At the end of 2024, major tax changes were adopted in Romania through Emergency Ordinance no. 156/2024, which will have a significant impact on the business environment and taxpayers starting in 2025. The normative act introduces significant changes to the tax legislation, including the removal of certain tax incentives and the establishment of new conditions in specific economic sectors.

In the Official Gazette no. 1334 of December 31, 2024, the Emergency Ordinance no. 156/2024 was published concerning certain fiscal-budgetary measures in the field of public expenditures for the substantiation of the consolidated general budget for the year 2025, the amendment and supplementation of certain legislative acts, as well as the postponement of certain deadlines.

Below, you will find details about the major tax changes in Romania and its impact.

Dividend tax for legal entities

1. Increase in the tax rate from 8% to 10%.

Dividend tax is determined by applying a 10% rate to the gross dividend paid to a Romanian legal entity.

Effective Date: The new rate applies to dividends distributed after January 1, 2025.

Microenterprise income tax

1. The income threshold for eligibility for this tax system is reduced.

A microenterprise is a Romanian legal entity that, as of December 31 of the previous fiscal year, has earned income not exceeding  the equivalent of €250,000 in lei (or €100,000 starting January 1, 2026). It must also meet all the other conditions specified in Article 47 of the Fiscal Code.

Previous threshold: €500,000.

Effective Date: January 1, 2025.

2. Removal of the condition regarding the share of consultancy or management income in total revenues,    which had to be below 20% to qualify for microenterprise income tax.

Effective Date: January 1, 2025.

3. Application of a 3% tax rate, starting January 1, 2025, to certain activities corresponding to the following CAEN codes:

• 6210: Custom software development activities (client-oriented software).
• 6290: Other IT service activities.
• 5611: Restaurants.
• 5612: Mobile food service activities.
• 5622: Other catering services n.e.c.

Effective Date: January 1, 2025.

4. If a microenterprise earns income exceeding €250,000 (or €100,000 starting January 1, 2026) during a fiscal year, it will owe profit tax starting with the quarter in which the threshold was exceeded, without the possibility of opting for the microenterprise income tax system in subsequent periods.

Effective Date: January 1, 2025.

5. For fiscal year 2025, the income threshold of €250,000 (or €100,000 starting January 1, 2026) will be verified based on revenues earned by December 31, 2024 (or December 31, 2025, for 2026). The condition regarding the share of consultancy and/or management income in total revenues as of December 31, 2024, does not apply when calculating the €250,000 limit.

Income tax changes in Romania

1. The income tax exemption for employees in IT, construction, agriculture and food industry is abolished.

Effective Date: Starting with income earned in January 2025.

2. The tax rate for dividend income earned by individuals increases from 8% to 10%.

Dividend income, including gains from holding participation titles defined by legislation on collective investment schemes,    will be taxed at a final rate of 10%.

Effective Date: The new rate applies to dividends distributed after January 1, 2025.

Non-resident income tax

The tax rate for dividends received by non-residents increases from 8% to 10%.

Effective Date: The new rate applies to dividends distributed after January 1, 2025.

Construction tax

The construction tax is reintroduced. It is calculated by applying a 1% rate to the value of constructions existing in the taxpayer’s   assets as of December 31 of the previous year, minus the value of buildings subject to building tax.

This provision also applies to the value of buildings in industrial, scientific, and technological parks that, according to the law, are not exempt from the building tax.

For constructions owned by the public domain of the state or local administrative units, the tax is payable by the taxpayers who manage, lease, or use them for free.

Payment deadlines: The construction tax is payable in two equal installments by June 30 and October 31.

Effective Date: January 1, 2025, with the mention that within 90 days of the entry into force of this emergency ordinance, the Ministry of Finance will issue methodological guidelines for the application of the new provisions regarding the construction tax.

Elimination of tax incentives for certain categories of employees

Starting with income related to January 2025, Emergency Ordinance No. 156/2024 eliminates the tax incentives previously granted to employees in the following sectors:

• IT – the exemption from income tax for employees involved in software development activities is repealed.
• Construction – the exemption from income tax applicable to workers in the construction sector is repealed.
• Agricultural Sector and Food Industry – the exemption from income tax for employees in the agri-food sector is repealed.

