Coface Study: Romanian Companies Caught Between High Taxes and Weak Demand

The geopolitical context, the macroeconomic situation, inflation, the increase in VAT and the fiscal measures approved by the Government constituted the perfect framework for favoring the increase in the number of Romanian companies that entered insolvency last year and, for this reason, entered insolvency proceedings or chose to follow the rules of preventive composition, according to the Insolvency Study conducted by Coface Romania and presented yesterday by its representatives. Moreover, Coface representatives claim that the trend of increasing the number of companies entering insolvency will continue in 2026.

"Overall, the domestic entrepreneurial environment faced many challenges in 2025, the most important being the decrease in demand, the increase in operational costs, but also the new tax measures implemented starting with August 2025. In 2026, we expect a deterioration in payment behavior and a continuation of the trend of increasing the number of insolvencies. In such a context, efficient risk management and robust financial governance become determining factors for avoiding operational blockages and maintaining financial stability," said Alina Popa, Country Manager Coface Romania.

According to the data from the cited study, in 2025, in our country, 7,553 new insolvency procedures were opened, compared to 7,274 in 2024, which represents an increase of 3.84%. Last year, 221 preventive composition procedures were opened, compared to 96 such procedures opened in 2024, which means a 130% increase in companies resorting to this procedure.

Tiberiu Chesoi, Head of Claims Department Coface Romania, stated: "The data reveals an increasing trend in the number of companies opting to open the concordat procedure. For example, in 2025, 221 concordat procedures were opened, compared to 96 concordat procedures opened in 2024 and 61 concordat procedures opened in 2023. There is also a high share, approximately 22%, of companies that entered insolvency and were established before 2010. This, combined with the fact that in 2025 the highest number of registrations was recorded (153,425), suggests structural changes in the economy. (...) Approximately 90% of insolvencies are of small companies, which either have turnover close to zero or have not filed their balance sheets.”

• Transportation, 20% increase in the number of insolvencies

The top three sectors by the number of companies that entered insolvency last year are: Wholesale and retail trade/repair of motor vehicles and motorcycles (1,844 open insolvencies, down 4% compared to 2024), Construction (1,580 open insolvencies) and Transport and storage (939 insolvencies, up 20% compared to 2024) and maintain a concentration of approximately 58% of the total number of insolvencies recorded in 2025.

It is important to note that four of the top seven sectors with the most insolvencies are also found in the top seven sectors by the number of insolvencies/1,000 active companies (Construction, Manufacturing, Hotels and restaurants and Transport and storage). The number of large companies that entered insolvency in 2025, those that achieved a turnover of over 500,000 euros in 2024, is also at its highest level in the last seven years, namely 684 (2025), compared to 610 (2024).

Tiberiu Chesoi showed: "The year 2025 was a complicated and difficult year for the Romanian business environment, in which the geopolitical context played an important, generally negative, role. The fact that we are dependent on the European single market mattered a lot and made our economy vulnerable. A second factor that influenced insolvencies was the implementation of aggressive tax policies. The state and the government have made the business environment vulnerable through the tax measures adopted, such as increasing VAT and lowering the turnover ceiling for micro-enterprises to 100,000 euros and requiring them, from January 1, 2026, to have at least one employee. Therefore, we estimate that the year 2026 will likely continue the trend of increasing insolvencies. For the business environment, the watchword in 2026 will be adaptability, as tax changes will continue to put pressure on companies." The most insolvencies opened in 2025 were recorded in Bucharest (1,359) and in the counties of Bihor (661) and Cluj (511). Of the 7,553 insolvencies opened in 2025, Bucharest continues to concentrate the largest share (18%). The capital also attracts the most registrations (22% of the total), followed by Ilfov, Cluj and Timiş. Bucharest generates the most business closures, followed by Cluj, Constanţa and Bihor.

The study prepared by Coface Romania also shows that, after a historic low in 2021, the trend of total amounts refused for payment has reversed. Thus, in 2025 the strong growth observed in 2024 continued, reaching a level of 3.52 billion lei, the highest in the last seven years. The number of refused payment instruments increased by 12% compared to 2024, but remained below the level recorded in 2019, reaching 43,600.

• Global and European context, unfavorable to the national economy

Sectoral developments during 2025 were determined in particular by the inflection point reached by the growth model of the Romanian economy (the transition from economic growth fueled by unsustainable fiscal stimulus to economic growth modeled by rationalizing government consumption and investment), the fiscal consolidation process, the payment behavior of the Romanian state, but also by the financing cost of local corporations, which remains high and, in large part, conditioned by the level (the highest in the European Union), of inflation, Coface Romania representatives showed.

