Interim dividend distribution in 2025: accounting and tax aspects, steps to follow

Legislative framework regarding interim dividends

The distribution of interim dividends is regulated by a complex legislative framework, requiring compliance with several legal acts, including: Accounting Law no. 82/1991, Companies Law no. 31/1990, Law no. 163/2018 on interim dividends, Order no. 3067/2018, OMFP no. 1802/2014 on accounting regulations, and OMFP no. 2861/2009 approving the Rules on the organisation and conduct of inventories. Amendments introduced through Ordinance no. 11/2022 and Law no. 141/2025 reflect the ongoing effort to update the legal framework and align it with modern economic trends.

Dividends represent shareholders’ property rights, proportional to their ownership of the company’s share capital, corresponding to the net profit achieved. Regarding the difference between annual and interim dividends, the key factors are the legal basis and timing of distribution: annual dividends are granted based on the approved annual financial statements, while interim dividends can be distributed during the financial year, based on Interim Financial Statements.

Interim (quarterly) distribution

Interim (quarterly) distribution is a feasible option, carried out on the basis of Interim Financial Statements, prepared and approved in accordance with legal requirements. From an accounting perspective, interim dividends are recorded as receivables from shareholders or associates.

The process involves a careful inventory of assets, liabilities, and equity at the date of the interim financial statements. The amounts distributed are regularised at the end of the financial year, based on the Annual Financial Statements approved by the General Meeting of Shareholders or Associates (GMS), or, where applicable, by the Sole Associate Decision.

Conditions for interim dividend distribution

Interim dividends may be distributed solely under certain conditions. They can consist of the net accounting profit recorded during the financial year, retained earnings, and established reserves, less any carried-forward losses.

Identifying eligible equity items for interim distribution requires a detailed analysis based on the financial indicators and the legal regulations applicable to each element. Quarterly Interim Financial Statements must be prepared and approved accurately.

Additionally, auditing of these Statements is required if the company has such an obligation regarding the Annual Financial Statements or chooses to have them audited. Interim Financial Statements must also be reviewed by censors if the Annual Statements are subject to such review under the law.

According to the Accounting Law no. 82/1991, Interim Financial Statements must be retained for 10 years.

Final regularisation occurs upon approval of the Annual Financial Statements. Positive differences are paid within 60 days of the GMS date, while negative differences must be reimbursed by shareholders or associates within the same timeframe.

Early dividend distribution may also apply to entities that use a financial year different from the calendar year.

One essential condition to be respected, especially in the current context of frequent legislative changes, is that the net asset value complies with the provisions of Companies Law no. 31/1990.

New provisions affecting companies’ ability to distribute dividends

At the time of writing, the Government published the draft Law on the second package of fiscal and budgetary measures. According to this draft, companies that, based on Interim Financial Statements, report a net asset value lower than half of the subscribed share capital will not be able to distribute interim dividends.

The new package would also introduce several additional clarifications and limitations:

• Dividend distribution will only be possible from the surplus remaining after covering losses or maintaining sufficient distributable reserves to cover such losses, ensuring that net assets are at least equal to half of the share capital. Until this net asset requirement is met, loans granted by affiliates cannot be repaid.
• Limitations are introduced regarding the granting of loans to affiliates in the context of interim dividends, until their regularisation.
• If, within two years from the date, it is found that equity has fallen below half of the share capital and the net asset requirement is not restored, companies will be obliged to convert loans or financing provided by shareholders into share capital.

Interim dividend distribution procedure

The procedure for distributing interim dividends involves several essential steps, each ensuring the legality and transparency of the process. First, a full inventory and accurate valuation of the company’s assets is required to reflect the exact financial position at the Interim Balance Sheet date. Interim Financial Statements are then prepared based on the trial balance and inventory results, which are subsequently audited or verified in accordance with the law.

For companies applying accounting regulations under OMFP 1802/2014, Interim Financial Statements include the Balance Sheet and Profit and Loss Statement, structured similarly to the Annual Financial Statements and accompanied by Significant Accounting Policies. For companies applying International Financial Reporting Standards (IFRS), Interim Financial Statements include the Statement of Financial Position and the Statement of Comprehensive Income, also accompanied by Significant Accounting Policies.

