Romania Tax Regime

Romania pairs a moderate flat corporate income tax of 16% and a flat 10% personal income tax with an increasingly demanding compliance environment built on mandatory e-invoicing, SAF-T accounting files and real-time transport monitoring. Successive fiscal consolidation packages have layered temporary turnover-based minimum taxes on large companies, raised the dividend tax to 16% from 2026 and lifted the standard VAT rate to 21%, so headline rates understate the direction of travel. As an EU member state, Romania implements the Parent-Subsidiary, Interest-Royalties and Anti-Tax-Avoidance Directives and transposed the Pillar Two global minimum tax from 1 January 2024. The regime remains attractive for regional operations, but planning must anticipate frequent legislative change.

1.1 Sources

Primary legislation includes the Fiscal Code (Law no. 227/2015), the Fiscal Procedure Code (Law no. 207/2015), the Pillar Two transposition (Law no. 431/2023) and the 2024–2025 fiscal consolidation ordinances and laws amending them.

1.2 Recent developments

The minimum turnover tax (IMCA) — 0.5% of adjusted revenues for companies with prior-year turnover above EUR 50 million whose corporate tax falls below that floor — applies through 2026 and is legislated to be eliminated from fiscal year 2027, as is the specific turnover tax (ICAS) for oil and gas companies; credit institutions pay a separate turnover-based surcharge. The micro-company revenue-tax threshold fell to EUR 100,000 from 2026 (from EUR 250,000), with a single 1% rate. The 2025 consolidation package raised the standard VAT rate from 19% to 21% and merged the reduced rates into a single 11% band from 1 August 2025, increased the dividend tax from 10% to 16% for distributions from 1 January 2026, and abolished the payroll tax exemptions previously enjoyed by the IT, construction and agri-food sectors. Pillar Two rules under Law no. 431/2023 apply from 2024, and tax loss utilisation has been restricted to five years and 70% of taxable profit for losses arising from 2024.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Companies — principally the SRL (limited liability company) and SA (joint-stock company) — are subject to corporate income tax at a flat 16% on worldwide income if they are incorporated in Romania or have their place of effective management there; foreign companies are taxed at 16% on profits attributable to a Romanian permanent establishment and on Romanian real estate and share-transfer income. Nightclub and gambling operators pay the higher of 5% of relevant revenue or 16% of taxable profit. There are no county or local taxes on corporate income.

Large taxpayers face the temporary minimum turnover tax (IMCA): where prior-year turnover exceeds EUR 50 million and the computed corporate tax is below 0.5% of total revenues less non-taxable income, work-in-progress fixed assets and depreciation on new assets, tax is due at that minimum level (with exemptions for regulated electricity and gas distributors); oil and gas companies instead owe the additional specific turnover tax (ICAS). Both levies are scheduled for elimination from fiscal year 2027. Separately, micro-companies below EUR 100,000 of revenue may pay 1% of revenues in lieu of corporate tax, subject to conditions including at least one employee and a 25% shareholder concentration limit; the regime excludes banking, insurance, capital-market, gambling and upstream oil and gas activities, and its benefits end from the quarter the threshold is exceeded.

2.2 Dividends and participation exemption

Dividends received by a Romanian company from another Romanian company or from a foreign subsidiary in the EU or a treaty jurisdiction are exempt where the recipient holds at least 10% of the payer for an uninterrupted year at distribution. Capital gains on the sale of shares in Romanian, EU or treaty-state companies are likewise exempt under the domestic participation exemption at the same 10%/one-year threshold. Non-qualifying dividends and gains are taxed at the standard 16%. Micro-companies may exclude qualifying EU Parent-Subsidiary dividends, and Romanian-source dividends unconditionally, from their revenue-tax base. Liquidation proceeds are taxed as gains under the general rules.

2.3 Income determination and deductions

Taxable profit starts from Romanian GAAP (or IFRS for banks and listed companies) accounting profit, adjusted for non-taxable income and non-deductible expenses. Expenses are deductible if incurred for business purposes; specific limits apply to protocol expenses (2% of adjusted profit), social expenses (5% of salary costs), provisions and impairments (largely non-deductible except regulated categories, with receivable impairments deductible within limits), 50% of costs of vehicles not exclusively used for business, and sponsorship (a tax credit within 0.75% of turnover and 20% of tax caps). Tax depreciation follows statutory useful lives, with accelerated depreciation (50% in year one) available for machinery and IT equipment. Interest on shareholder loans and other borrowing costs fall under the ATAD limitation described below. Reinvested profit in new technological equipment and certain IT assets is exempt from tax subject to conditions.

