Payroll Taxes in Romania in 2026: The Complete Guide for Foreign Employers

Introduction

For any foreign company hiring employees in Romania — whether through a local SRL, a branch, or directly from abroad — understanding payroll taxes is not optional. Romania’s payroll system is structurally simple (a small number of contributions at fixed rates), but the total burden on gross salary is substantial, the compliance obligations are strictly enforced, and the cross-border rules for foreign employers add layers of complexity that do not exist for purely domestic companies.

The headline numbers are straightforward: the employee pays 25% CAS (pension), 10% CASS (health insurance), and 10% income tax from their gross salary. The employer pays 2.25% CAM (work insurance) on top of the gross. But behind these numbers lies a detailed calculation sequence — the order of deductions matters, personal deductions and exemptions can reduce the income tax base, certain benefits are tax-exempt within limits, and the rules for foreign employers, posted workers, and cross-border employment add specific obligations that must be managed correctly to avoid penalties, double contributions, and permanent establishment risk.

This guide explains the complete Romanian payroll tax framework as it applies to foreign employers in 2026. It covers every contribution, a step-by-step net salary calculation with a worked example, the full cost of employment, employer obligations, the rules for foreign companies without a Romanian entity, social security coordination for posted workers, the 183-day rule, benefits in kind, director compensation, and the mistakes that foreign employers most commonly make.

Payroll Tax Rates in Romania in 2026

Romania’s payroll tax structure consists of four mandatory components:

CAS (25%). The pension contribution is the largest single deduction from an employee’s salary. It is calculated on the gross salary and is deducted before the income tax calculation. CAS entitles the employee to state pension benefits. Under normal working conditions, the employer does not pay a separate CAS contribution — the full 25% is employee-borne. Additional CAS surcharges apply for workplaces classified as special or hazardous conditions (4% or 8% additional, paid by the employer).

CASS (10%). The health insurance contribution provides the employee with access to Romania’s public healthcare system. It is deducted from gross salary alongside CAS. Together, CAS and CASS account for 35% of the gross salary in mandatory employee-side social contributions.

Income tax (10%). Romania applies a flat 10% personal income tax rate. The taxable base is the gross salary minus CAS, minus CASS, minus any applicable personal deduction. The income tax is thus calculated on a reduced base, not on the full gross salary.

CAM (2.25%). The work insurance contribution is the employer’s only mandatory payroll contribution under standard conditions. It is calculated on the gross salary but is not deducted from the employee’s pay — it is an additional cost borne by the employer on top of the gross salary.

IT salary tax exemption. Employees working in qualifying IT roles for companies that meet specific conditions (minimum number of employees, IT-related NACE code, higher education in a technical field) may be exempt from the 10% income tax. This exemption has been narrowed in recent years but remains an important benefit for the Romanian IT sector. When it applies, the employee’s net salary is higher for the same gross, or the employer can offer the same net salary at a lower gross cost.

How Net Salary Is Calculated: Step by Step

The calculation sequence for a standard employee under normal working conditions is:

Step 1. Start with the agreed gross salary (salariul brut).

Step 2. Deduct CAS: gross × 25%.

Step 3. Deduct CASS: gross × 10%.

Step 4. Calculate the income tax base: gross − CAS − CASS − personal deduction (if applicable).

Step 5. Calculate income tax: taxable base × 10%.

Step 6. Net salary = gross − CAS − CASS − income tax.

Step 7 (employer side). Total employer cost = gross + CAM (gross × 2.25%).

The personal deduction (deducere personală). Employees with a gross salary up to a defined threshold are entitled to a personal deduction that reduces the income tax base. The deduction amount depends on the gross salary level and the number of dependants. For employees with gross salaries above approximately RON 4,050 (the minimum gross wage), the deduction phases out progressively. For mid-to-high salary levels typical of foreign-owned companies, the personal deduction is often zero or negligible.

Worked example: gross salary of RON 10,000 per month

In this example, the employee receives RON 5,850 (58.5% of gross). The employer’s total cash cost is RON 10,225. The combined tax and contribution burden (employee deductions plus employer CAM) is RON 4,375, or 42.8% of the total employer cost.

