent‑Subsidiary Directive holding‑period enforcement can materially affect IRR calculations.
• Build regulatory uncertainty into SPA mechanics. Tiered drop‑dead dates, remedy commitment caps and reverse break fees are no longer optional, they are standard practice in this environment.
• Engage experienced Romanian M&A counsel early. The interaction between FDI, competition and tax workstreams requires coordinated local advice from the LOI stage onwards.

For tailored guidance on a specific transaction, find a Romania M&A lawyer in the Global Law Experts directory.

Sources

1. Consiliul Concurenței (Romanian Competition Council)
2. Romanian Government, Gov.ro
3. ANAF (National Agency for Fiscal Administration)
4. Romanian Ministry of Finance
5. European Commission
6. CMS Law
7. EY (Ernst & Young)
8. PwC Romania