About Romania – a short and helpful guide for expats

Located in southeastern Europe, Romania is a country with a rich history, stunning natural landscapes, and a vibrant culture. Today, Romania is one of the fastest-growing economies in Europe, with a strong focus on sectors such as IT, manufacturing, and tourism.
About Romania
About Romania

About Romania

This is a short and helpful guide about Romania, that helps you understand a bit of: history, geography, economy, and many useful aspects.

Table of contents:

  1. A bit of history about Romania
  2. Romania in the EU
  3. Geography and population
  4. Government and political leadership
  5. Country’s regions and cities
  6. Romanian economy – evolution and structure

Romania is for sure a country that deserves to be added to your “must see” list. Home to wonderful destinations, friendly people and areas where nature is still abundantly present, the country has many things and places to show to new & returning visitors.

If you’re planning to visit Romania, or have been here before, but would like to learn more about this country and the local people – e.g. history, geography, population, economy and political leadership – here you have a short guide.

1. A bit of history about Romania

If we had to briefly define the history of Romania, we would say that it’s a long quest for unity and independence. There’s a strong connection between the history of Romania and its geographical position on the continent. Our country was always located at the crossroads of great historical empires.

A relatively young state, Romania was founded, as a first step, in 1859 by the union of Moldavia with Wallachia. Later, in 1878, Dobrogea also joined the union, and in 1918, Transylvania and Bucovina, and for a while Basarabia. Before this big union in 1918, the entire territory was divided politically, economically, religiously, the Romanian language being the only common element during all this time.

About Romania - Romania after the 1859 Union
Romania after the 1859 Union of Moldova with Wallachia (source: Wikipedia)

It is said about the current territory of Romania that it has been inhabited uninterruptedly for more than 40,000 years. The strongest argument is the discovery made in 2002 at the “Cave with Bones” (in Caraş Severin County) of three skeletons considered to be the oldest human remains in Europe.

The first population on the actual Romanian territory – Carpathian-Danubian-Pontic territory – whose name we know as the Thracian population, was attested in Homer’s poems “Iliad” and “Odyssey”.

The first Romanian state formations appeared in the 12th and 13th centuries. The principalities of Wallachia, Moldova and Transylvania were formed during those times.

In 1600, under the leadership of the voivode Mihai Viteazul, the union between Wallachia, Transylvania and Moldavia took place for the first time – in Iași, in May 1600. But the union lasted only for a year, Mihai Viteazul being defeated by the Turks and the Habsburgs.

Later on, in 1859, under the leadership of Alexandru Ioan Cuza, the Union of the Romanian Principalities (Moldova and Wallachia) took place, a personal union achieved through his double election in Iasi and in Bucharest (the capital cities of the two principalities at that time). Seven years later, the German prince, Carol of Hohenzollern-Sigmaringen, is proclaimed the ruler of Romania.

In 1878, Romania’s Independence from the Ottoman Empire was declared, and in 1918 Romanians achieved the Great Union through the alliance with territories of Transylvania, Basarabia and Bucovina.

In 1939, the beginning of the Second World War finds an economically strong Romania with a flourishing agriculture. The communists take power and force King Mihai to abdicate, proclaiming the Romanian People’s Republic.

The communist leadership in Romania was one of the most oppressive and brutal regimes in Eastern Europe. Two terrible decades follow in which hundreds of thousands of people lose their lives in communist prisons. Ceaușescu attracts international reproach by embracing the cult of personality and constantly violating the fundamental rights and freedoms of citizens.

Ceaușescu was in the end removed from the country’s leadership by the December 1989 revolution that left more than a thousand dead. Since then, Romania’s path has been constantly with the Euro-Atlantic structures, the most important steps being taken in 2004, when it became a NATO member and in 2007, when it joined the European Union.

2. Romania in the EU

Romania began its journey to the European Union on February 1, 1993, which could signify the Association Agreement of Romania to the European Union. The document entered into force two years later.

Romania officially applied to join the European Union in June 1995, and in December 1999, the accession negotiations was opened by the European Council, along with six other states. Officially, negotiations were opened on 15 February 2000.

On 25 April 2005 in Luxembourg the Treaty of Accession of Romania and Bulgaria to the EU was signed by Romania and our neighboring country, Bulgaria and by the representatives of the member states of the Union. Romania officially became a member of the EU as of 1st of January 2007.

The signing of the Accession Treaty is a political event of utmost importance, which puts an end to a dramatic legacy and opens up unprecedented opportunities, based on the principles of freedom, sustainable development, tolerance and respect for human dignity.

3. Geography and population

According to the October 2011 Population and Housing Census (final results), the permanent population of Romania was about 20.12 million (20,121,641) people. 727,500 people were away for a long time (over 12 months), although it is estimated that much bigger number of Romanian people are living abroad.