2.4 Interest limitation

Exceeding borrowing costs are deductible up to the RON equivalent of EUR 1,000,000 per year; costs above that threshold are deductible only within 30% of tax EBITDA, with indefinite carryforward of the disallowed excess. Where the EBITDA base is negative or nil, deduction is confined to the EUR 1 million threshold. A stricter EUR 500,000 annual cap applies to exceeding borrowing costs on loans from affiliates that do not finance qualifying asset acquisitions, targeting intra-group debt push-downs. Stand-alone entities outside a group benefit from full deductibility, and financial institutions are carved out in line with the directive.

2.5 Losses

Tax losses incurred from 2024 onwards may be carried forward for five years and offset against at most 70% of taxable profit in each year; losses accrued up to 2023 retain their original seven-year window subject to the same 70% cap. There is no carryback. Losses of merged or divided companies transfer to successors in proportion to the assets transferred, and losses of a permanent establishment abroad are ring-fenced under treaty exemption methods. The restriction materially lengthens cash-tax paths for cyclical and start-up businesses and should be modelled alongside the IMCA floor.

2.6 Group taxation

Fiscal consolidation for corporate income tax has been available since 2021: Romanian companies (and Romanian PEs of foreign members) under at least 75% direct or indirect common ownership may elect, for a minimum five-year period, to consolidate taxable results through a responsible legal entity, offsetting members' profits and losses. Members compute individual results, and pre-consolidation losses remain usable only against the member's own profits; leaving the group early triggers recomputation. For groups within the IMCA, the minimum is computed on aggregated member turnover. VAT grouping is available only as consolidated payment (each member still files), and transfer pricing rules continue to apply to intra-group dealings.

2.7 Controlled foreign companies

Under ATAD-based CFC rules, a Romanian taxpayer holding, alone or with associated enterprises, more than 50% of the capital, voting rights or profit entitlement of a foreign entity (or maintaining an exempt PE) must include its share of the entity's undistributed passive income — interest, royalties, dividends, share-disposal gains, financial leasing, insurance and banking income, and invoicing income from low-value-adding resale — where the foreign entity's actual corporate tax is lower than half the tax that would have been payable in Romania. The inclusion does not apply where the CFC carries on substantive economic activity supported by staff, equipment, assets and premises, as evidenced by relevant facts and circumstances.

2.8 Transfer pricing

Related-party transactions must observe the arm's-length principle interpreted in line with the OECD Transfer Pricing Guidelines. Large taxpayers must prepare an annual transfer pricing file by the statutory deadline where transactions exceed materiality thresholds (EUR 200,000 for interest, EUR 250,000 for services, EUR 350,000 for goods); other taxpayers prepare the file on request within 30 to 60 days at higher thresholds. Failure to present the file empowers the authority to estimate prices. Country-by-country reporting applies at the EUR 750 million consolidated-revenue threshold, public CbCR has applied since 2023 — Romania adopted it a year ahead of most member states — and unilateral or bilateral advance pricing agreements are available with three- to five-year validity.

2.9 Incentives

R&D expenditure attracts an additional 50% deduction plus accelerated depreciation of R&D equipment, and a corporate tax exemption applies for taxpayers exclusively performing innovation and R&D in their first decade — though eligibility documentation is demanding. The reinvested-profit exemption relieves profit invested in new technological equipment, computers and software used in the business. Sponsorship of non-profits generates a capped tax credit, and state-aid schemes (regional grants, large-investment schemes) supplement the Fiscal Code. The former salary income tax exemptions for IT, construction and agri-food employees were withdrawn from 2025, so employment-cost planning should no longer assume them.

2.10 Pillar Two

Law no. 431/2023 transposed the EU minimum taxation directive with effect from 1 January 2024, applying the 15% minimum to multinational and large-scale domestic groups with consolidated revenues of at least EUR 750 million in two of the four preceding years, through an income inclusion rule, an undertaxed profits rule and a qualified domestic minimum top-up tax (QDMTT), with the transitional CbCR safe harbours. With a 16% headline rate the arithmetic exposure is narrower than in low-rate jurisdictions, but incentive users (reinvested-profit exemption, R&D super-deduction) and micro-company subsidiaries can fall below the 15% effective floor; the QDMTT keeps any top-up in Romania. In-scope entities face registration, GloBE information return and top-up tax return obligations within the directive's 15-month (18-month transitional) deadlines, and the interaction between the IMCA, ICAS and covered-tax computations requires case-by-case analysis.