As a result, employees in these sectors will pay the full amount of income tax (10%), pension contributions (CAS – 25%), and health insurance contributions (CASS – 10%).

Establishment of a differentiated gross minimum wage

The gross minimum wage for certain economic sectors is set as follows:

• Construction Sector: The guaranteed gross minimum basic salary is set at RON 4,582 per month, excluding allowances, bonuses, and other additions, for an average normal working schedule of 165.334 hours per month, representing an average of RON 27.714 per hour.
• Agricultural Sector and Food Industry: The guaranteed gross minimum basic salary is set at RON 4,050 per month, excluding allowances, bonuses, and other additions, for an average normal working schedule of 165.334 hours per month, representing an average of RON 24.496 per hour.

The amount of RON 300 net, without taxes, for the minimum wage

Starting with the income earned in January 2025 and until December 31, 2025, the measure regarding the tax exemption for RON 300 per month from the gross minimum wage will remain in place. This amount is exempt from income tax and mandatory social contributions if the following conditions are met:

1. The gross monthly basic salary, excluding bonuses and other additions, equals the guaranteed gross minimum wage set by Government decision.
2. The gross monthly income from wages and wage-like income, excluding the value of meal vouchers, vacation vouchers, and meal allowances, if applicable, granted according to the law under the same individual employment contract for the same month, does not exceed RON 4,300, inclusive.

Mandatory contribution to pillar II private pensions

With the elimination of tax incentives for the IT, construction, and agri-food sectors, the mandatory full contribution to Pillar II private pensions is reinstated. Until now, employees in these sectors paid a reduced CAS contribution of 21.25%, with the difference intended for Pillar II being transferred only if the employee opted in writing.

Following the changes, the legal percentage of 4.75% from CAS will be automatically transferred to Pillar II, without requiring an explicit request from employees. Thus, the contribution to private pensions becomes mandatory again, similar to the regime applicable to other employees in Romania.

Support for implementing these major tax changes in Romania

These major fiscal changes in Romania pose significant challenges for companies and individuals. If you are affected by the new regulations and need support to understand the impact on your business, Accace Romania specialists are here to assist you. Contact us for personalized consultation and effective solutions or discover our services for tax advisory and tax compliance services in Romania.

During past years, intragroup transactions have become a reality and a status-quo for recent business models. Financial-wise, companies belonging to a group, either national or international, are prone to tailoring operational and financial flows efficiently depending though on the business model pursued.

Yet, from a tax point of view, such transactions do create an additional pressure and administrative burden for taxpayers that are required to fulfil certain principles set forth by international tax law transposed also into domestic law. Basically, such intercompany transactions shall observe the arm’s length principle.

What arm’s length principle means?

In brief, the price agreed and charged between related parties belonging to the same group (affiliation relationship being assessed based on Romanian tax rules) shall be in line with the price that would have been agreed between totally independent parties for a similar transaction, under similar conditions.

This principle represents the base root of the taxpayers’ obligation to prepare a transfer pricing file according to Romanian tax law. The transfer pricing file represents a comprehensive and complex document aimed to describe the business structure and activities, undertaken functions, risks borne by the parties – that are expected to facilitate the documentation of whether the transfer prices agreed are in line with the arm’s length principle. Even though there are multiple transfer pricing methods to check to document the observance of the arm’s length principle, the most used and preferred by the Romanian tax authorities is the net margin method which supposes to compare the net margin obtained by the concerned taxpayer out of the analyzed transaction with the net margins derived on the market by independent suppliers with a similar functional profile. The analysis consists in a benchmarking study prepared using a specialized database.

What is the exposure of taxpayers carrying out intercompany transactions?

First of all, we would like to mention that the fine that a taxpayer may be subject to is the lowest risk the company is exposed to. Actually, failure to present the transfer pricing file or a robust documentation (which is the common mis-practice) is expected to trigger significant additional tax liabilities in the area of corporate tax in case of a tax audit. Thus, if tax authorities were to consider that the sale price was undervalued, the taxable basis will be adjusted accordingly so as the net margin of the taxpayer reflects the market level. Also, additional tax liabilities are backed up by late payment interest and penalties.

