ANAF Updates the Procedure for Redirecting 20% of Profit Tax to NGOs

Important changes to how profit tax is redirected

ANAF (National Agency for Fiscal Administration) has recently announced a significant change to the procedure through which companies in Romania can direct up to 20% of their profit tax to non-governmental organisations (NGOs) and other forms of sponsorship or patronage. This initiative comes at a time when the tax redirection mechanism has been a valuable tool for businesses that want to support social, cultural or corporate responsibility projects, while keeping rigorous control over where the funds go.

The amendment to ANAF President's Order no. 3562/2024 aims to simplify and clarify the steps needed to make the transfer, and to ensure better transparency and traceability of the amounts redirected. The impact of these changes is significant for both companies and beneficiary NGOs, and they have the potential to make the process more efficient and encourage greater involvement in philanthropic activities.

Who the eligible beneficiaries are and what types of actions can be supported

Under the current rules, companies can redirect 20% of their profit tax to NGOs registered and active in Romania that carry out activities with a social, cultural, educational, environmental protection or community support impact. Funds can also be redirected to sponsorship and patronage actions, a legal facility dedicated to supporting artistic, scientific or sporting initiatives.

To be eligible, organisations must be officially registered as non-profit legal entities and listed in the Special Register kept by the Ministry of Finance. They must also demonstrate transparency in how they use the funds received and submit clear reports to the authorities.

Companies therefore have a wide range of options for identifying projects that align with their values and their own social responsibility strategy, choosing to invest in causes that have a positive impact both on the community and on the company's image.

How this tax facility works and which documents are required

The redirection procedure requires the company to prepare an official request to ANAF, asking for a percentage of the profit tax calculated for the current or the previous fiscal year to be redirected. The recent changes introduce new rules on supporting documents and on deadlines for submitting the request.

In general, companies must submit:

• The profit tax return (form 101 or the equivalent for the current year);
• The request to redirect the percentage, precisely identifying the NGO or the beneficiary of the sponsorship;
• Documents certifying the eligible beneficiary status of the NGO or patronage action;
• Sponsorship contracts or other written commitments, where applicable.

Complying with these requirements is crucial for the request to be processed correctly and to avoid delays or rejections by ANAF.

The changes proposed in the tax agency's most recent steps aim to make these requirements clearer and most likely also include wider use of electronic means for submitting documentation.

The impact of the changes on businesses and NGOs

For companies, the updated procedure is an opportunity to make their internal process for managing tax obligations more efficient and to optimise their social responsibility strategy. Simplifying and digitalising the administrative stages reduces the time and resources involved, encouraging companies to use this facility more often.

NGOs benefit as well, because a clear and fast procedure means easier access to the resources their projects need. A rise in transparently redirected funds can stimulate the development of the non-profit sector and increase the social impact of funding.

In the current economic climate, where the non-profit sector often faces challenges with funding sources, these administrative adjustments can strengthen cooperation between the public, private and civil sectors, producing positive effects across society.

What companies need to prepare and what to watch out for

Companies that want to benefit from this facility should pay attention to a few practical points:

• Checking NGO eligibility: Make sure the chosen organisations are on the official lists and meet all the conditions required by law to receive the redirected funds.
• Preparing complete and correct documentation: Any omission or error can lead to the request being rejected or to processing delays.
• Monitoring deadlines: Strictly observe the submission deadlines for requests and documents, especially given the new ANAF rules.
• Using digital channels: Taking advantage of the new electronic facilities for submitting documentation reduces the risk of errors and speeds up approval.
• A social responsibility strategy: Choose sponsorship or patronage projects that bring long-term value to the company and to the community in which it operates.

Adapting to the new ANAF rules will require coordinated effort between companies' legal, financial and communications departments, in order to turn this tax facility into a competitive advantage and a form of investment in reputation and social responsibility.

Want to find out what non-refundable funding you can access?

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