Taxes in Romania in 2026: The Complete Overview for Foreign Entrepreneurs, Investors, and Property Owners

How the Romanian Tax System Works

Romania’s tax system operates on several levels: state-level taxes (corporate income tax, personal income tax, VAT, excise duties), local taxes (property tax, land tax, vehicle tax), and mandatory social contributions (pension, health insurance, work insurance). The system is governed primarily by the Fiscal Code (Codul fiscal), the Fiscal Procedure Code (Codul de procedură fiscală), and local council decisions for property taxes.

ANAF (Agenția Națională de Administrare Fiscală) administers state taxes, while local tax directorates (direcțiile de impozite și taxe locale) administer property and local taxes. All state tax declarations must be filed electronically through ANAF’s SPV portal. Romania has over 90 double tax treaties that may modify the domestic rules for cross-border situations.

Who Is Considered a Romanian Taxpayer
Tax obligations in Romania can arise for: Romanian-registered companies (SRL, SA, and other forms), foreign companies with a permanent establishment or effective management in Romania, individual tax residents (taxed on worldwide income), individual non-residents (taxed on Romanian-source income), self-employed persons (PFA), employers (withholding obligations), and property owners (local taxes and income tax on rental or sale proceeds). A tax obligation can arise even without a Romanian company, residence permit, or physical presence — for example, through rental income from Romanian property or services performed in Romania.

TAXES ON ROMANIAN COMPANIES

Corporate Income Tax (16%)

The standard corporate income tax rate is 16% of taxable profit. It applies to Romanian companies that do not qualify for or have opted out of the micro-enterprise regime, and to foreign companies with a permanent establishment in Romania. Romanian companies are taxed on worldwide income; permanent establishments are taxed on attributable profit. CIT is calculated quarterly and reconciled annually (annual declaration due 25 June of the following year).

How Taxable Profit Is Calculated

Taxable profit = taxable revenue − deductible expenses − carried-forward tax losses ± fiscal adjustments. The starting point is accounting profit under Romanian Accounting Standards, adjusted for items the Fiscal Code treats differently. Not all accounting expenses are deductible: entertainment is capped at 2% of accounting profit plus salary costs, social expenses at 5% of salary costs, mixed-use vehicle costs at 50%, fines are non-deductible, undocumented expenses are non-deductible, and personal expenses of the owner are non-deductible.

Micro-Enterprise Tax in 2026 (1%)

From 1 January 2026, qualifying micro-enterprises pay a single 1% tax on total revenue (turnover), not on profit. The previous 3% rate has been eliminated. The revenue threshold has been reduced to the RON equivalent of €100,000. Qualifying conditions include: at least one employee, the company is not a bank or insurer, consulting income does not exceed a defined percentage of total revenue, and ownership restrictions are met (a single individual cannot control more than a defined number of micro-enterprises).

Companies exceeding the threshold or losing eligibility during the year must switch to the 16% CIT regime from the quarter in which the condition is breached. New companies may start on the micro regime if they meet all conditions.

Is Micro-Enterprise Tax Always Better?

No. The 1% turnover tax ignores expenses entirely. For high-margin businesses with low costs (consulting, IT, freelancing), micro is typically cheaper. For low-margin businesses with high costs (trading, construction, manufacturing), CIT at 16% of profit may be lower. Example: a company with €80,000 revenue and €20,000 expenses pays €800 micro tax vs €9,600 CIT. But a company with €80,000 revenue and €75,000 expenses pays €800 micro tax vs €800 CIT — they’re equal. At €76,000 expenses, CIT becomes cheaper. The calculation must be modelled for each company annually.

Minimum Turnover Tax for Large Companies

Companies with prior-year turnover exceeding €50 million may be subject to the minimum turnover tax (impozitul minim pe cifra de afaceri / IMCA) at 0.5% of an adjusted revenue base. The company pays whichever is higher: the standard 16% CIT or the 0.5% minimum turnover tax. This primarily affects large enterprises and ensures a minimum tax contribution regardless of deductions.

Sector-Specific Turnover Taxes

Certain sectors face special rules: nightclubs and gambling operations pay the higher of 16% profit tax or 5% of relevant revenue. Credit institutions and oil/gas companies may face additional sector-specific taxes. Excise duties apply to alcohol, tobacco, energy products, and other specified goods.