Therefore, the tax team of Accace Romania, by way of its tax and legal department, would be glad to support you in any of the following directions:

• Preparation / review of intercompany contracts that shall accurately reflect the functions and risks each party undertakes / bears. As one may know, the higher the risk, the higher the return and therefore a higher corporate tax. Yet, we have noticed during the tax audits we have assisted that the tax inspectors have leveraged the risk related contractual clauses to challenge the mark-up which should have been higher.
• Preparation / review of the TP mechanism which shall be enclosed in the contract
• Determination of the most appropriate mark-up expected to give to the taxpayer a high level of comfort during the preparation of the TP file, as well as during the tax audit.
• Preparation of the TP file and benchmarking studies
• Assistance in the administrative area, as well as in dispute resolutions with the tax authorities

We remain available to assist you in any of the above-listed directions and to address any questions in relation to any tax and legal topic.

As a result of recent legislative changes at the end of the 2023 financial year, amendments have also affected the area of the Romanian transport reporting. Thus, the Romanian e-Transport system keeps track of both road transports of goods with high tax risk within the national territory, as provided by law, and international road transports of goods.

Obligation to declare data for international transport in Romania

The obligation to declare the data for the international transport of goods affects the following:

• in case of import/export operations:
  • the importer who is listed in the customs import declaration
  • the exporter who is listed in the customs export declaration.
• in case of intra-community acquisitions of goods: the Romanian beneficiary.
• in case of intra-community supplies of goods: the Romanian supplier.
• in case of intra-community transactions in transit, both for goods unloaded in Romania for storage or for the creation of a new consignment from one or more consignments of goods, as well as for goods loaded after storage or after the creation of a new consignment on the national territory from one or more consignments: the warehouse keeper.

Penalties for non-compliance with all these changes will be implemented from 1st of July, 2024.

Therefore, an UIT code has to be obtained under the following scenarios:

• Road transport, within the national territory, of goods with a high fiscal risk.
• International road transport of goods with a high fiscal risk.
• International road transport of general goods.

Need help with complying with the amendments? Get in touch with us and our Romanian experts to see how we can help.

On Friday, October 27, 2023, Law no. 296/2023 regarding certain fiscal and budgetary measures to ensure the long-term financial sustainability of Romania, aimed as tax reform measures – was published in the Official Gazette. The Law contains both tax changes and other measures that strengthen financial discipline. Regarding the entry into force of the measures, some of them have immediate applicability, i.e. November 1, whilst others will enter into force gradually, according to the particular entry into force dates, e.g. November 14, 2023, January 1, 2024, July 1, 2024, etc. We have structured below the tax changes depending on the date of entry into force:

Fiscal changes entering into force on November 1, 2023

Starting with the revenues of November 2023, the tax treatment applicable to employees operating in the IT sector (activities of software development, tax exempt so far), construction, agriculture and agri-food sector is standardized as follows:

• Tax exemption on gross salaries up to a limit of Lei 10,000, inclusive, the portion exceeding the threshold being fully taxable. 
• Pension fund contribution of 25% is due, less the mandatory private pension fund contribution of 3.75% (that will increase to 4.75% starting 1st of January 2024) – until 31.12.2028. Employee may though opt for the payment of the thus reduced contribution. 
• Health insurance contribution of 10% is due.
• Work insurance contribution is due – 2.25% or the one applicable to special conditions, if the case.

Fiscal changes that enter into force on January 1, 2024

These tax changes target a wider range of tax areas, as we will detail below:

