Targeting both current business owners but also future entrepreneurs, our “10 facts about taxation in Romania” is an essential overview of local taxation aspects – find out more bellow!
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CIT
Corporate Income Tax (CIT): 16%*
*Taxpayers that are carrying on activities such as gambling and nightclubs are either subject to 5% rate of the revenue obtain or 16% of the taxable profit, depending on which is higher
Micro-enterprise tax rates
Companies are liable to pay the microenterprise tax (instead of corporate tax) provided that:
- Revenues in the previous tax year were below EUR 1,000,000 (as opposed to EUR 500,000 in 2017)
- Companies are no longer have available the possibility to opt to be corporate income tax payers irrespective of the level of the share capital.
The micro-enterprise tax is computed as follows:
- 1% for micro-enterprises with at least one employee*
- 3% for micro-enterprises with no employees
* A reduced rate of 1% is applicable for the newly set up Romanian companies having at least one employee and being incorporated for a minimum period of 48 months and whose shareholders/associates did not hold participation titles in other legal entities. This reduced tax rate is only applied to the first 24 months since the registration date of the legal entity.
Withholding Tax Rate
WHT rates in relation with non-resident companies are:
- 1% for revenues obtained from gambling activities
- 5% for revenues obtained from dividends
- 50% for payments made by a Romanian company to non-resident company bank accounts (opened in countries that do not have an information exchange agreement concluded with Romania) and only if such payments result from artificial transactions
- 16% in case of any other revenues from Romania
Standard VAT
Standard VAT rate in Romania: 19%
Reduced VAT
- Reduced 9% rate applies to food and beverage industry, medical treatments and prosthesis, accommodation etc.
- Extra-reduced 5% applies to supplies of social housing under certain conditions and to school books, newspapers, magazines, admission fees to castles, museums, sport events, cinemas, etc.
Personal Income Tax
Personal Income Tax: 10%* (16% in 2017)
* IT specialists, employees with disabilities and employees who work in Research and Development (R&D) or Technological Development field are exempted under certain conditions
The personal income taxation has suffered significant changes in 2018, as most of the social contributions are borne now by the individual as compared to a shared responsibility between employee and employer in 2017.
Social contributions owed by the Employee
Social contributions owed by the Employee: 45% (as compared with 16.5%, in 2017)
Social contributions owed by Companies
Social contributions owed by Companies in Romania: 2,25 (as compared with 23.45%, in 2017)
Tax losses
Losses may be set off against the same types of income
- Losses that cannot be set off may be carried forward
- Tax losses may be carried forward for a 7-year period (no carry back is allowed)
Tax for buildings owed by companies
- 0.08% – 0.2% of the buildings´ tax value for residential buildings
- 0.2% – 1.3% of the buildings´ tax value for non-residential buildings
Building tax is paid annually in two equal installments. The tax is due for the entire tax year by the person who owns the building as of December 31st of the prior tax year.