The Total Cost of an Employee for the Employer

The total cost of employment extends beyond gross salary and CAM. A foreign employer budgeting for a Romanian hire should account for the following components:

As a rule of thumb, the total cost of an employee to the employer in Romania is approximately 105% to 130% of the gross salary, depending on the benefits package. For a gross salary of RON 10,000, the total monthly cost including CAM and typical benefits ranges from approximately RON 10,500 to RON 13,000.

Employer Obligations: Contracts, Registration and Monthly Reporting

A Romanian employer (whether a Romanian SRL or a foreign company registered for payroll in Romania) has the following core payroll obligations:

• Written employment contract. Romanian labour law requires a written individual employment contract (contract individual de muncă) for every employee. The contract must be signed before the employee begins work and must contain all mandatory elements specified by the Labour Code: job title, job description, workplace, working hours, salary, leave entitlement, notice period, and other terms.
• Revisal registration. Before the employee’s first working day, the employer must register the employment contract in the Revisal electronic registry, which is maintained by the territorial labour inspectorate (Inspectoratul Teritorial de Muncă). Any subsequent changes to the contract (salary, position, working hours, suspension, termination) must also be reported in Revisal within the legally specified deadlines.
• Monthly payroll calculation. The employer must calculate gross-to-net salary, including all deductions (CAS, CASS, income tax), for each employee every month.
• Withholding and payment. The employer withholds CAS, CASS, and income tax from the employee’s salary and pays them to the state budget, together with the employer’s CAM, by the 25th of the month following the payroll month. All payments are made through the ANAF system.
• Declaration 112. The employer files a monthly payroll declaration (Declarația 112 — declarația privind obligațiile de plată a contribuțiilor sociale, impozitului pe venit și evidența nominală a persoanelor asigurate) with ANAF by the 25th of the month following the payroll month. This declaration reports each employee’s salary, contributions, and income tax. It is filed electronically through ANAF’s SPV portal.
• Payslip. The employer must provide each employee with a monthly payslip (fluturaș de salariu) showing the gross salary, each deduction, and the net salary.
• Internal regulations and occupational health. The employer must maintain internal regulations (regulamentul intern), conduct occupational health and safety assessments, and arrange occupational medicine examinations for employees.
• Minimum wage compliance. The gross salary must meet or exceed the national minimum gross wage, which is RON 4,050 per month in 2026 (approximately €810). Certain sectors or qualifications may have higher minimum thresholds (for example, construction-sector minimum wages are set at a higher level).

Foreign Companies Without a Romanian Entity

A foreign company that does not have a Romanian subsidiary (SRL, branch, or other registered entity) but employs or engages individuals working in Romania faces specific payroll and tax obligations. The treatment depends on the employment structure and the applicable international agreements.

Direct employment from abroad. If a foreign company employs a person who physically works in Romania, Romanian payroll taxes generally apply to the salary attributable to work performed in Romania. The foreign employer may need to register with ANAF as a non-resident employer for payroll purposes, withhold and remit Romanian income tax and social contributions, and file monthly Declaration 112. The registration and compliance process is administratively complex and requires professional support.

Transfer of withholding obligation to the employee. In certain circumstances, the withholding and reporting obligations can be transferred to the employee through a written agreement. The employee then becomes responsible for calculating and paying their own income tax and social contributions and for filing the required declarations with ANAF. This arrangement is used in some cross-border employment situations but requires careful structuring and does not relieve the employer of all responsibilities.

Employer of Record (EOR). A foreign company that does not want to establish a Romanian entity or register as a non-resident employer can use a Romanian Employer of Record. The EOR becomes the legal employer in Romania, handles all payroll, tax, and labour-law compliance, and invoices the foreign company for the total cost. The employee works under the direction of the foreign company but is formally employed by the EOR. This is a practical solution for companies testing the Romanian market or hiring a small number of employees before committing to a full local presence.

Permanent establishment risk. A critical consideration for foreign companies employing staff in Romania is whether the arrangement creates a permanent establishment (sediu permanent) for corporate income tax purposes. If the Romanian-based employee habitually exercises authority to conclude contracts on behalf of the foreign company, or if the employee’s activities constitute a fixed place of business in Romania, a permanent establishment may arise. This would subject the foreign company’s attributable profit to Romanian corporate income tax at 16%. The assessment is fact-specific and requires professional tax advice.