1. Corporate income tax

Minimum corporate tax for taxpayers with a turnover higher than EUR 50 million

• A minimum tax of 1% on turnover is implemented for taxpayers who derived a turnover of over 50 million euros in the previous fiscal year and, during the concerned year, the corporate tax computed at the level of the cumulated profits is lower than the minimum tax.
• The calculation of the minimum corporate tax will be performed as follows: IMCA = 1% x (VT – Vs – I – A), where the indicators are:
  • IMCA = minimum tax, determined cumulatively from the beginning of the fiscal year/modified fiscal year up to the end of the quarter/concerned year.
  • VT = total revenues, determined cumulatively from the beginning of the fiscal year/modified fiscal year to the end of the quarter/concerned year, as the case may be;
  • Vs = revenues that are subtracted from total revenues, determined cumulatively from the beginning of the fiscal year/modified fiscal year to the end of the quarter/concerned year, as the case may be, representing: regulated non-taxable revenues, revenues related to work in progress, revenues from subsidies, compensations for damages.
  • I = the value of the purchase/production of assets carried out in the quarter/concerned year, starting with FY 2024, respectively with the modified fiscal year starting in 2024; if the assets are realized during several consecutive years, the value taken into account for the determination of this indicator is the one recorded in the accounting records related to the accounting quarter/year, as the case may be;
  • A = accounting depreciation of assets purchased/produced before January 1, 2024 / first day of the modified fiscal year beginning in 2024.
• If the minimum tax is negative, then, it shall be considered NIL.
• The corporate tax that serves as a comparison is the cumulated corporate tax after deducting the tax credit for sponsorship, the bonuses provided for by EGO 153/2020, but without deducting the external tax credit or the tax exemption on reinvested profit.
• Rules are also introduced for taxpayers who apply the annual system with advance payments of profit tax, as well as for members of the fiscal group / responsible person within the group.

Additional tax on turnover for credit institutions – Romanian legal entities and Romanian branches of credit institutions – foreign legal entities.

An additional tax of 2% is established (until December 31, 2025), respectively 1% starting from January 1, 2026 on the turnover derived by credit institutions – Romanian legal entities and Romanian branches of credit institutions – foreign legal entities, tax in addition to the profit tax due.

Additional tax on turnover for legal entities that carry out activities in the oil and gas sectors and that register a turnover of over EUR 50 million in the previous year. The formula for calculating the tax on turnover is: 0.5% x (VT – Vs – I – A).

2. Microenterprise tax

• First of all, we mention that the eligibility conditions for the qualification of a Romanian legal entity as a microenterprise taxpayer have not been changed, as initially proposed.
• The tax rates are amended as follows, depending on new conditions introduced by the law:
  • 1%, for microenterprises that derive revenues that do not exceed EUR 60,000 inclusive and that do not carry out the activities provided for in letter b) point 2 below;
  • 3%, for microenterprises that:
    • derived revenues higher than EUR 60,000; or
    • carry out activities, main or secondary, corresponding to the following NACE codes:
      • 5821 – Computer game publishing activities,
      • 5829 – Editing activities of other software products,
      • 6201 – Custom software creation activities (customer-oriented software),
      • 6209 – Other service activities regarding 7 information technology,
      • 5510 – Hotels and other similar accommodation facilities,
      • 5520 – Accommodation facilities for holidays and short periods,
      • 5530 – Caravan parks, campsites and camps,
      • 5590 – Other accommodation services,
      • 5610 – Restaurants,
      • 5621 – Food activities (catering) for events,
      • 5629 – Other food services n.e.c.,
      • 5630 – Bars and other activities serving drinks,
      • 6910 – Legal activities – only for professional companies with legal personality, established by lawyers according to the law,
      • 8621 – General medical assistance activities,
      • 8622 – Specialized medical assistance activities,
      • 8623 – Dental assistance activities,
      • 8690 – Other activities related to human health.
• Rules are introduced for shifting to one tax rate to another in case of exceeding the threshold of EUR 60,000 or the performance of the regulated activities mentioned above.

3. Income tax

• It is clarified that taxable income represents the equivalent in Lei of meal vouchers within the same limits and conditions, as well as within the same destinations as those provided by law, granted to employees who do not benefit from such vouchers.
• Changes are brought to the types of revenues that are included in the non-taxable 33% basic salary limitation:
  • With regard to the value of the food provided by the employer to its own employees, it is mentioned that the number of days in the month in which the employee carries out telework activity or work from home or is on holiday/medical leave/delegation is not taken into account.
  • Regarding the value of the touristic and/or treatment services, including transport, during the holiday period, for own employees and their family members, the provisions are not applicable to employees who benefit from holiday vouchers, in accordance with the legislation in force.
• Changes to the computation of the personal income tax for individuals carrying out independent activities subject to cash accounting system: the annual taxable income is the net income from any source out of which pension fund and health insurance are deducted. The deduction of the social contributions are proportionate with the ratio of such revenues in total revenues subject to social contributions.

