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Romania

Financial Year – 1 January – 31 December
Currency – Romanian leu (RON)

Corporate Tax Summary

Residence – A Romanian resident (legal entity) is any Romanian legal person, any foreign legal person having its place of effective management in Romania and any legal person established under European law having its registered office in Romania.

The following taxpayers are liable to pay Corporate Income Tax (CIT):

  • a) Romanian legal entities, with certain exceptions (e.g. but not limited to State Treasury, National Bank, Romanian Academy etc.).
  • b) Foreign legal entities operating through a permanent establishment in Romania.
  • c) Foreign legal persons with Romania as the place of effective management.
  • d) Foreign legal persons having incomes from the transfer of real estate located in Romania or any rights related to such property (including the rental or disposal of the use of real estate located in Romania).
  • e) Legal persons established under European law having a registered office in Romania.
  • f) Others, e.g. foreign legal persons resident in a third country operating in Romania through elements treated as permanent establishments or fiscally transparent entities for situations involving the existence of uneven treatment of hybrid elements or uneven treatment of tax residence.

Basis of Taxation – CIT is applied mainly as follows:

  1. On taxable profit obtained from any source, both in Romania and abroad (a-c and e above).
  2. On taxable profit attributable to the permanent establishment, i.e. the taxable profit at the level of the permanent establishment designated to fulfil the tax obligations.
  3. On income from the exploitation of natural resources located in Romania, as well as income from the sale-transfer of shares held in a legal person in Romania, on their taxable profit (d above).

For a special group of entities called micro-companies or microenterprises, CIT is replaced by a 1% – 3% tax on total incomes where the company fulfils certain conditions (at incorporation or as of 31 December of the previous fiscal year).

The conditions are:

  • a) Annual incomes not exceeding the RON equivalent of EUR 1,000,000.
  • b) Its share capital is held by persons other than the State and administrative-territorial units.

Companies registering a minimum of 1 full time employee are taxed at 1%, while those without employees are taxed at 3%.

The Fiscal Period is a Calendar Quarter

The option to exit the microenterprise category and become a CIT-paying subject to the legal entity fulfilling certain conditions.

Reference
Corporate Income Tax Rate (%) 16%
Branch Tax Rate (%) 16%
Withholding Tax Rate:
Dividends – Franked a) exempted (special condition – see reference)
b) 5%
c) % from DTC
Generally, dividends paid by a Romanian legal person to a legal person resident in another EU Member State are exempted of WHT if certain conditions are met. These refer to:

  1. The type of legal person receiving the dividends.
  2. A minimum 10% ownership of Romanian entity shares for at least 1 year.
  3. The type of Romanian legal entity paying the dividends (e.g. a CIT taxpayer).

Where these conditions are not met, WHT is applicable at the most favourable rate (Romanian tax or tax on dividends included in a DTC (Double Taxation Convention).

Dividends – Unfranked a) exempted (special condition – see reference)
b) 5%
c) % from DTC
idem
Dividends – Conduit Foreign Income a) exempted (special condition – see reference)
b) 5%
c) % from DTC
idem
Interest a) exempted (special conditions)
b) 16%
c) % from DTC
d) 50%
Interest and royalty payments originating in Romania are exempted from WHT in Romania, provided that the beneficial owner of the interest or royalties is an associated entity of the Romanian legal entity. Ownership conditions (such as percentage of period) apply to the exemption.
In some cases (where there is no communication between authorities), 50% WHT applies (qualified suspicious transactions).
Royalties from Intellectual Property a) exempted (special conditions)
b) 16%
c) % from DTC
idem (except for the 50% tax rate).
Fund Payments from Managed Investment Trusts n/a
Branch Remittance Tax n/a
Net Operating Losses (Years)
Carry Back no
Carry Forward 7 years

Individual Tax Summary

Residence – Resident (individual) is any natural person who fulfils at least one of the following conditions:

  • (a) Is domiciled in Romania.
  • (b) The centre of the person’s vital interests is located in Romania.
  • (c) Is present in Romania for a period or periods exceeding a total of 183 days, during any period of 12 consecutive months ending in the calendar year concerned.
  • (d) Is a Romanian citizen working abroad as an official or employee of Romania in a foreign state.

A non-resident individual who fulfils the conditions of residence is subject to personal income tax (from any source, both in Romania and outside Romania) starting the date on which he/she becomes resident in Romania.

Exceptions: Individuals who can prove that they are residents of states with which Romania has concluded a DTC (provisions of the conventions apply).

Basis of Taxation – Personal income tax applies to the following income:

  • a) Income obtained from any source, both in Romania and outside Romania for Romanian resident natural persons domiciled in Romania.
  • b) Income obtained from any source, both in Romania and outside Romania for natural persons resident in Romania from the date of becoming a Romanian fiscal resident.

Filing Status – Individual taxpayers who, individually or in the form of association, generate income/loss from various activities ( self-employment, intellectual property rights, disposal of goods, agriculture, forestry and fisheries activities etc.) , determined in the real system (i.e. based on effective income and expenses), are required to submit a single declaration of income tax and social contributions to the competent tax body for each tax year by 15 March of the year following that of the income for the purpose of finalising the annual income tax.

The single declaration on income tax and social contributions due from natural persons must be completed for each source within each income category.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
All incomes 10% 10%

Goods and Services Tax (GST)

Rate 19% / 9% / 5%
Taxable Transactions a) Transactions taxable for VAT in Romania are those which cumulatively meet the following conditions:
1. Transactions which constitute, or are treated as, a supply of goods or a supply of services within the scope of the tax, carried out with payment.
2. The place of delivery of the goods or services is considered to be in Romania.
3. The supply of goods or services shall be performed by a taxable person, acting as such.
4. The supply of goods or services results from one of the economic activities referred to in Article 269
(1) (a) of Regulation (EEC) No 2081/92.
b) Imports of goods carried out in Romania by any person, if the place of import is in Romania.
c) Transactions carried out with payment, for which the place is considered to be in Romania.
Registration Taxable persons established in Romania whose annual turnover, declared as estimated at incorporation or realised during the fiscal period (calendar year) is above the ceiling of RON 300,000 (the equivalent of EUR 88,500 at the exchange rate communicated by the National Bank of Romania on the date of EU accession) are required to register for VAT in Romania.

If, in the course of a calendar year, a taxpayer’s turnover reaches or exceeds the ceiling above, the tax payer must apply for registration within 10 days of the end of the month in which the ceiling is reached or exceeded.

Filing and Payment The VAT tax period for reporting and payment is the calendar month.

By way of exception, the tax period for a taxable person who, during the preceding calendar year, had turnover from taxable and/or exempt transactions which did not exceed the ceiling of EUR 100,000, the equivalent of which in RON shall be calculated in accordance with the exchange rate communicated by the Romanian National Bank, shall be the calendar quarter, unless the taxable person has made one or more intra-Community purchases of goods during the preceding calendar year.

Other Taxes Payable

Tax Reference
Payroll Tax
  • Income tax on wages 10%
  • Social security contributions 25%
  • Health insurance contributions 10%
Stamp Duty n/a
Land Tax Tax on buildings:

  • 0.08% – 0.2% individuals
  • 0.08 – 1.3% legal entities. The tax/land tax is determined taking into account the area of the land, the rank of the locality in which the land is located, the area and the category of use of the land, according to the classification made by the local council.

Last updated: 04.08.2020