Depreciation of Business Assets

Tax depreciation allows deduction of asset costs over their useful lives. Buildings: 20–60 years; machinery: 3–15 years; vehicles: 4–6 years; software: 3 years; computers: 2–4 years. Accelerated depreciation (50% in year one) is available for machinery and equipment. Land is not depreciable. Accounting and tax depreciation may differ, creating fiscal adjustments.

Tax Losses

Tax losses can be carried forward for five consecutive fiscal years. Annual offset is limited to 70% of that year’s taxable profit. Each year’s losses are tracked separately. Losses not used within five years expire permanently. Special rules apply to mergers and reorganisations.

TAXES ON OWNERS AND INVESTORS

Dividend Tax in 2026 (16%)

From 1 January 2026, the standard tax on dividends is 16% (increased from 8%). The company withholds the tax before paying the net dividend. This applies to distributions to individuals and to corporate shareholders, subject to exemptions. Interim dividends are taxed at the same rate. Dividends can only be distributed from approved financial statements after covering losses and allocating legal reserves.

Dividend Exemptions Between Companies

Dividends between Romanian companies, or from a Romanian company to an EU/EEA parent, are exempt from withholding if: the recipient holds at least 10% of the share capital, the holding has been maintained continuously for at least one year, the recipient is subject to corporate tax in its home state, and anti-abuse conditions are met. This implements the EU Parent-Subsidiary Directive.

Effective Tax on Distributed Company Profits

The total tax burden includes company-level tax plus dividend tax. For a CIT company: 16% CIT on profit + 16% dividend on the remainder = approximately 29.4% combined. For a micro company: 1% on turnover + 16% dividend on distributable profit. CASS (up to 10% on a capped base) may also apply to individual shareholders. The widely advertised “1% tax” understates the real burden significantly.

Capital Gains for Companies

Gains from selling assets (property, equipment, shares) are included in the company’s taxable profit and taxed at 16%. A participation exemption may apply to gains from selling qualifying shareholdings (minimum 10% held for at least one year in an EU/EEA company). Losses on asset disposals are generally deductible within the normal CIT framework.

Personal Investment Income

From 2026, gains from securities transactions through a Romanian intermediary are taxed at 3% (holding ≥365 days) or 6% (shorter holding). Transactions without a Romanian intermediary and certain other categories are taxed at 16%. Cryptocurrency gains are taxed at 16%. Dividends from foreign companies: 10% declared by the individual. Interest income: 10%. All rates apply to Romanian tax residents; non-residents are taxed only on Romanian-source investment income.

VALUE ADDED TAX (VAT)

Romanian VAT in 2026

The standard VAT rate is 21% (increased from 19%). A reduced rate of 11% applies to specified goods and services including certain food products, medicines, water supply, and some agricultural inputs. Certain supplies are VAT-exempt (financial services, insurance, medical services, education, residential property sales after first occupation). VAT returns are filed monthly or quarterly depending on turnover.

VAT Registration

Mandatory registration is required when taxable turnover exceeds RON 300,000 (approximately €60,000). Voluntary registration is available below the threshold. Non-resident companies making taxable supplies in Romania may need to register directly or appoint a fiscal representative. Intra-Community acquisitions and distance sales have separate thresholds and registration requirements.

Input VAT Deduction

Input VAT on purchases related to taxable activities is deductible. Requirements: a valid invoice, a link to taxable supplies, and compliance with documentation rules. Mixed-use vehicle costs: 50% input VAT deductible unless exclusive business use is documented. Capital goods adjustments apply over 5 years (movables) or 20 years (immovables). VAT refunds are available when input exceeds output, subject to ANAF verification.

VAT on Real Estate

New buildings (delivered within 12 months of completion or first occupation) are subject to VAT. Old buildings are generally VAT-exempt but the seller may opt to tax the supply. Construction land is taxable; other land is exempt. Residential property below a defined area and price threshold may benefit from a reduced rate. Rental of commercial property may be subject to VAT if the landlord opts to tax. Reverse charge applies to property sales between VAT-registered persons.

