How to determine the obligation to file a tax return in Romania

File a tax return in Romania

When it comes to the obligation to file a tax return in Romania, our tax system makes no exception from other countries. Everyone would agree that preparing and filing a tax return is not an easy job in any country. But this gets a lot more complicated when you are a foreign individual that has just landed in a new jurisdiction. Since you have no information (or very little) about the tax system of your new country, this can grow into your worst nightmare. 

Are you an expatriate who has just recently moved to Romania, and is trying to get his mind around filing his tax forms? And you’re not quite sure if you have the obligation to file a tax return in Romania? We created this article just for you, to help you clarify your questions regarding the personal tax obligations you may have while living in Romania.

First, let us clarify that in this article we will address only the annual tax return filing obligation. This is simply because we want to keep the information as concise, and as clear as possible. This will also help you keep a clear understanding regarding your personal tax matters. If there is any topic you wanted clarified and cannot find it herein,  please check also other articles in the Resources section. Otherwise, you are always welcome to send us an email with your questions.

Now let’s start with the first question:

1. Do I have an obligation to file a tax return in Romania?

The answer to this question splits into at least 2 scenarios:

If you are deemed tax resident of Romania:

You do have the obligation to report your personal income (any income other than salary) through a Romanian annual tax return. Now, the tax return obligation depends also on the types of income that you generate. For example, for some types of income a tax withholding obligation (by the income payer) may apply. Since your income payer withholds the income tax and declares it already, this may eliminate the need for you to report that income, so to avoid duplication. In practice, this means that you will not have an obligation to report certain types of income for which tax is withheld at source by a Romanian payer. Such types of income are: dividends paid by a Romanian company, or interest paid by a Romanian bank.

2. What types of income do I have to declare as a tax resident?

file a tax return in Romania_types of income

In general, if, as a foreign individual you have been deemed tax resident of Romania, you have the obligation to report the following types of income through the annual tax return:

  • any personal income that you generate from abroad: rental income, dividends, interest, capital gain (derived as result of sale of any financial investments), pensions or similar income, intellectual property rights.
  • certain types of income that you generate from Romania: rental income, capital gains (derived as result of sale of any financial investments), intellectual property rights, income from self-employment.

All these types of income (from Romania or from abroad) must be declared by a Romanian tax resident in the annual tax return (in Romanian: “Declaratia unica”).

If you are NOT deemed tax resident of Romania:

You have the obligation to report ONLY the income that you obtain from Romanian sources (paid by Romanian residents or obtained from activities carried out in Romania).

2. What types of income do I have to declare as a tax non-resident?

As tax non-resident, you have the obligation to report ONLY the income that you obtain from Romanian sources, as detailed under second bullet above – e.g., rental income, capital gains (derived as result of sale of any financial investments), intellectual property rights, income from self-employment, or income from other sources. The types of income that you derive from Romania must be declared through the same annual tax return (in Romanian: “Declaratia unica”).

If you want to see how it looks or want to use it, here is a link to the Romanian annual tax return for 2018 (“Declaratia unica”): Declaratia unica privind impozitul pe venit si contributiile sociale datorate de persoanele fizice.

Now, let’s assume you determined that you are a Romanian tax resident and you have the obligation declare some income that you obtained from your home country. Let’s assume that you obtained some dividends you’ve been paid as shareholder in a foreign company. We’ve already determined that, as Romanian tax resident, you have the obligation to declare that income in Romania. We’ve also determined the tax return that you have to prepare and submit to the tax office. Now, let’s clarify the applicable deadline and the tax office where you must submit the return.

4. What is the deadline for filing the tax return?

file a tax return in Romania

The deadline to file the tax return to the Romanian tax office is 15 March of the following year. For example, if you received the dividends during year 2019, the deadline to report the income through the annual tax return is 15 March 2020. There is no legal option to extend the reporting deadline (through personal request). The extension of the deadline can be performed only by the authorities.

Same deadline applies for the payment of the taxes due.

This material has been prepared for informational purposes only, it describes aspects of general nature and is not intended to provide, and should not be relied on for tax, legal or accounting advice. For specific advice on your case, we encourage you to contact a specialized consultant.

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