4. Social contributions

• Health insurance contribution becomes due for meal vouchers and holiday vouchers.
• Individuals who earn income from independent activities from one or more sources are subject to 10% health insurance contribution applied to the annual net income (income allowances) which cannot be higher than the level of 60 gross minimum wages in force upon the submission of the Unique Tax Return.
• Individuals who derive income from independent activities below 6 gross minimum wages are not subject to health insurance contribution as long as they also derive salary revenues or other source of income higher than 6 minimum gross salaries.
• Individuals who obtain income from investment, rental activities, intellectual property rights will be subject to health insurance applied to:
  • 6 minimum wages in force upon the submission of the Unique Tax Return, if the income falls between 6 and 12 minimum wages;
  • 12 minimum wages in force upon the submission of the Unique Tax Return, if the income falls between 12 and 24 minimum wages;
  • 24 minimum wages in force upon the submission of the Unique Tax Return, if the income is at least 24 minimum wages.

5. VAT

• The concept of home that can be lived in as such, for VAT purposes, is redefined.
• For the following products, the VAT rate is increased to 19%: alcohol-free beer, foods with added sugar (over 10g/100g product), with the exception of Romanian specialty (RO: cozonac) and biscuits.
• The following operations will be charged with 9% VAT (increased from 5%):
  • the delivery of housing as part of the social policy (i.e. with a useful surface of a maximum of 120 sqm, exclusive of household annexes, whose value, including the land on which they are built, does not exceed the amount of Lei 600,000, exclusive of VAT);
  • delivery and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems, including installation kits, as well as all necessary components purchased separately for housing/central public administration buildings or local with the exception of commercial companies;
  • delivery and installation of components for the repair and/or expansion of systems as a component part of construction deliveries;
  • services that consist of access to malls, amusement parks and recreational parks whose activities are included in CAEN codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events, other than those exempt from VAT;
  • services consisting of access to sports events.
• The following operations will be charged with 19% VAT (increased from 5%):
  • the right to use sports facilities whose activities are included in NACE codes 9311 and 9313, other than the exempt ones;
  • the transport of persons by trains or historical vehicles with steam traction on narrow lines for touristic or leisure purposes;
  • the transport of persons using the cable transport facilities – cable car, cable car, chair lift, ski lift – for tourist or leisure purposes;
  • the transport of persons with animal-drawn vehicles, used for tourist or leisure purposes;

6. Excise duties

• Unharmonized excise duties are introduced for the following categories of products: products containing tobacco, intended for inhalation without burning; liquids with or without nicotine, intended for inhalation without burning; products intended for inhalation without burning, containing tobacco substitutes, with or without nicotine; non-alcoholic drinks with added sugar for which the total sugar level is between 5g – 8g/100ml; non-alcoholic drinks with added sugar for which the total sugar level is more than 8 g/100 ml.
• We remain available for details regarding the tariff classification as well as other conditions provided by law.

7. Special tax on high value goods

• The special tax on high-value goods is introduced for the following categories of taxpayers:
  • Individuals who, as of December 31 of the previous fiscal year, own residential buildings in Romania solely or under joint ownership whose taxable value exceeds Lei 2,500,000. The tax is computed as 0.3% applied to the difference between the taxable value of the building communicated by the local fiscal body through tax decision and the threshold of  Lei 2,500,000;
  • Individuals/legal entities that own vehicles registered in Romania and whose purchase value exceeds 375,000 lei. The special tax is computed as 0.3% applied to the difference between the purchase value and the threshold of Lei 375,000 and is due for a period of 5 years from the date of registration of the vehicle or for the fraction of time until the completion of the 5-year period.
• Deadlines for submission of the tax return and payment of tax:
  • April 30 inclusive of the current fiscal year – for owners of residential buildings;
  • December 31 inclusive of the current fiscal year – for vehicle owners.

