TAXATION OF CORPORATIONS
The profit tax rate (IS) is of 16%.
TAXATION OF DIVIDENDS
Dividend distributions are taxed at a rate of 5%. It should be noted that, under double tax treaties signed with many European countries, this withholding may represent a tax credit imputable to the amount of tax owed by the shareholder or partner in his country of origin. Dividends distributed for the benefit of persons domiciled in a state that has not signed a tax agreement with Romania are subject to a 50%-withholding tax.
The effective VAT rate has been of 19% since 1 January 2017.
A reduced 9%-rate is applied to certain hotel services.
TAX ON THE INCOME OF INDIVIDUALS
Individuals are taxed at a 10%-rate.
In particular, salaries are taxed in the form of a 10%-withholding tax.
Under certain conditions, the salary income received by Romanian IT specialists is tax-free.
Several income categories (independent incomes, royalties, land incomes, etc.) are however additionally affected by social security expenses for a flat amount of RON 190 for the health contribution and at a rate of 25% for the pension contribution.
SMALL ENTERPRISES (MICRO-ENTERPRISE REGIME)
Companies that have an annual turnover of less than EUR 500,000 can choose to pay, instead of corporation tax, but instead pay income tax of 1% of their income provided however:
- that they employ at least one full-time employee (or the equivalent of a full-time employee if the company uses part-time jobs);
- that revenues from consulting and management activities represent less than 20% of turnover;
- that the same partner does not hold more than 25% of the shares in more than 3 micro-enterprises
Last update: March 2023