Bogdan Nichişoiu, Regional (Central & Eastern Europe) Enhanced Information Manager, stated that all of the above unfortunately also experienced an unfavorable global, but also European context: "Without any surprise, economic confrontations and military confrontations are the most important risk vectors, at a remarkable distance from climate change or the risk of recession. Europe is at a crossroads, a moment of quo vadis, because in the last ten years it has grown economically slower than the US, China or Japan. We have had an erosion of investments in the European space, we have been incapable of creating digital giants in Europe and we have a fragmented capital market. At the same time, we are champions in overregulation in the field of companies, which cannibalizes approximately 22% of the human resources of SMEs. In the current global context, Europe's economic growth model is no longer verified. China is a strong competitor for crucial industries for Europe, such as the automotive industry, and the tariff fences raised by the Trump administration is also limiting access to the US market. However, Germany seems to be stabilizing. The federal government led by Chancellor Friedrich Merz has taken courageous and important decisions regarding the use of public debt and subsidizing part of the cost of energy, which has led to economic growth in Germany, which will continue by about 1% in 2026. The stabilization is seen in industrial orders, which entered positive territory for the first time since 2022, and in the stabilization of the number of insolvencies in Germany. The industries that generated an increase in the number of insolvencies in 2024 began to reduce their number in 2025”.

The Coface representative also mentioned that, in this context, our country remains a binomial of lights and shadows, with a frugal economic growth of about 0.6%, accompanied by the largest twin deficits in Europe.

"We have a fiscal deficit that puts pressure on the public debt, which has passed the psychological threshold of 60% of GDP, becoming increasingly difficult to bear from the perspective of financing costs. The state's financing cost inevitably shapes the cost of capital of companies in Romania. A Romanian company that borrows for an investment loan pays, in equivalent terms, approximately 200 basis points more than a Polish company. However, there are also bright spots. One of them is stopping the hemorrhage of confidence from international rating agencies, which led last year to a decrease of approximately 200 basis points in financing costs. Another bright spot is represented by public investments of 7.2% of GDP, and to these is added the multiplier effect of joining the Schengen area. Investments in green energy are also important: we have production capacities of approximately 2.5 gigawatts installed in 2025. Added to all this is the opening in 2025 of 150 kilometers of highway and the fact that our country received 22 out of 25 approvals required for the OECD accession process”, said Bogdan Nichişoiu.

• Investments in the food industry for creating added value

Mr. Nichişoiu also showed that, if the first half of last year recorded a maintenance of private consumption at the level of 2024, in the second semester, after the reliberalization of the electricity market, after the VAT increase and after the fiscal measures introduced by the Government, the consumer became more reluctant, which led private consumption into frugal territory, even negative in certain segments, such as the food and beverage area.

Bogdan Nichişoiu also said: "Industry remains a polynomial marked by expensive energy, a lethargic Germany and with the minimum turnover tax of 1% in 2025, a tax that has broken the wings of exporters. The points of tension are the metallurgical, automotive and chemical industries. Unfortunately, there have been news almost every month about the closure of industrial hubs. It is no coincidence that the PMI index has remained in negative territory for 19 consecutive months. However, there are also positive developments, especially in the food industry, where we have seen important investments: Transavia, the Cristim IPO, the Carmistin banking syndication for investments and the Agroland projects. The common denominator of these investments is vertical integration and orientation towards products with higher added value".

He also reviewed the negative factors: the payment behavior of the state, especially of local authorities, and the bureaucracy, which inhibits the pace of infrastructure projects.

"We must not forget that we are at the beginning of March and we still do not have the state budget approved. The paradox of 2025 was that we had a lot of work in construction, but monetizing this volume of work, due to the state's payment behavior, was difficult", noted Bogdan Nichişoiu.

The Coface representative also said that, after 2025 meant a big breath of oxygen for Romanian farmers, 2026 seems to be a replica of the previous year, especially since there is an excess of water in the soil for the crops established last fall. Regarding the pharma sector, Mr. Nichişoiu showed that it depends over 80% on the liquidity coming from the public sector - hospitals and CNAS, but, although the market is growing in value, it is not growing in number of units sold, with consumer fatigue being evident.

"Inflation in the non-prescription product segments led to an 8.8% decrease in the number of units sold in the last quarter of last year. Another factor is the state's payment behavior: between March and August it was equivalent to the non-investment grade level, which generated tensions in the market, although these were not reflected in insolvencies or compositions, because the players rescheduled the state's debts”, Bogdan Nichişoiu also said.

Coface representatives also said that the business environment in our country remains dynamic, characterized by a high capacity for regeneration and that, despite the increase in the number of dissolutions and suspensions in recent years, which indicates constant pressure, especially on small and medium-sized companies, a high rate of registrations is maintained, which confirms the entrepreneurial potential.

According to the cited study, of the over 1.29 million legally active companies, approximately 100,000 are SRLs, and 450,244 are PFAs. The number of companies deregistered in 2025 was 83,233, almost the same level as in 2024. In 2025, a 23% increase in the number of registrations was reported compared to the previous year and a 22% increase in dissolutions.