Taxes

Taxes in Romania – types and tax rates


  • Income Taxes
  • Microenterprise income tax
  • Tax revenue from Romania by non-residents and tax representatives of foreign companies in Romania
  • Value added tax
  • Tax revenue from Romania by non-residents and tax representatives of foreign companies in Romania
  • Excise and other special taxes
  • Local taxes

Income Taxes


Apply the following categories:

  • Romanian legal entities;
  • foreign legal entities carrying out activities through a permanent establishment in Romania;
  • foreign legal entities and natural persons resident in Romania which operates in association with or without legal personality (in force since January 1st. 2012)
  • foreign legal persons obtaining income from / or in connection with real estate located in Romania or from the sale / transfer of shares held in a Romanian legal entity;
  • resident individuals associated with Romanian legal persons, the income both in Romania and abroad from associations without legal personality; In this case, the tax payable by the individual is calculated, withheld and paid by Romanian legal entity.
  • legal entities with headquarters in Romania, set up under European law.
  • companies taxable on profit are the companies with turnover exceeding 1 mil EUR.
  • tax period: calendar year, unless it has been chosen to apply a different fiscal year, to match the company’s own applicable accounting regulations.

Profit tax rate applicable to the taxable profit and is 16%. By taxable income means the difference between income from any source and the expenses incurred in order to achieve revenue of a fiscal year, net of non-taxable income and deductible expenses plus. When determining taxable income are taken into account and other similar items of income and expenses. The tax code are explained in detail all the revenue and expenditure and exceptions.

Memo tax is paid by legal entities (companies, institutions, organizations, etc.) not by individuals (natural persons).

Income tax


This is a tax payable by any person (natural person). The tax rate is 10% and is applied to taxable income in each category corresponding to each source for determining the income tax:

  • employment;
  • wages;
  • rental and leasing;
  • investments;
  • pensions;
  • farming;
  • awards;
  • other sources.

Dividend income tax


Dividend income is subject to a 5% income tax rate. This income is considered for assessing the annual minimum cap based on which the health fund contribution might be due. For example, individuals receiving, in 2020, income from dividends, which, alone or together with other categories of personal income, as provided by the Fiscal Code, are in a value of at least RON 26,760 (12 x minimum gross salary for 2020), have to submit the Single return and pay the health fund contribution (10% applied on the aforementioned threshold). 


Microenterprise income tax


Tax Code establishes that Micro-enterprises are companies with turnover not exceeding 1 mil EUR
Tax rates:
• 1% of the revenue, for companies with at least 1 employee
• 3% of the revenue, for companies with no employees
Tax period: the calendar year

Value added tax (VAT)


It is an indirect tax owed to the state budget. In other words this indirect tax is obtained as the difference between the purchase price and the sale of a product.

The standard VAT rate in Romania is 19%.
A reduced rate of 9% applies to food & beverage industry, medical treatments and prosthesis, accommodation etc.
Extra-reduced rate 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.

 

Excise and other special taxes


 

The most common are customs duties “harmonized”. They apply to the following products derived from domestic or imported:

  • beer;
  • wines;
  • fermented beverages other than beer and wine;
  • intermediate products;
  • alcohol;
  • tobacco;
  • energy products;
  • natural gas,
  • coal, coke and lignite

Tax Code provides all the information and describe the characteristics of each category of products subject to excise duty. For example, hectolitre of sparkling wine is 100 euro excise quiet, cigarettes and cigars, cigarettes excise is 1,000 euro and 64 tonne diesel excise paid by the end user Euro 302.51. Notably, the company that supplied excise goods should add to the selling price and the amount of excise duty to remit to the state budget next month.

Local taxes


These taxes are collected by local authorities, villages, towns, counties. Each local authority sets its own taxes, advise on local decisions, respecting decisions, ordinances and laws issued by the Government or Parliament.

  • Tax on buildings
  • Tax and land tax,
  • Tax on vehicles,
  • Fee for the issuance of certificates, permits and authorizations,
  • The fee for the use of public advertising and publicity,
  • The tax on shows,
  • Tax,
  • Special charges,
  • Other local taxes

Nicoleta Mădălina Gherghe Mihăilă

Managing Partner - Powerfull Deeds For 10 years doing Powerfull Deeds, serving individuals and companies in their own journey of growth with my knowledge, experience, tools and shortcuts, enjoying each step. I would love to contribute in yours too. How can I serve you? Send me an email and tell me how can I add value to you? [contact-form-7 id="497" title="Contact form 1"]

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