Romania tax system - taxation of Romanian companies and individuals: VAT, income tax and capital gains. Tax treaties of Romania.

Basic taxes (briefly)

Personal tax 10%
Corporate tax (in detail) The basic rate is 16%. Small businesses are taxed on their turnover at a rate of 1 to 3%
Capital gains tax. Details Profit from the sale of assets is included in the tax base
VAT. Details The standard VAT rate is 19%. Reduced rates of 9% and 5% apply to some goods and services
Other taxes Social contributions, Property tax
Government fee
Stamp duty No

International tax agreement

Australia, Austria, Algeria, Armenia, Azerbaijan, Bangladesh, Belgium, Belarus, Bulgaria, Bosnia and Herzegovina, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Israel, Iran, Ireland, Italy, Japan, Jordan, Kazakhstan, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova, Montenegro, Morocco, Namibia, Netherlands, Nigeria, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Republic of Korea, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, UAE, Ukraine, United Kingdom, Uruguay, USA, Uzbekistan, Vietnam, Zambia.
   
Guernsey, Isle of Man, Jersey


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Taxation of individuals

Romanian tax residents pay tax on their worldwide income, but wages and salaries for work done abroad are not taxed. Non-residents pay tax on income from sources in Romania.

The tax rate is 10%. Persons engaged in research and development and the creation of software, under certain conditions may be exempt from tax. There are some other exemptions.

Profits from the sale of property, in general, are taxed at the ordinary tax rate. Gains from the sale of real estate are taxed at the rate of 3% (withheld by the notary public). From the income for these purposes, a nontaxable amount of 450,000 lei is deducted from the income for these purposes. The tax is not imposed on some transactions between relatives.

Dividends are taxed at 5%.

The tax rate for non-residents, with some exceptions, is 16%. Tax is 5% on dividends and 10% on interest, subject to certain conditions.

Income tax

Romanian companies pay income tax on their global income, foreign - on income from sources in Romania.

The income tax rate is 16%. Dividends from Romanian companies with substantial participation are taxed at a rate of 5%.

Profits from the sale of assets are included in the taxable base.

Gains from the sale of shares in a Romanian or foreign company from a country with a Romanian SIDN is exempt from taxation if the shareholding at least 10% for at least one year. Dividends from a company from an EU or SIDN country with Romania are exempt from taxation if the shareholding is at least 10% for at least one year if the dividends are not deductible for tax purposes. income tax at the distributing company.

Small companies (with revenues up to €1 million) are taxed taxed at 3% in the absence of employees and generally at 1% if there are one or more employees.

CFC rules

A foreign company is considered to be a controlled company if it has in its capital, voting rights or rights to profits is directly or directly or indirectly, alone or jointly with related parties, is more than 50% and the company pays income tax at the rate less than half of the income tax income tax that would be paid by a similar Romanian company. Undistributed profits of the CIC in the relevant proportion of the passive income is taxed at the controlling person in Romania. Passive income for these purposes, among others include, inter alia, interest, royalties, dividends, income from the sale of shares, leasing, trading and service income from transactions with related parties with insignificant economic contribution to the activity (income from "invoicing").

Withholding tax

Tax is withheld at a rate of 5% on dividends paid. Payments of royalties and interest are taxed at source of payment at a rate of 16%. When Payments of income to countries that do not exchange information with Romania, the tax may, under artificial structures, be withheld at a rate of 50%.

Tax rates are reduced in accordance with the provisions of agreements on avoidance of double taxation and EU directives.

VAT

The standard rate of VAT is 19%. Reduced rates of VAT are applied to certain goods and services. Reduced rates of 9% and 5% are applied to certain goods and services.

Social security contributions

Employees pay social security contributions at a rate of 25% of the remuneration and a medical insurance contribution at the rate of 10%.

Employers pay social security contributions at the rate of 4% or 8% depending on Depending on the working conditions, they also pay an unemployment insurance contribution of At the rate of 2.25%.

Social security contributions can be paid not only on employment Social security contributions can be paid not only on labor remuneration, but also on certain other benefits, including royalties, investment income, etc., in accordance with special social security regulations. income, etc. according to special rules.

Property Tax

Residential buildings are taxed at rates ranging from 0.08% to 0.2% (the base is different for individuals and companies) and for non-residential buildings from 0.2% to 1.3%, in some cases - 5%. Local authorities can increase the tax by 50%.

Land owners pay the tax at the rates set in lei per square meter and varies depending on the purpose and location plot of land.

Double Taxation Agreements

Bulgaria has entered into a number of mechanisms for the avoidance of double taxation and exchange of tax information:

85 DTCS: Australia, Austria, Algeria, Armenia, Azerbaijan, Bangladesh, Belgium, Belarus, Bulgaria, Bosnia and Herzegovina, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Israel, Iran, Ireland, Italy, Japan, Jordan, Kazakhstan, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Moldova, Montenegro, Morocco, Namibia, Netherlands, Nigeria, Norway, Pakistan, Philippines, Poland, Portugal, Qatar, Republic of Korea, Russian Federation, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, UAE, Ukraine, United Kingdom, Uruguay, USA, Uzbekistan, Vietnam, Zambia.

3 TIEA: Guernsey, Isle of Man, Jersey.

Currency control

In general, foreign exchange transactions are carried out without restrictions.

    Taxes of Romania

    Min. rate for corporate tax 16%
    Capital gains tax Regular rate
    VAT 19%
    Withholding tax 5%/16%/16%
    Exchange control No
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