Increasing economic resilience in mountain areas through differentiated fiscal policies and incentives for mountain entrepreneurship under conditions of economic volatility.
Establishing Mountain Special Economic Zones (MSEZs)

Authors: Ioan Gâf-Deac, Adrian Radu Rey 

09.07.2025 – CE-MONT Vatra Dornei

• The need for a favorable fiscal regime for SMEs in mountain areas
• State aid schemes and facilities for local producers affected by crises
• European models of “mountain special economic zones” and their adaptability to Romania

European Models

1. “Special Status Zones” – Madeira (Portugal)

• Madeira has established the Madeira International Business Centre, recognized by the EU as a zone with fiscal advantages under Article 349 of the TFEU, targeting regions with “isolation, difficult terrain, climate, economic dependence.”
• Authorized companies benefit from a reduced corporate tax rate of 5%, plus dividend, property, and stamp tax incentives.
• The model includes requirements for economic substance (minimum number of employees, investments, business plans), and is monitored by the European Commission.

Adaptability to Romania:

• Romanian mountain regions such as the Eastern or Southern Carpathians may obtain similar status by being recognized as natural disadvantaged areas (as provided by EU legislation – e.g., mountain areas in Europe are eligible for exemptions).
• Needed actions:
  • Legislative definition of mountain areas as priority regions
  • Creation of a special fiscal framework coordinated with the European Commission
  • Establishment of clear substance criteria (local employees, investments)

2. Shannon Free Zone – Ireland (Europe’s first “export processing zone”)

• Launched in 1959, it offered profit tax exemptions for export revenues for 25 years, modern infrastructure, and deregulated administrative requirements. By 1968, it had over 4,000 employees.
• It became a best-practice model by combining competitive taxation with logistics and infrastructure.

Adaptability:

• Romanian mountain regions could attract export-oriented investments (e.g., agri-food, wood processing). Tax exemptions could offset higher logistics costs.

3. Special Economic Zones in Poland and other Eastern European countries

• Poland has 14 SEZs offering profit, wage, and property tax exemptions for 10–15 years, targeting low-income regions. Outcome: over 55,000 jobs and significant investment (e.g., in the automotive industry).
• EBRD/EU studies show SEZs are especially effective in regions with:
  • Good infrastructure
  • Skilled labor force
  • Efficient zone management

Adaptability:

• In Romania, mountain towns like Gura Humorului, Câmpulung Moldovenesc, Vatra Dornei can host economic parks with fiscal benefits and investments in logistics and the local labor force.
• Public-private partnerships (PPPs) could be formed for infrastructure and competence centers.

4. “Customs Exclusion” Model – Kleinwalsertal (Austria)

• The Kleinwalsertal region in the Alps has been part of the German customs system since 1891 – facilitating trade without customs barriers between Austria and Germany.
• Although not a “special economic zone” in the fiscal sense, it exemplifies how economic integration tailored to mountain conditions can be achieved.

Adaptability:

• Romania could promote cross-border mountain areas (e.g., with Ukraine, Poland) that benefit from joint customs regimes and logistical facilities to stimulate production and tourism.

Conclusions & Recommendations for Romania

Establishing MSEZ Suceava

1. Regional Context

• The region: Historical Bukovina, including the mountain area of Suceava County (Rarău, Călimani, Obcinele Bucovinei Mountains), offers rich tourism diversity — eco, thermal, cultural — and a strong tradition of crafts and sustainable agriculture.
• The current economy relies on rural & ecological tourism, traditional agriculture, crafts, and urban revitalization (e.g., Suceava, Vatra Dornei), but it remains fragmented and underutilized.

2. SWOT Analysis

3. Development Scenarios

1. Conservative scenario – Limited creation of a mountain SEZ with fiscal facilities (5% profit tax). Moderate application only in agro-tourism parks; light investment calibration.
2. Moderate scenario – Public-private partnerships (PPPs) for infrastructure; creation of competence centers in agro-ecology, digitalization; integration of e-commerce and sustainability. Pilot: Gura Humorului – Dorna area.
3. Extensive scenario – Cross-border MSEZ Romania–Ukraine, extended to the Chernivtsi region; integrated customs and fiscal regime, logistics for exports, regional renewable energy. Requires EU agreements, possibly under Article 349 TFEU.

4. Budgetary Implications & Required Investments

• Infrastructure: ~€25–40 million (access roads, digital connectivity) — EU + PPP funding
• Fiscal facilities: revenue loss through reduced tax, compensated by private investment estimated at €50–80 million over 5 years
• Soft components (education, competence centers): ~€5–10 million, funded by EU, universities, and private sector
• Total estimated investment: €80–130 million, with multiple impacts:
  • +2,000–3,000 jobs over 5 years
  • +15–25% regional gross economic value increase

5. Institutional & Legal Framework

• Legal recognition of the area as a natural constraint zone (Art. 349 TFEU)
• EU approvals for state aid schemes and the fiscal framework
• Local management authority — PPP structure — responsible for monitoring, eligibility, and impact evaluation
• Criteria: minimum local employment, minimum investment, sustainable business plan

6. Strategic Recommendations

1. Develop a PNRR / EAFRD proposal for a pilot MSEZ project in Bukovina (e.g., Gura Humorului – Câmpulung Moldovenesc – Vatra Dornei)
2. Launch a mixed pilot plan: eco-tourism + agri-industry + renewable energy
3. Create a partnership with the local university (“Ștefan cel Mare” University of Suceava) – research & training centers in mountain sustainability
4. Provide logistical equipment: micro-hydro, biomass, e-commerce network for local products
5. After 2 years: impact evaluation and expansion — possible cross-border integration

Conclusion

An MSEZ in Bukovina is feasible:

• It has ideal anchors (rural tourism, agriculture, crafts)
• EU integration is possible (Art. 349)
• Socio-economic impact is clearly estimated

A pilot launch is recommended, robust in legal, fiscal, and institutional terms, under EU monitoring. Later, the project could become a national and trans-European model for mountain areas.

PILOT: MICROREGION ȚARA DORNELOR

Bibliography
https://www.fdiintelligence.com/content/4909c43e-5328-57c4-88ff-772f2afcf08d
https://www.madr.ro/docs/poca/2024/A4.4-EN-Draft-Integrated-Strategy-MA.pdf
https://en.wikipedia.org/wiki/Special_economic_zone
https://en.wikipedia.org/wiki/Kleinwalsertal
https://www.preprints.org/manuscript/202503.1052/v1