Tax guide

This is a short tax guide for Romania, presenting brief information on the main tax rules applicable for year 2019 under the Romanian tax law.

The tax guide below provides a basic understanding around Romanian main taxation rules. It provides information of general nature, which may not be applicable to all possible situations. Therefore, for specific guidance related to your case, we advise you to contact us.

Taxation of individuals

Who is subject to Romanian income tax?

1. Romanian tax resident individuals (for any type of income, from any source)  – i.e. an individual is tax resident of Romania if he/she meets at least one of the following conditions:

– has his/her domicile registered in Romania

– the center of his/her vital interests is located in Romania

– resides in Romania for more than 183 days in any 12 months period.

2. Tax non-resident individuals who perform an independent activity through a permanent establishment registered in Romania;

3. Tax non-resident individuals, for income derived from employment activities that are performed in Romania;

4. Tax non-resident individuals who obtain other income from Romania, only for the income obtained from Romania.

Salary tax guide

Salary tax rates

Income tax

10%

applied to gross salary less mandatory employee social contributions.

Employee social contributions

pension fund contribution: 25% (no cap applicable)

health fund contribution: 10% (no cap applicable)

Employer social contributions

labour insurance contribution: 2.25% (no cap applicable)

Employee social security contributions are deductible for income tax calculation purposes.

Personal tax deduction: only available for gross salaries of up to 3,000 LEI/month, can be between 300 – 800 LEI / month, depending on the salary level and number of dependents.

Here is a sample salary tax calculation:
  • Gross monthly salary 5,000 LEI

Less employee social contributions:

  • Pension fund contribution 25% 1,250 LEI

    (no cap applicable)

  • Health fund contribution 10% 500 LEI

    (no cap applicable)

  • Total employee contributions 1,750 LEI
  • Taxable base 3,250 LEI

    (subject to income tax)

  • Income tax due 10% 325 LEI
  • Net salary payable 2,925 LEI
  • Employer social contribution 2.25% 112.5 LEI
  • Total cost for employer 5,112.5 LEI

You can use the Salary Tax Calculators on our website to determine your net salary, gross salary, or payable taxes according to Romanian tax law.

Income from independent activities/self-employment

Income tax

10%

5% for dividend income

Health fund contribution

10%

certain exemptions are applicable

taxable base can be chosen, but cannot be lower than 2,080 LEI/month

Pension fund contribution

25%

certain exemptions are applicable

taxable base can be chosen, but cannot be lower than 2,080 LEI/month

Taxation method: gross income derived less deductible business expenses. For certain types of independent activities, taxation based on annual income quotas can apply.

Investment income
(capital gains, dividends, interest income)

Income tax

10%

5% for dividend income

Health fund contribution

10%

applicable only if total level of annual income equals or exceeds 12 minimum national salaries (for 2019: 12×2,080 Lei = 24,960 Lei)

Rental income

Income tax

10%

applied to gross salary less mandatory employee social contributions.

Health fund contribution

10%

with some exemptions applicable

Taxable income is gross income derived, minus lump-sum expenses of 40% of gross income.

Income from transfer of real estate

Income tax

3%

The taxable base is the gross income derived, less a non-taxable fixed amount of 450,000 LEI.

Exemptions from taxation apply to:

  • any transfer by donation between relatives up to the 3rd degree, as well as between spouses
  • any transfer where value of the real estate is less than 450,000 LEI.

Income from prizes

Income tax

3%

must be withheld at source, if the payer is Romanian resident

The taxable base is the gross income derived, less a non-taxable fixed amount of 600 LEI/each prize.

Income from gambling

Income tax

1% for income between 1 and 66,750 LEI, inclusively

16% for income between 66,751 and 445,000 LEI, inclusively

25% for income that exceeds the amount of 445,000 LEI

The taxable base is the gross income derived by a gambler from the income payer, and it is subject to progressive tax rates, as reflected above.

The gambling organizer/the income payer has the liability to calculate, withhold and pay the income tax due for each beneficiary.

Tax guide for companies

Companies subject to Romanian tax:

1. Romanian tax resident companies, for their worldwide income – i.e., any type of income, from any source – with applicability of double tax treaties, where the case.

A company is tax resident of Romania if:

– it is incorporated under the Romanian legislation

or

– its place of effective management is located in Romania.

2. Non-resident companies, only for their Romanian source income.

Taxable basis and tax rates

Companies taxable on profit

turnover exceeding 1 mil EUR

Tax base must be determined as the difference between the gross income and the business expenses incurred, reduced by non-taxable income and increased with non-deductible expenses.

Tax rate: 16%

Tax period: calendar year, unless it has been chosen to apply a different fiscal year, to match the company’s own applicable accounting regulations.

Micro-enterprises

turnover not exceeding 1 mil EUR

Tax rates:

1% of the revenue, for companies with at least 1 employee

3% of the revenue, for companies with no employees

Tax period: the calendar year

Tax reporting: filing of the returns and payment of the tax due must be done quarterly, by the 25th of the month following the end of each quarter. For companies taxable on profit, the final year tax return and payment must be performed until 25 March of the following year (for the entire closing year).

Related resources:

Updated at: 8 March 2019

We encourage you to keep checking this page, as the tax guide will continue to be updated with useful information.

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