Social Security for Cross-Border and Posted Workers

The general rule under both EU regulations and Romanian domestic law is that a person is subject to the social security system of the country where they physically work. A person working in Romania is, by default, subject to Romanian CAS and CASS.

The A1 certificate (EU/EEA/Switzerland). An important exception applies to posted workers. Under EU Regulation 883/2004 on the coordination of social security systems, an employee who is temporarily posted from one EU/EEA member state or Switzerland to Romania can remain subject to the social security system of the sending country, provided the posting meets specific conditions and the employer obtains an A1 certificate (also known as a portable document A1) from the sending country’s social security authority.

The A1 certificate confirms that the posted worker is covered by the social security system of the sending state and is exempt from Romanian CAS and CASS for the duration of the posting. The standard maximum posting period under EU rules is 24 months, with the possibility of extension in exceptional cases by mutual agreement between the social security authorities of the two countries.

Conditions for a valid posting. The posting must be genuine: the employer must habitually carry on substantial activities in the sending country, the employment relationship must be maintained during the posting, and the posting must be temporary. An arrangement designed solely to avoid Romanian social contributions — for example, a company with no real activity in the sending country posting a worker to Romania indefinitely — will not be recognised, and Romanian contributions will apply.

Workers from non-EU countries. For workers posted from countries outside the EU/EEA/Switzerland, Romania’s bilateral social security agreements determine whether the worker can remain in the home-country system. Romania has bilateral agreements with several countries. If no agreement exists, the worker is generally subject to Romanian social contributions from the first day of work in Romania.

Multi-state workers. Employees who regularly work in two or more EU member states (for example, splitting time between Romania and Germany) are subject to specific rules under EU Regulation 883/2004. The applicable legislation is generally that of the member state of residence, provided a substantial part of the activity (at least 25%) is performed there. If not, other criteria apply. A determination must be requested from the competent social security authority.

Tax Residence and the 183-Day Rule

The question of whether a foreign employee or a cross-border worker owes Romanian income tax on their salary depends on Romanian domestic law and the applicable double tax treaty. The 183-day rule is the most commonly cited threshold, but it is frequently misunderstood and cannot be applied in isolation.

Romanian domestic law. Under the Romanian Fiscal Code, an individual who is present in Romania for more than 183 days in any 12-month period is presumed to be a Romanian tax resident and may be taxed on their worldwide income. However, tax residence can also arise through having a permanent home or centre of vital interests in Romania, even with fewer than 183 days of physical presence.

The treaty exemption for employment income. Most of Romania’s double tax treaties include an exemption for short-term employment income. Under the typical treaty provision (based on Article 15 of the OECD Model), salary paid to a non-resident employee for work performed in Romania is exempt from Romanian income tax if three conditions are all met simultaneously: the employee is present in Romania for no more than 183 days in the relevant period (usually a calendar year or any 12-month period), the remuneration is paid by or on behalf of an employer who is not a resident of Romania, and the remuneration is not borne by a permanent establishment of the employer in Romania.

If any one of these three conditions is not met, the exemption does not apply, and the salary attributable to work performed in Romania is taxable in Romania regardless of how many days the employee spends in the country.

The economic employer concept. Romanian tax authorities and the OECD commentary increasingly focus on the concept of the economic employer — the entity that bears the economic cost of the employee’s services and directs the employee’s work. If a foreign company posts a worker to a Romanian group company, and the Romanian company bears the cost of the worker’s services (through a recharge or intercompany agreement), the Romanian company may be considered the economic employer even if the formal employment contract remains with the foreign entity. In such cases, the treaty exemption may not apply, and Romanian income tax must be withheld.

For foreign employers, the practical implication is clear: the 183-day rule is not a simple calendar count. It must be assessed in the context of the full treaty provision, the identity of the economic employer, the existence of a permanent establishment, and the specific terms of the applicable double tax treaty. Professional tax advice is essential for any cross-border employment arrangement involving Romania.

Benefits in Kind: What Is Taxable and What Is Exempt

Employee benefits provided by the employer may be taxable (included in the employee’s income tax and contribution base) or exempt (wholly or partially excluded). The treatment depends on the type of benefit, the amounts involved, and whether the conditions for exemption are met.