8. Generalized B2B RO-invoice system

• Electronic invoicing becomes mandatory under B2B regime as follows:
• Starting January 1, 2024, economic operators established in Romania for VAT purposes, as well as those not established in Romania but registered for VAT purposes that supply goods / services with the place of supply in Romania, are required to issue electronic invoices and send them in the national RO-invoice system, regardless of whether the recipient is enrolled in the system or not. Exports and intra-Community deliveries of goods are excluded.
• The deadline for submitting invoices in the national RO e-Invoice electronic invoice system is 5 working days from the date of the invoice, but no later than the 15th of the following month.
• Grace period: during January 1 – March 31, 2024, there are no penalties for non-compliance with the obligations to submit invoices in the RO e-Invoice system.
• Contraventions for failure to comply with obligations in the e-invoice field:
  • Lei 5,000 – 10,000 for large taxpayers;
  • Lei 2,500 – 5,000 for medium taxpayers;
  • Lei 1,000 – 2,500 for other legal entities, as well as for individuals.

Fiscal changes – entry into force from July 1, 2024

• Starting July 1, 2024, only invoices issued and transmitted in the national RO-invoice system by taxable persons established in Romania under the B2B regime for supplies of goods and services taxable in Romania will be considered invoices within the meaning of art. 319 of the Fiscal Code, without the need for being accepted by the recipients.
• Revenues discovered by the tax authorities whose source is not identified will be subject to a 70% tax rate applied to an adjusted basis.

Measures aimed to strengthen financial discipline – entry into force November 14, 2023

• Law 296/2023 amends also Law no. 70/2015 for strengthening the financial discipline regarding the operations of cash collections and payments and for the amendment and completion of EGO no. 193/2002 regarding the introduction of modern payment systems, with subsequent amendments and additions.
• The changes concern the operations of cash collections and payments, as follows.
• Cash collections and payments can be performed under the following conditions:,
  • Collections from legal entities, freelancers and other similar entities, within the limit of a daily ceiling of RON 1,000.00 per person;
  • Collections made by cash and carry stores, from legal entities, freelancers and other similar entities, within the limit of a daily ceiling of RON 2,000.00 per person;
  • Payments to legal entities, freelancers and other similar entities, within the limit of a daily ceiling of RON 1,000.00 / person, but not more than a total ceiling of RON 2,000.00/day;
  • Payments to cash and carry stores, within a total daily ceiling of RON 2,000.00;
  • Advance payments, within the limit of a daily ceiling of RON 1,000.00 per person;
  • The cash amounts in the cash register of legal entities cannot exceed, at the end of each day, the ceiling of RON 50,000.00. Cash amounts that exceed the ceiling are deposited in the bank accounts of these persons within 2 (two) working days;
  • By way of exception, it is allowed to exceed this ceiling only with the amounts related to the payment of salaries and other personnel rights, as well as other operations with individuals, for a period of 3 (three) working days from their scheduled payment date.
• Non-compliance with above provisions constitutes contraventions being sanctioned with a fine in an amount equivalent to 25% of the amount collected/paid, respectively held in the cash register, which exceeds the established ceiling, for each type of operation, but not less than RON 500.00.
• Split cash collections from beneficiaries for invoices whose value is greater than RON 1,000.00 and, respectively, RON 2,000.00, in the case of cash and carry stores, as well as splitting invoices for a delivery of goods or a provision of services whose value is greater than RON 1,000.00, respectively RON 2,000.00 are forbidden.
• Split cash payments to suppliers of goods and services for invoices whose value is higher than RON 1,000.00 and, respectively, RON 2,000.00, to cash and carry stores are prohibited. The persons provided for in art. 1 paragraph (1) from Law 70/2015 can pay invoices with values that exceed the ceiling of RON 1,000.00, to suppliers of goods and services, respectively of RON 2,000.00, to cash and carry stores, as follows: RON 1,000.00 /RON 2,000.00 in cash, the amount exceeding this ceiling can only be paid through non-cash payment instruments.
• Cash collection and payment operations between legal entities, freelancers individuals, representing the consideration for deliveries or purchases of goods or services, dividends, assignments of claims or other rights and receipts or reimbursement of loans or other financing it is carried out within the daily ceiling of RON 5,000.00 to/from one person, until December 31, 2024 and RON 2,500.00, starting from January 1, 2025.
• The operations of cash collections and payments performed between legal entities, freelancers and individuals as shareholders/administrators/natural persons/other creditors save for institutional creditors that carry out financial intermediation activities representing loans regardless of their nature and destination area allowed only through non-cash payment instruments.