2.11 Branch income and reorganisations

A Romanian branch or permanent establishment of a foreign company is taxed at 16% on attributable profits determined under arm's-length attribution; there is no branch profits or remittance tax, so after-tax branch profits are repatriated free of withholding. Construction sites constitute PEs after six months, and non-resident oil and gas operators without a PE must post an EUR 1 million guarantee against ICAS liabilities. Mergers, divisions, partial divisions, asset contributions and share exchanges qualify for tax neutrality under rules implementing the EU Merger Directive, both domestically and cross-border, with carryover of fiscal values and proportionate transfer of loss carryforwards. ATAD exit taxation applies at 16% on the difference between market value and fiscal value of assets, business or residence transferred out of Romania, payable in five annual instalments for EU/EEA destinations.

3.1 Residence and rates

Resident individuals are taxed on worldwide income; non-residents on Romanian-source income, with inbound individuals who become resident through the domicile, centre-of-vital-interests or 183-day tests transitioning to worldwide taxation. Personal income tax is a flat 10% on employment, self-employment, rental, pension and most other income categories. Employees benefit from a regressive personal deduction at low salaries and exemptions for certain benefits within a monthly cap of 33% of base salary (meal vouchers and private pension and health contributions within sub-limits); the sectoral exemptions for IT, construction and agri-food workers were repealed from 2025. Self-employed individuals are taxed at 10% on net income under the real system, with the lump-sum income-norm option narrowed in recent years, and owe social contributions on capped bases as described below.

3.2 Capital income and real estate

Dividends received by individuals bear 16% final withholding for distributions from 1 January 2026 (10% in 2025, 8% previously). Interest is taxed at 10% by withholding. Capital gains on securities disposed of through Romanian brokers or fund managers bear a final withholding of 3% where the holding period is at least 365 days and 6% otherwise, with no further filing; gains realised through foreign intermediaries are self-assessed at 16% with loss offset. Gains on the sale of personal real estate are taxed by notarial withholding at 3% of the transaction value for properties held under three years and 1% for longer holdings. Rental income is taxed at 10% on gross rent reduced by a 20% flat expense allowance, generally collected by withholding where the tenant is a legal entity. Health insurance contributions (CASS) apply additionally to investment and other non-wage income above thresholds of 6, 12 and 24 gross minimum wages.

3.3 Social security and payroll

The employee bears most social charges: 25% pension contribution (CAS) and 10% health contribution (CASS) on gross salary, alongside the 10% income tax; the employer pays a 2.25% work insurance contribution (4% or 8% supplements for special working conditions). There is no general ceiling on salary contributions, which keeps the tax wedge on employment income high relative to the flat rates' appearance. Part-time salaries are subject to contributions on at least the minimum wage, with limited exceptions. Employers withhold and remit tax and contributions monthly through the consolidated D112 return by the 25th of the following month; a portion of the minimum wage is exempt from tax and contributions under transitional social measures (RON 300 per month to 30 June 2026, RON 200 per month from 1 July 2026).

3.4 Inbound individuals

There is no net wealth tax. Inheritances attract no income tax if the estate is settled within two years (a 1% charge applies thereafter), and gifts between individuals are outside the income tax. Romania offers no special expatriate regime, but the 10% flat rate is itself competitive; non-residents pay 10% on Romanian-source employment and professional income from day one, subject to treaty relief. EU social security coordination and Romania's bilateral totalisation agreements govern assignee contributions; A1-covered postings remain in home-state systems. Daily allowances for delegation and detachment are tax-favoured within caps. There is no exit tax on individuals, and local taxes on residences are modest, computed on notional values by the municipalities.

Domestic withholding on payments to non-residents applies at 16% to dividends distributed from 2026 (aligned with the increased domestic dividend tax), 16% to interest, royalties, commissions and services performed in Romania (management and consultancy services taxed wherever performed), and 50% to payments made to jurisdictions without an exchange-of-information instrument where the transaction is classified as artificial. The EU Parent-Subsidiary and Interest-Royalties Directives eliminate withholding on qualifying intra-group dividends, interest and royalties (10%/25% participation thresholds, with holding-period conditions), and the domestic participation rules extend dividend exemption at 10%/one year. Romania's network of over 85 treaties typically reduces dividends to 5–15%, interest to 0–10% and royalties to 0–10%; relief at source requires a valid tax residence certificate before payment, and the beneficial-ownership and principal-purpose tests are applied following ratification of the multilateral instrument.

