Finance News by Mazars Romania - September 2022

Fri | 30.09.2022

Accounting/audit/tax

Finance News by Mazars Romania - September 2022

Banks grapple with GAR objectives, by Mazars

In force since 1 January 2022, the European Union’s Taxonomy regulation aims to support the market for green finance. More specifically, greater transparency in the market will help prevent green washing by providing information to investors about the environmental performance of assets and economic activities of financial and non-financial information.

For the banking sector, the target is to measure the share of financing allocated to sustainable economic activities by publishing a Green Asset Ratio (GAR). However, in a recent analysis of the first GARs issued by the European Union’s 11 leading banks, the absence of information means banks have had no choice but to estimate a company’s level of green finance. These estimates have been taken into account in the ratio published mainly on a voluntary basis by the banks reviewed.

Such voluntary ratios reflect the broadening of the scope of eligible assets by including the financing of companies identified as subject to the Non-Financial Reporting Directive (NFRD) or by having an EU economic activity classification through a NACE code listed in the delegated act on climate targets.

Read more info HERE.

Reliable information key to the insurance sector’s ability to apply Green Taxonomy, by Mazars

The objective of the European Union’s Taxonomy regulation, in force since 1 January 2022, is twofold for the insurance and reinsurance sector. First, to measure the share of investments devoted to financing economic activities eligible for the taxonomy, known as the Investment Ratio. Second, to measure the share of gross premiums written in eligible non-life insurance, or Non-life Underwriting Ratio.

However, in a recent analysis of 11 European Union insurers and reinsurers based on the regulation’s first financial year, a lack of eligibility ratios of non-financial companies subject to the Taxonomy regulation meant the share of eligible investments on these counterparties had to be estimated. As such, most of the insurers and reinsurers in the panel indicated that they use an external data provider such as Carbon4 or ISS ESG, allowing them to determine their voluntary ratio based on estimates.

In contrast, the mandatory ratios for investments are relatively homogeneous, between 0% and 10% and up to 15% for AXA and MAIF. This is mainly due to the methodology adopted for identifying eligible assets in the portfolio, particularly real estate assets.

Read more info HERE.

New CEE tax guide outlines fundamental changes and long-term trends, analysis by Mazars

Providing information on taxation in 22 Central and Eastern European (CEE) states, the latest Mazars CEE tax guide analyses long-term taxation trends and fundamental tax regime changes in each country, both now and in previous years. The publication is designed to help investors understand the complexities of the various CEE tax regimes that are vital for long-term investment decisions.

Significant social tax differences

Mazars’ analysis found that social taxes are decreasing in almost all observed countries, but the extent of the decrease shows significant differences across jurisdictions. The basic approach to income taxation also varies, with some countries such as Bulgaria, Hungary and Romania continuing to enforce flat-rate income tax rates. While Austria, Germany and Slovakia maintain significantly progressive tax rates.

In the countries analysed, average social taxes borne by employers amount to 15% of gross wages. Still, there are significant differences between the lowest, less than 5% in Romania, and the highest, 30% in countries such as Slovakia, making tax system comparisons difficult. A more practical way of comparing systems is the so-called ‘tax wedge’, which shows what percentage of total income the state takes away in taxes and contributions. The tax wedge indicator varies between 15% and 51%, mainly depending on income levels and family status.

All 22 countries analysed show the most significant variation is in wage levels. Minimum wages in the Czech Republic, Hungary Slovakia and Poland, known as the Visegrad Four countries, range between €500-€650. Minimum wage levels are significantly lower in the Balkans and Moldova, where they are below €400 compared with over €1,700 in Germany and Austria. In terms of the private sector, the euro-based average wage grew by more than 12%. However, in Serbia and Hungary, private sector wages increased by 14% and 19%, respectively.

Read more info HERE.