The next step is the explicit approval of the dividend distribution by the GMS. Interim Financial Statements must be submitted to the tax authorities (ANAF) within 30 days of approval. The GMS resolution must clearly specify the dividend amount, beneficiaries, payment deadlines, and related tax obligations.

Companies deciding on interim dividend distribution based on Q3 2025 statements should note that this distribution is based on Interim Financial Statements as of 30 September 2025, prepared and approved in accordance with legislation by the end of the year. It is also important to remember the obligation to return any excess dividends received within 60 days of the approval of the Annual Financial Statements, if amounts exceeding the annual net profit are identified upon regularisation.

Applicable tax treatment

Dividends are subject to withholding tax at a rate of 16%. However, this rate applies only to dividends distributed from 1 January 2026 onwards. Therefore, dividends distributed before this date, whether interim or final, and regardless of the payment date, are taxed at the current rate of 10%.

Non-resident individuals and entities may benefit from reduced tax rates under Romania’s double taxation treaties, provided the specific conditions of each treaty are met. In particular, legal entities resident in EU member states or Switzerland may be fully exempt from tax on dividends distributed from Romania, provided that:

• They hold at least 10% of the paying company’s share capital for an uninterrupted period of at least one year;
• They meet formal requirements regarding the legal form and tax status as a corporate taxpayer.

A similar regime applies to resident legal entities. Dividends received by such entities may be exempt from tax if they hold a minimum 10% stake for at least one continuous year. Dividends meeting this condition are considered non-taxable for corporate income tax purposes, while related expenses for managing these holdings are treated as non-deductible (either directly if allocable, or proportionally based on the ratio of total revenue to non-taxable dividend income).

Resident individuals must assess the obligation to include dividend income in their Unique Tax Return to determine contributions to the National Health Insurance system, in accordance with applicable legislation.

Generally, dividends become taxable at the time of payment, regardless of their form or moment of distribution. The withholding tax is declared through Form 100 by the 25th of the month following the dividend payment. An exception applies if dividends are distributed but not paid by the year-end: in this case, the tax must be withheld, declared, and paid by 25 January of the following year.

Additional reporting obligations include notifying distributed amounts and withheld taxes via Form 205 (for dividends paid to individuals) and Form 207 (for dividends paid to non-resident legal entities).

Risks of incorrect profit verification

Administrators are jointly liable to the company for the actual existence of paid dividends. Distributing amounts exceeding available profit and failing to return excess amounts within the legal deadline may result in the application of penal interest.

Dividends must be returned if it is proven that shareholders knew, or should have known, about the irregular distribution. Receiving or paying dividends from fictitious profits or undistributable profits is punishable by 1 to 5 years’ imprisonment.

Failure to comply with legal deadlines for declaring and paying tax may result in additional fiscal penalties.

The new fiscal and budgetary measures also introduce sanctions if equity conditions or restrictions regarding: (i) granting loans before regularising interim dividends, and (ii) repayment of loans to shareholders or affiliates if equity requirements are not met.

Practical regularisation examples

Consider a scenario where, at the end of the financial year, interim dividends exceed the net profit. In this case, shareholders must return the excess within 60 days of the approval of the Annual Financial Statements. This obligation may put pressure on shareholders’ personal cash flow, particularly if the funds have already been used.

Conversely, if the annual net profit allows the payment of additional dividends beyond interim ones, shareholders will receive the differences after regularisation, with tax withheld accordingly. This ensures a fair and transparent distribution of dividends.

Conclusion and recommendations

Interim dividend distribution is a fast and effective way to reward shareholders, but it requires strict compliance with the legal framework and financial transparency requirements.

Quarter III marks the last relevant opportunity in 2025 to distribute interim dividends at the 10% tax rate. Similarly, any dividend distribution - whether interim from 2025 results or carried forward from previous financial years - made by 31 December 2025 will benefit from the 10% tax rate.

Suppose companies decide to distribute interim dividends in quarter III from 2025. In that case, they must carefully follow legal and accounting procedures, ensure that actual profit exists, and complete all formalities by year-end. Consulting accounting or tax experts is essential to prevent errors and ensure compliance.