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 RON 450 000 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.
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 EUR 1 000 000) are taxed taxed at 3% in the absence of employees and generally at 1% if there are one or more employees.
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").
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.
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.
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.
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.
From 1th January 2023 microenterprises (tax of 1%) will be able to be only that kind of company which:
By taking into consideration these changes, all the companies microenterprises will be required to have at least 1 full time employee, turnover of microenterprise has been reduced from EUR 1 000 000 to EUR 500 000, shareholders can own over 25% from social capital in maximum 3 different companies (currently is 50), dividends tax will rise from 5% to 8%, income tax of 3% will change to 1% to all of the microenterprises because they are required now to hire at least a full time employee.
I. Independent activities (freelancer PFA, II individual enterprise etc) established at income norm will be only available if the realized gross income is under EUR 25 000, otherwise will pay tax according to the real system.
II. Social contributions to the independent activities will be owed in the following way:
a) Pension contributions:
b) Health contributions:
Some categories of untaxed income for employees were removed. Example: holidays provided to employees, voluntary health primes, contributions to optional pension fund, wages provided to telework employees etc. These kinds of incomes will stay untaxed only in the limit of 33% from the base salary. It will be cumulated the untaxed income, will be compared to the base salary in the limit of 33% and if these are over this limit, the difference will be taxed with all the employee contributions, including income tax.
Rent income will be taxed with 10% to the amount of the rent, without being deducted to 40%. More than that, any kind of updates to the rent contract will have to be notified to the Fiscal Authority ANAF in maximum 30 days from the date of updating/concluding the rent contract.
Romania has concluded 85 Double Tax Treaties (DTC) and 3 Tax Information Exchange Agreements (TIEA) with the following jurisdictions:
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.
In addition, Romania has signed but not yet ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
In general, foreign exchange transactions are carried out without restrictions.