Withholding must be remitted by the 25th of the month following payment, with an annual informative return on income paid to non-residents due by the last day of February. Certificates of residence may cover the year of issue and the following twelve months, and refund claims are available where domestic tax was withheld above treaty rates. For interest and royalties, payer-side deductibility under the interest-limitation and transfer pricing rules should be analysed together with payee-side withholding, and service fees require substance documentation (contracts, deliverables, benefit tests) to survive both withholding characterisation and deductibility review. Branch repatriation bears no withholding.

5.1 General anti-abuse and hybrids

The Fiscal Code and Fiscal Procedure Code allow the authority to disregard transactions without economic substance and to reclassify arrangements to reflect their economic content, complementing the ATAD GAAR that denies benefits of non-genuine arrangements whose main purpose is a tax advantage. Hybrid mismatch rules neutralise deduction/non-inclusion and double-deduction outcomes arising from hybrid instruments, hybrid entities, permanent-establishment mismatches and imported mismatches, including reverse hybrids. The 50% withholding on artificial payments to non-cooperative jurisdictions adds a domestic deterrent, and beneficial-ownership scrutiny of treaty and directive claims has tightened in audit practice.

5.2 Exit taxation and disclosure

ATAD exit taxation applies on transfers of assets, business or tax residence out of Romania at 16% on the market-to-fiscal-value difference, with five-year instalments within the EU/EEA. DAC6 mandatory disclosure of reportable cross-border arrangements, DAC7 platform reporting and CRS/DAC2 financial-account exchange operate through ANAF, with DAC8 crypto-asset reporting phasing in for 2026 data. Public country-by-country reporting has applied to large multinationals active in Romania since 2023. Domestic transparency tooling is unusually extensive: mandatory B2B and B2C e-invoicing through the RO e-Factura system, the SAF-T (D406) standard audit file, e-Transport declarations for high-risk goods movements and the e-TVA pre-completed VAT return give the authority near-real-time visibility and feed automated risk scoring.

6.1 VAT

VAT applies at a standard rate of 21% from 1 August 2025 (previously 19%), with a single reduced rate of 11% covering foodstuffs, medicines, books, hotel accommodation, restaurant services, water supply and certain housing transactions; the former 5% band was absorbed into the 11% rate. Registration is mandatory above the small-enterprise threshold of approximately RON 395,000 of annual domestic turnover, with voluntary registration available and special schemes for intra-EU acquisitions. Returns are monthly, or quarterly below EUR 100,000 of turnover without intra-EU acquisitions, due with payment by the 25th of the following month, accompanied by recapitulative statements; the pre-completed e-TVA return is reconciled against e-Factura and SAF-T data, with taxpayers required to explain significant discrepancies. The domestic reverse charge covers cereals, wood, energy and greenhouse-gas certificates among others, cash accounting is available for small payers, and VAT refunds are processed with risk-based control, generally with subsequent audit for low-risk claims.

6.2 Transaction, payroll and other taxes

There is no transfer tax on real estate acquisitions by companies — transaction costs are limited to notarial and land-book fees — while individuals selling property bear the 1%/3% notarial withholding described in section 3.2. Local taxes comprise building tax (roughly 0.08–0.2% of taxable value for residential and 0.2–1.3% for non-residential buildings, with municipal discretion and revaluation obligations), land tax and vehicle tax. A construction tax on special structures not subject to building tax (pipelines, networks, platforms) was reinstated from 2025. Excise duties on energy products, alcohol and tobacco follow EU floors with national escalators, and the bank turnover surcharge, gambling levies and environmental fund contributions round out the sectoral picture. Employer payroll costs are confined to the 2.25% work insurance contribution, with the burden of the 25%+10% contributions falling on employees. There is no net wealth tax.

7.1 Filing, assessment and audit

The fiscal year is the calendar year, or a modified fiscal year aligned to the group's accounting year on election. Corporate tax is declared quarterly by the 25th of the month following each of the first three quarters, with the annual return (D101) and balance due by 25 June of the following year (or the 25th of the sixth month after a modified year-end); banks apply an advance-payment system. Micro-company tax and IMCA/ICAS instalments follow the quarterly 25th-day rhythm. All filings are electronic through the Virtual Private Space (SPV), and large and medium taxpayers submit monthly SAF-T files. The general limitation period is five years from 1 July of the year following filing, extended to ten in cases of fiscal fraud; audits are risk-scored from e-Factura, SAF-T, customs and payroll data, with documentary verifications increasingly replacing on-site inspections.