Of the total permanent population of Romania, 54.0% lived in municipalities and cities, and 46.0% lived in rural areas. Compared to the situation from the previous census, the share of the permanent population in the urban area increased by 1.3% points to the detriment of the rural environment.

16.79 million people (88.9%) declared themselves Romanians. The Hungarian population was 1.227 million people (6.5%), and the number of those who declared themselves Romi was 621,600 people (3.3%). Other larger ethnic groups: Ukrainians (50.9 thousand people), Germans (36.0 thousand), Turks (27.7 thousand), Russians – Lipovans (23.5 thousand) and Tatars (20.3 thousand people).

The largest Romanian communities abroad are in the Republic of Moldova, USA, Canada, Ukraine, Serbia, Germany, Israel, Australia, Austria. We must add the large communities of Romanians who relocated to work abroad, especially in Italy and Spain, but also in the UK, Ireland and Portugal.

Population by sex, according to the National Institute of Statistics (as of October 20, 2011): 51.4% female, 48.6% male. The estimated average age of the population on January 1, 2013 was 40.9 years, increasing.

Romania is located in the center-eastern part of Europe. Romania’s neighbors are: Ukraine (North and Northeast), Moldova (Northeast), the Black Sea (East), Bulgaria (South), Serbia (Southwest) and Hungary (West).

With an area of ​​238,391 square km, Romania ranks 12th on the European continent by size.

Romania’s geography is characterized by a great diversity and complexity. Of the entire surface of the country, 31% is occupied by mountains (with altitudes between 800 and 2,543 m), 36% by hills and plateaus, and the rest of 33% by plains (below 200 m altitude).

Harmoniously arranged, the country’s geography revolves around the arch of the Carpathian Mountains. In the center of the territory is the Transylvanian Plateau, surrounded by the mountain chains of the Carpathians: Eastern Carpathians, Southern Carpathians (with the maximum altitude on the territory of Romania through Moldoveanu Peak, of 2,543 m) and Apuseni Mountains.

The Sub-Carpathian hills (with heights of 800-900 m) make the transition to the plains. The most important is the Romanian Plain, located in the southern part and adjoining the Danube River, and which is the main agricultural area of ​​the country.

The Danube Delta, located to the East of the country, in the north of the Dobrogea Plateau, is the youngest land form in Romania. It includes the 3 main arms of the Danube River: Chilia, Sulina and Sfântul Gheorghe, through which the Danube flows into the Black Sea.

The network of running waters in Romania is arranged radially, due to the relief configuration, most of them spring from the Carpathian mountains. The main collector is the Danube, which forms most of the southern border of the country.

The Black Sea forms the border of Romania in the southeast on a distance of 245 km.

Romania’s climate is temperate-continental, with oceanic influences in the west, Mediterranean in the southwest and continental-excessive in the northeast. Romania’s fauna and flora are very rich, thanks to its geographical position and the diversity of natural conditions.

4. Government and political leadership

From an organizational perspective, the Romanian state is considered a semi-presidential republic.

According to the Romanian Constitution, the Government represents the executive power in Romania, together with the president. The government is organized and operates in accordance with the constitutional provisions, based on a government program previously accepted by the Parliament.

The government consists of a leader named prime minister and a number of ministers who lead specialized ministries in certain areas. The Government of Romania occupies Victoria Palace in Bucharest, as the headquarters of its activities.

The appointment of the government is made by the President of Romania based on the vote of confidence granted by the Parliament. The nomination of the candidate for prime minister is made by the president after consultations with political parties or the coalition that holds the majority in the Parliament. After his nomination, the candidate must propose a government program and a complete list of proposals for ministerial positions within 10 days.

The Government is organized and operates in accordance with the constitutional provisions, based on the Government Program accepted by the Parliament.

The Romanian Parliament is the only institution of the Romanian state that exercises control over the Government through a mechanism of questions, interpellations and parliamentary commissions of inquiry.

The Romanian Parliament is bicameral, being composed of the Senate, with 137 members and the Chamber of Deputies, with 314 members. A number of 18 additional seats in the Chamber of Deputies are reserved for the representatives of minor. The current government is led by Marcel Ciolacu, who was appointed Prime Minister of Romania in June 2023, by President Klaus Iohannis.

5. Country’s regions and cities

After the fall of the communist regime, the 1991 Constitution and the Law on local public administration no. 69/1991 established as basic administrative units the counties, municipalities, cities and communes (consisting of several villages). Romania is organized in 41 counties, plus Bucharest, the capital of the country. Bucharest is a municipality with independent county rights. It is not part of Ilfov county, the county surrounding the city.

