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Deloitte: Effective average rate of royalties grew in Romania from 15% in 2014 to 17.5% in 2016

The effective average royalty rate and other similar taxes grew in Romania from 15% in 2014 to 16.9% in 2015 and 17,5% in 2016, while in most European states it dropped, a Deloitte study sent to News.ro shows.

Taxes similar to royalties include, in Romania, taxes on additional incomes, taxes on special constructions and taxes applied for exploitation of crude.

“The effective tax rate determined for upstream natural gas activity in Romania has a higher value than that of oil exploration and production, the difference resulting mainly from additional taxes applicable to natural gas,” the study shows.

The effective average royalty rate and that of other similar taxes dropped in Europe - including Groningen gas field in Holland, which has a special regime - from 11.7% in 2014 to 10% in 2015.

If we exclude Groningen gas field, the effective average royalty rate dropped in Europe from 9.3% in 2014 to 7.9% in 2015.

The effective average royalty rate and that of similar taxes dropped in 2015 compared to 2014 in ten European states: Great Britain, Norway, Denmark, Hungary, Austria, Germany, Holland, Italy, Bulgaria and Albania, the study shows.

In exchange, royalties recorded a slight increase in five European states: Serbia, Lithuania, Ireland, France and Poland.

“The analysis was made based on data from public sources and had in view effective tax rates in different European countries. The results of the study should be considered and interpreted by reporting them to our previous analyses which cover 2013 and 2014,? said Dan Badin, coordinator partner for Fiscal and Juridical Services, Deloitte Romania.

The three studies released by the company until now show the evolution of effective tax rates in this sector in Romania and other European states and offer a useful instrument to compare the effective tax rate in each state included in the study.

The Deloitte study takes into account limitations imposed by the different fiscal regime applicable in each country and effective tax rates existing in different European countries, based on public data available for December 31, 2015.

The effective tax rate for each state was calculated by reporting the value of royalties and specific taxes paid by the main players in industry for incomes obtained from the production and sale of oil and natural gas.

Effective royalties and other similar specific taxes can be different from nominal rates, being influenced by national priorities, market realities as well as the recent and powerful decline of the price of oil and natural gas, which has been affecting industry in the last years, Deloitte shows.