Verified Facts
The tax rates in Romania range from 10% to 40% for personal income tax, with a corporate tax rate of 16%, and a standard VAT rate of 19%, making it essential for expats and businesses to understand the tax system to navigate their obligations.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Romania has a territorial taxation system, where individuals and companies are taxed on their income earned within the country, regardless of their residency status. However, individuals who are considered tax residents are subject to worldwide taxation, meaning they are taxed on their global income, not just the income earned in Romania. To be considered a tax resident, an individual must have a permanent home in Romania, be present in the country for at least 183 days in a calendar year, or have their center of vital interests in Romania.
The Romanian tax system is governed by the National Agency for Fiscal Administration (ANAF), which is responsible for collecting taxes, customs, and other fiscal obligations. The tax year in Romania runs from January to December, and taxpayers are required to file their tax returns by May 25th of each year. Taxpayers can file their returns online or through a tax representative, and they must pay any outstanding taxes by the same deadline to avoid penalties and interest.
Personal Income Tax
| Income Bracket (RON) | Tax Rate |
|---|---|
| 0 - 1,000 | 10% |
| 1,001 - 3,000 | 15% |
| 3,001 - 6,000 | 20% |
| 6,001 - 12,000 | 25% |
| 12,001 and above | 40% |
| Personal income tax rates in Romania are progressive, with higher income earners paying a higher tax rate. Taxpayers are entitled to deductions and allowances, such as a personal allowance of RON 1,200 per month, and deductions for mortgage interest, charitable donations, and medical expenses. Taxpayers are required to file their tax returns annually, and they can claim tax credits for foreign taxes paid, up to the amount of tax payable in Romania. |
Corporate & Business Tax
- The corporate tax rate in Romania is 16%, which applies to companies' taxable profits.
- Small businesses with an annual turnover of up to RON 500,000 are eligible for a reduced corporate tax rate of 3%, provided they meet certain conditions.
- Romania has several free zones and industrial parks that offer tax incentives and other benefits to companies that set up operations in these areas.
- Companies are required to register with the Romanian Trade Register and obtain a tax identification number to operate in the country.
- Companies must also comply with tax accounting and VAT registration requirements, and file their tax returns and financial statements annually.
VAT / Sales Tax
- The standard VAT rate in Romania is 19%, which applies to most goods and services.
- A reduced VAT rate of 9% applies to certain goods and services, such as food, pharmaceuticals, and hotel accommodations.
- A super-reduced VAT rate of 5% applies to certain goods, such as books and newspapers.
- Some goods and services are exempt from VAT, such as financial services, healthcare services, and education services.
- Romania has a tourist refund scheme, which allows foreign visitors to claim a refund of VAT paid on certain goods purchased in the country.
For Expats & Foreign Workers
- Expats who are considered tax residents in Romania are subject to worldwide taxation, meaning they are taxed on their global income, not just the income earned in Romania.
- Romania has double taxation treaties with 88 countries, which help to prevent double taxation and fiscal evasion.
- Expats are required to register with the Romanian tax authorities and obtain a tax identification number to work in the country.
- Expats are entitled to tax credits for foreign taxes paid, up to the amount of tax payable in Romania.
- Expats may be required to pay social security contributions in Romania, depending on their employment status and nationality.
- Expats should be aware of the remittance rules in Romania, which require them to report and pay tax on foreign-sourced income.
Crypto & Investment Income
- Investment income, such as dividends, interest, and capital gains, is subject to income tax in Romania, at a rate of up to 40%.
- Cryptocurrency is considered a digital asset in Romania, and is subject to capital gains tax at a rate of 10%, when sold or exchanged for other assets.
- Dividends paid to non-resident shareholders are subject to a withholding tax of 5%, which can be reduced or eliminated under a double taxation treaty.
- Interest income earned by non-resident individuals is subject to a withholding tax of 10%, which can be reduced or eliminated under a double taxation treaty.