corporate taxation

Taxation in Romania

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.

 

VAT

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 with an annual turnover of less than EURO 1,000,000 are not subject to profit tax, but instead pay income tax in the amount of:

- 3% of their income if they do not hire any employees;

- 1% of their income if they hire at least one employee.

Companies wishing to do so may, however, choose the general profit tax regime, provided they hold a capital of at least EURO 10,000 and have at least two employees.

 

Last update: October 2018