The correct treatment of benefits in kind is a frequent audit issue. Employers should document the business purpose of each benefit, stay within the exempt thresholds, and include any taxable benefits in the monthly payroll calculation. Failure to include a taxable benefit in the payroll results in underpayment of income tax and social contributions, with interest and penalties on discovery.

Director Remuneration vs Employee Salary

Foreign business owners who also serve as the administrator (director) of their Romanian SRL must understand the distinction between director remuneration and employee salary.

Employment contract (contract individual de muncă). A standard employment contract subjects the salary to the full payroll tax regime: 25% CAS, 10% CASS, 10% income tax (employee), and 2.25% CAM (employer). The employee is entitled to all labour-law protections: paid leave, notice period, unfair-dismissal protection, and social security benefits.

Administrator mandate agreement (contract de mandat). The administrator of an SRL may be appointed under a mandate agreement rather than an employment contract. Remuneration under a mandate agreement is subject to income tax and, depending on the specific circumstances and the individual’s other income, may also be subject to CAS and CASS. The mandate agreement does not create an employment relationship and does not confer labour-law protections. It is a civil-law contract governing the administrator’s duties and compensation.

No remuneration. The administrator of an SRL may serve without remuneration. This is common for foreign owners who take their return through dividends rather than salary. However, if the administrator is actively managing the company — making decisions, signing contracts, directing employees — performing these functions without any formal compensation may attract scrutiny from ANAF, which could argue that the work should be remunerated and taxed. A nominal mandate remuneration is often advisable.

Dividends are not salary. A foreign owner who works full-time in the Romanian company should not use dividends as a substitute for salary or mandate remuneration. Dividends are a return on capital — a distribution of profit after the company has paid its taxes. If the owner is performing executive or operational work, that work should be compensated through a salary or mandate agreement, with appropriate payroll taxes. ANAF may reclassify dividend payments as disguised employment income if it determines that the owner is effectively an employee without a contract.

Common Mistakes Foreign Employers Make

• Treating gross salary as the total cost. The employer’s cost is gross salary plus CAM (2.25%) plus benefits, payroll administration, and other employment-related expenses. Budgeting based on gross salary alone understates the real cost by 5% to 30% depending on the benefits package.
• Paying employees without Romanian payroll registration. A foreign company that pays a Romanian-based employee directly from abroad, without registering for Romanian payroll or using an EOR, creates a compliance gap. The income tax and social contributions may go unpaid, the employment contract may be unregistered, and ANAF may impose penalties and back-assessments on both the employer and the employee.
• Misapplying the 183-day rule. The 183-day threshold is only one of three conditions that must all be met for the treaty employment-income exemption to apply. Employers who assume that any employee present for fewer than 183 days is automatically exempt from Romanian tax overlook the economic-employer test and the permanent-establishment condition. Each cross-border case must be analysed individually.
• Not obtaining an A1 certificate for posted workers. Posting an employee from another EU country to Romania without an A1 certificate means the employee is, by default, subject to Romanian social contributions from the first day. If the employer continues paying contributions in the sending country without the A1, the result is either double contributions or a gap in coverage. Obtaining the A1 before the posting begins is essential.
• Misclassifying employees as independent contractors. Using a service contract (contract de prestări servicii) or a PFA arrangement to engage a person who effectively works as an employee — fixed hours, single client, employer-provided equipment, subordination — is a misclassification. Romanian labour inspectors actively enforce reclassification, and the consequences include back-payment of all payroll taxes, penalties, and fines for unregistered employment.
• Failing to tax benefits in kind. Company cars used for personal purposes, employer-provided housing, equity compensation, and other benefits must be included in the payroll calculation if they exceed exempt thresholds. Omitting taxable benefits understates the employee’s income and underpays tax and contributions.
• Missing monthly Declaration 112 deadlines. Declaration 112 is due by the 25th of each month. Late filing attracts penalties, and persistent non-compliance can trigger ANAF enforcement. Setting up a reliable payroll calendar from the first month of employment is critical.
• Ignoring permanent establishment risk. A foreign company that employs staff in Romania may inadvertently create a permanent establishment, subjecting its attributable profit to Romanian corporate income tax. The risk increases when the Romanian employee has authority to conclude contracts, when the activity is long-term, and when the employee operates from a fixed location. The PE assessment should be part of every cross-border employment decision.

Frequently Asked Questions