In light of the global pandemic and the widespread adoption of remote work, nonresident companies have increasingly turned their attention to the Romanian workforce, particularly in sectors that can easily accommodate remote work arrangements. As part of their strategies to attract and retain employees, these companies are considering entering into individual labor agreements with Romanian tax residents who will work from their home offices in Romania.

Permanent establishment in Romania for tax liabilities

However, before proceeding with such agreements, it is essential for these companies to conduct a thorough analysis of the risk of generating a permanent establishment (PE) in Romania.

The concept of a permanent establishment holds significant importance as it determines the potential corporate income tax liabilities that nonresident companies may face in Romania. Recent declarations made by the Romanian tax authorities have emphasized the necessity for nonresident companies to carefully evaluate whether their activities conducted through their employees in Romania satisfy the criteria for establishing a permanent establishment.

Determining the existence of a permanent establishment involves considering various factors, such as the nature and duration of the activities conducted, the presence of employees or agents in Romania, the utilization of facilities, and the level of authority exercised within the country. It is advisable for nonresident companies to engage professional guidance and conduct a comprehensive examination of the available information to accurately assess the potential PE risk.

Social contributions in Romania for non-resident companies

In Romania, there are several social contributions that are in the charge of the employee on a monthly basis: health insurance contribution and social (Pension) insurance contribution, while the work insurance contribution is in the employer’s charge.

The currently available alternatives for nonresident companies to declare and pay social contributions in Romania are the following:

• Registration of the nonresident employer for social contribution purposes in Romania. Thus, the employer will file monthly tax returns by way of which social contributions will be declared and paid to the State Budget. Regarding personal income tax, it will remain in the charge of the employee who is also be required to file the personal income tax return on a monthly basis. In conclusion, two separate returns will be submitted on a monthly basis.
• Shifting the responsibility in terms of social contributions to the employee by way of concluding a separate agreement with the employee who will take over the obligations thus arising. Hence, the employee will file one single tax return comprising also the personal income tax and social contributions on behalf of the employer and will pay all tax liabilities arising as a result of the employment agreement.

Each alternative entails pros and cons which shall be discussed on a case-by-case basis.

Rely on experienced Romanian advisors for a peace of mind

Our team of experts not only provides valuable insights and guidance but also offers a range of additional benefits to streamline your business operations. By entrusting Accace with your agenda, you can save precious time as our dedicated advisors communicate with authorities and handle all necessary documentation. We ensure that every form is meticulously filled, sparing you the hassle of paperwork.

Moreover, our expertise allows us to identify the proper registrations required for your specific needs, eliminating unnecessary costs.

The tax and corporate advisory team of Accace Romania is able to assist you in the entire process starting from the analysis of the permanent establishment risk, preparation of the employment agreement, tax registration and monthly tax and payroll assistance in any of the above mentioned alternatives.

With Accace, you can rest assured that you’re on the right track, making informed decisions and optimizing your resources.

We are getting very close to the most important tax deadline of the year when individuals who derive income from Romania or from abroad, other than salary related revenues, are required to prepare and file the Unique Tax Return for revenues earned during 2022, as well as for the estimations performed for 2023 and settlement of the tax payments for 2022.

Thus, according to the Romanian tax calendar, 25th May 2023 represents the deadline for declaration and payment of the income tax and social contributions for 2022 and revenue-estimation for 2023. The types of revenues falling under this obligation are: revenues from freelancing activities / liberal professions, rent, dividends, capital gains, interest, cryptocurrency revenues, etc.

If this legal obligation applies to you or you would like to know more details, our tax specialists may assist you in the entire flow starting from assessment of the tax status of the individual, determining the correct tax treatment, as well as in the preparation and submission of the Unique Tax Return.

The Romanian Tax Department colleagues are gladly available to address any questions which may arise in relation to the above information, as well as to any other tax area.