7.2 Rulings, appeals and penalties

Advance individual tax rulings and advance pricing agreements are available from ANAF and the Ministry of Finance for fees, binding on the authority if the described facts are respected. Assessments must first be challenged through the administrative appeal within 45 days, decided by the specialised appeal-resolution structure, before recourse to the courts of appeal and the High Court of Cassation and Justice; MAP, the EU Arbitration Convention and the dispute-resolution directive address treaty double taxation. Interest of 0.02% per day and late-payment penalties of 0.01% per day apply to arrears, with a 0.08% per day non-declaration penalty for undeclared liabilities found on audit (reducible on prompt payment). Amnesty-style instalment and penalty-cancellation schemes recur; voluntary corrective returns before audit notice avoid the non-declaration penalty and reduce exposure.

SAF-T (D406) files are due monthly or quarterly in step with the VAT period, e-Factura invoices must be transmitted within five calendar days of issuance, and e-Transport declarations precede high-risk road movements. Local building and land taxes are payable in two instalments by 31 March and 30 September with a discount for full early payment. Because interest and penalties accrue daily by operation of law and the e-systems generate automatic mismatch notices, Romanian compliance rewards monthly reconciliation discipline over year-end clean-up.

9.1 Entity choice

The SRL is the standard vehicle: nominal minimum share capital, one or more directors, up to 50 shareholders, and incorporation through the Trade Register within days. The SA (minimum capital RON 90,000) is required for banking, insurance and listing ambitions. Branches of foreign companies are taxed like subsidiaries at 16% without repatriation withholding but cannot access the micro-company regime and carry the parent's full liability. New ventures below EUR 100,000 of revenue can weigh the 1% micro-company regime against standard 16% profit taxation — attractive at high margins, unattractive at low margins or in loss years since it taxes revenue — bearing in mind the one-employee condition and the single-entity-per-shareholder rule. Representative offices (taxed at a fixed annual EUR 4,000 equivalent) suit non-trading liaison activity.

9.2 Structuring and incentives

Holding structures benefit from the 10%/one-year participation exemption on both dividends and share gains and from directive-based relief on inbound flows, making Romanian intermediate holdings feasible, though the 16% dividend withholding from 2026 sharpens the value of qualifying for exemption before distribution. Financing structures must clear the EUR 1 million/30% EBITDA limitation and the EUR 500,000 affiliate-loan cap, arguing for capitalisation or qualifying-acquisition tracing of intra-group debt. Manufacturing and technology investors should combine the reinvested-profit exemption, accelerated depreciation and the 50% R&D super-deduction, and large groups should model IMCA (through 2026) and Pillar Two effects before relying on incentives. The five-year/70% loss rule penalises long-gestation projects; consider the fiscal consolidation election where profitable and loss-making Romanian entities coexist.

9.3 Worked effective-rate illustration

A Romanian SRL earns EBITDA of RON 20,000,000, books depreciation of RON 3,000,000 and net interest expense of RON 2,000,000. The interest is fully deductible (below the RON equivalent of the EUR 1,000,000 threshold at roughly RON 5 million). Accounting and taxable profit before incentives is 20,000,000 − 3,000,000 − 2,000,000 = RON 15,000,000. Qualifying R&D expenditure of RON 2,000,000 (already expensed) attracts the additional 50% deduction of RON 1,000,000, reducing the taxable base to 15,000,000 − 1,000,000 = RON 14,000,000. CIT at 16% is RON 2,240,000, an effective rate of 2,240,000 / 15,000,000 ≈ 14.9% of pre-incentive profit; with turnover below EUR 50 million the IMCA floor does not apply. If the after-tax profit were fully distributed to a resident individual in 2026, dividend tax of 16% would apply, giving a combined burden of 16% + (84% × 16%) ≈ 29.4% on distributed profits.

9.4 Compliance

Expect e-Factura for essentially all invoicing, SAF-T (D406) submissions from month one for most taxpayers, e-Transport for goods movements, monthly D112 payroll filings, quarterly profit-tax declarations and the annual D101, plus transfer pricing files prepared to the statutory thresholds and deadlines — Romanian audits request them early and estimation powers are real. UBO declarations to the Trade Register, DAC6 monitoring and, for large groups, Pillar Two registration and returns complete the standing agenda. Budget for frequent legislative change: the 2024–2026 consolidation cycle moved VAT, dividend, micro-company and payroll parameters with short lead times, so tax calendars and ERP rate tables need active maintenance.