The average population of the 41 counties of Romania is 445,000, Iași county being the most populated (772,000), and Covasna county (210,000) the least populated. The average surface of the counties is 5,809 square km, Timiș county (8,697 square km) being the largest, and Ilfov county (1,583 square km), the smallest.

Bucharest, which has the same administrative level as a county, is the most populated and smaller than any county, with 1,883,425 people and 228 square km. There are currently 319 cities in Romania. Romania’s economic development poles are Bucharest-Ploiești, Timișoara-Arad, Constanța-Galați, Cluj, Iași, Craiova, regions supported by the large number of inhabitants, which means labor force and purchasing power.

Big cities are a magnet for foreign direct investment, for specialists in the field of work, motivated by higher salaries and a higher life expectancy. The top of the most developed municipalities is also confirmed by the employees’ earnings.

Thus, in the first ten counties regarding the average monthly net earnings per inhabitant, appear: Bucharest, Constanta, Prahova, Timiș, Cluj, with salaries above the national average. The average net salary in the country, according to INS data, is 328 euros per inhabitant, while Bucharest has 460 euros per inhabitant, and Constanța and Prahova 347 euros per inhabitant.

6. Romanian economy – evolution and structure

Romania benefited from a significant economic growth by joining the EU in 2007, it promoted international trade with the other members of the union. Romania’s main business partner is Germany. It contributes 19.7% to exports and 19.8% to imports of this Balkan economy. The second most important business partner is Italy.

Romania’s trade balance is negative. Imports exceed exports by about 15%. Trade with China, Hungary, Poland, Germany and the Netherlands is mainly involved in the negative trade balance. On the contrary, Romania has a positive balance of reciprocal trade with Great Britain, USA or France. The decision of the British voters regarding the withdrawal of Great Britain from the EU could be unfavorable for the Romanian economy.

The Romanian economy in recent years is in good shape. GDP growth, the low debt ratio of the state sector and other indicators lead to the consideration of Romania’s accession to the euro area. The potential acceptance of the euro is still being postponed, so it could be the closest in 2020.

We hope that our short guide helped you gain an overview of everything that Romania means: a country full of historical events and great complexity of its geography.

7. Romanian tax system – 2024

In 2024, Romania continues to adapt its taxation laws to align with both local economic goals and international standards.

Individuals who are Romanian tax residents are subject to income tax on their worldwide income, while non-residents are taxed only on their Romanian-sourced income. This means that tax residents of Romania are required to pay taxes on income earned both within the country and abroad.

The definition of a tax resident includes individuals who have their domicile in Romania, those who are present in Romania for 183 days or more in any 12-month period ending in the fiscal year concerned, or those whose center of vital interests is in Romania.

The taxation of worldwide income for individuals encompasses various types of income, including but not limited to, employment income, business profits, investment income (such as dividends, interest, and capital gains), rental income, and pensions. Each type of income may be subject to specific rules, allowances, deductions, and tax rates.

Romania has traditionally employed a flat tax rate system for personal income, which simplifies the tax calculation process. As of recent years, this rate has been set at 10%, which applies uniformly to most types of income.

Similarly, the corporate tax rate for 2024 remains at a competitive level to encourage business investment and economic growth. Typically, Romania has offered a flat corporate tax rate, which has historically been among the lower rates in the European Union to attract foreign investors and support local businesses.

While specific rates can be subject to change due to fiscal policy adjustments, the rate has traditionally been set at 16% for standard corporate entities.

However, Romania also offers a microenterprise tax regime, under which smaller businesses may pay tax on their revenue at rates lower than the standard corporate income tax rate, provided they meet certain criteria such as revenue thresholds and the number of employees.

These provisions aim to stimulate entrepreneurship, support small and medium-sized enterprises (SMEs), and foster economic diversity. Businesses should consult the latest tax legislation or a tax professional to confirm the current rates and understand how they apply to their specific circumstances. Also, to explore any potential tax incentives or exemptions that could further reduce their effective corporate tax rate.

Value-Added Tax (VAT) in Romania is a consumption tax that applies to most goods and services. As part of the European Union, Romania follows the EU’s VAT directives, but it also has the autonomy to set specific rates that apply within its territory. The standard VAT rate in Romania for 2024 is aligned with EU norms, aiming to balance revenue generation for the state with the need to keep the cost of living and doing business reasonable.

The standard VAT rate has been historically set at 19%, but Romania also applies reduced rates for certain categories of goods and services to support social and economic objectives. For example, reduced rates apply to essential goods such as food, medicines, and certain services, including but not limited to, cultural events and utilities. These reduced rates are typically set at 9% or even 5% for specific sectors, demonstrating Romania’s commitment to making essential goods and services more affordable for its citizens.

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