This is a short Romanian tax guide, presenting valuable information on the main tax rules applicable under the Romanian tax law. The Romanian tax guide below provides you with valuable 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 a tax consultant.
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 (e.g., income from renting out an apartment situated in Romania).
Income tax
Employee social contributions:
Employee social security contributions are deductible for income tax calculation purposes.
Employer social contribution:
Personal tax deduction: only available for gross salaries of up to 3,600 LEI/month; can be between 15 and 1,300 LEI/month, depending on the salary level and number of dependents without income.
Less employee social contributions:
Total employee contributions: 1,750 LEI
Taxable base (for income tax calculation): 3,250 LEI
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
Pension fund contribution: 25% (certain exemptions are applicable). Taxable base can be chosen, but cannot be lower than 30,600 LEI/year.
Taxation method: gross income derived less deductible business expenses (e.g., office rental, accounting services, etc.). For certain types of independent activities, taxation based on annual fixed/lump-sum income can apply.
For more details on freelancer tax system, you can read this article: Freelancer tax obligations in Romania – how it works.
Health fund contribution: 10%; applicable only if total level of annual income equals or exceeds 6 minimum national salaries (for 2024: 6 x 3,300 Lei = 19,800 Lei).
For more details on dividend taxation in Romania you can read: Dividends taxation in Romania – FAQ.
Income tax: 10%, applied to gross income derived, minus lump-sum expenses of 20% from gross income.
Applicable mandatory employee social contributions:
Health fund contribution: 10%, applicable only if total level of annual net income equals or exceeds 6 minimum national salaries (for 2024: 6 x 3,300 Lei = 19,800 Lei).
The health insurance contribution to be paid will be at one of the thresholds listed below, depending on the level of one’s annual income (cumulated from rental income, dividends and other types of personal income such as capital gains, interest, etc.):
– if annual income is of at least 6 x 3,300 lei, a contribution of 1,980 lei/year is due
– if annual income is of at least 12 x 3,300 lei, a contribution of 3,960 lei/year is due
– if annual income is of at least 24 x 3,300 lei, a contribution of 7,920 lei/year is due.
Income tax
Different income tax rates apply, depending on the period of ownership, as follows:
Exemptions from taxation apply to:
No social contributions apply.
Income tax: 10%
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 tax
The following income tax rates apply, depending on the level of the income:
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, with certain exceptions.
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.
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.
According to the general rule, expenses can be deducted only if they are made for the economic activity carried out by the company.
Companies may carry forward annual losses for a period of 7 years. The carry forward of tax losses is not affected if company changes shareholders.
Corporate 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.
Tax period: the calendar year
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).
According to the Romanian tax legislation, VAT applies to any supply of goods or services that are performed in exchange for money.
Prior to commencing any economic activities that involve transactions subject to VAT/exempt from VAT, every company (that is Romanian based or has a fixed base registered in Romania) must register for VAT purposes with the Romanian tax authorities.
VAT standard rate in Romania is 19%, with following reduced rates applicable for certain types of transactions:
9% – for: pharmaceutical products or certain medical equipment, hotel accommodation, restaurant and catering services (less for alcoholic drinks), agricultural supplies, etc.
5% – for: school textbooks, newspapers, magazines, admission to museums, zoos, cinemas and any cultural events, social housing, etc.
Employees who carry out activities of research & development nature (R&D activities), as they are defined in the Romanian specific legislation, can be exempt from salary income tax (10%). The exemption can be applied only for the salary income that can be allocated to the R&D activities.
Certain conditions must be fulfilled cumulatively, as enforced through specific law. Most important condition is the carrying out of activities that have genuine R&D nature.
Specifically, the following salary tax benefits are available:
Main conditions for the company to qualify for these incentives:
Romania has a large number of tax treaties signed with other countries. Today, a number of approximately 87 double tax treaties can be applied with these countries for avoiding double taxation of income or capital.
You can find some of the tax treaties on our website here: Tax treaties signed by Romania with other countries. If there’s a treaty you can’t find, please e-mail us and we will be glad to help.
Romanian tax guide updated at: 1 January 2024
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2 Responses
I would like to know about tax procedures for importing beauty or skin care products from Romania to Singapore and Romania to Vietnam. What are the standard tax rate ?
Hi.
I am a romanian citizen as well as USA citizen, my wife has USA citizenship and we would like to retire to Romania.
Our combined income is 33000,00 per year.
Do we have to pay taxes to romania? How much?
Thank you