Below-the-line (BTL) advertising is a very popular marketing tool in Romania. At the beginning, companies using BTL advertising faced unfavorable tax legislation. ‘Until 1998, the deductibility of advertising expenditure was limited to 3% of annual taxable income.’ (EIU) New investments in Romania during that period faced significant, non-deductible advertising costs. Recognizing the importance of advertising to the growth of businesses, the Romanian government finally approved a law (Emergency Ordinance 92) on incentives for direct investments, which came into force in January 1998. For the first time, the law encouraged advertising activities by allowing full deductibility of advertising expenditure. The situation improved with the introduction of a new law at the beginning of 2000, which reduced the profit tax rate from 38% to 25% and the value- added tax (VAT) rate to 19%, easing the tax burden for non-deductible advertising expenses. (EIU)

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Another impediment for advertisers is a new law (99/2000), implemented from the start of 2001, which imposes restrictions on certain types of BTL advertising. Companies may no longer offer prizes other then their own products in promotional sweepstakes, and "lucky dip" competitions are also forbidden; instead, prizes can only be awarded when consumers have demonstrated skill in a competition. Moreover, companies that want to release new products are no longer able to sell them at discounted, promotional prices, while so-called loss-generating sales, that is, the sale of products at a price equal to or lower than the purchase cost, are also banned.
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