EMPLOYMENT, DIRECTORS, AND SELF-EMPLOYMENT

Salary Income Tax (10%)

Employment income is subject to a flat 10% personal income tax, calculated on the taxable base (gross salary minus CAS, CASS, and any personal deduction). The employer withholds the tax monthly. Qualifying IT employees may be exempt from the 10% income tax under specific conditions. Benefits in kind (company car, housing) are taxable above exempt thresholds.

Employee Social Contributions

Total employee-side deductions are approximately 41.5% of gross salary. The employer’s total cost is gross + 2.25% CAM + benefits. International social security agreements and A1 certificates may exempt posted workers from Romanian contributions.

Director Remuneration

A director may be compensated through an employment contract (full payroll taxes) or a mandate agreement (income tax and, depending on circumstances, CAS/CASS). Serving without remuneration is possible but may attract ANAF scrutiny if the director performs substantial management work. Dividends cannot substitute for remuneration for work actually performed.

Self-Employment and PFA

Income from self-employment (PFA, liberal professions) is taxed at 10% income tax. CAS (25%) applies when annual income exceeds defined thresholds, on fixed contribution bases. CASS (10%) applies similarly. The taxpayer can choose between the real-income system (actual revenue minus deductible expenses) and the income-norm system (flat amount based on activity type). A PFA must register for VAT if turnover exceeds RON 300,000.

CASS on Non-Salary Income

CASS (10%) may apply to non-salary income including dividends, rental income, interest, and investment gains if total annual income from these sources exceeds RON 24,300. The contribution is calculated on fixed bases (RON 24,300, 48,600, or 97,200) depending on the income bracket, not on the actual amount. Maximum annual CASS on non-salary income is RON 9,720 (approximately €1,944). Non-residents are generally exempt.

NON-RESIDENTS AND INTERNATIONAL TAXATION

Tax Residence of Individuals

An individual becomes a Romanian tax resident if any one of these criteria is met: presence exceeding 183 days in any 12 consecutive months, centre of vital interests in Romania, or permanent home/domicile in Romania. Residents are taxed on worldwide income. The ANAF questionnaire (form Z015) must be filed within 30 days after exceeding 183 days. Double tax treaty tie-breaker rules may assign residence to another country.

Permanent Establishment

A foreign company with a fixed place of business in Romania (office, branch, construction site >12 months, dependent agent) has a permanent establishment taxed at 16% CIT on attributable profit. Remote employees working in Romania for a foreign company may create a PE if they habitually conclude contracts or perform core business functions.

Withholding Tax on Payments to Non-Residents

The standard withholding rate on dividends, interest, royalties, management fees, consultancy fees, commissions, and services performed in Romania paid to non-residents is 16%. Double tax treaties may reduce or eliminate the withholding. The EU Interest and Royalties Directive may exempt qualifying payments between EU group companies. A valid certificate of tax residence must be provided before payment to claim the treaty rate.

Double Tax Treaties

Romania has over 90 double tax treaties that allocate taxing rights, reduce withholding rates, and provide foreign tax credits. Treaties are not applied automatically — the recipient must provide a certificate of tax residence and the payer must verify the beneficial ownership. Common treaty withholding rates: dividends 5–15%, interest 5–15%, royalties 5–15% depending on the treaty and the relationship between the parties.

Transfer Pricing

Transactions between related parties must be at arm’s length. Common targets: management fees, intercompany loans, royalties, and goods pricing. Companies above defined thresholds must prepare a transfer pricing file. ANAF actively audits transfer pricing, and adjustments with penalties are common for undocumented or mispriced transactions.

Anti-Avoidance Rules

Romania has implemented CFC (controlled foreign company) rules, a general anti-abuse rule, beneficial-owner requirements, hybrid mismatch rules, and DAC6 reporting obligations for cross-border arrangements. Artificial structures without economic substance may be disregarded for tax purposes. EU-wide Pillar Two minimum tax rules apply to groups with consolidated revenue above €750 million.

PROPERTY TAXES

Annual Property Taxes

Building tax and land tax are local taxes set by municipal councils within ranges defined by the Fiscal Code. Residential buildings: typically 0.08–0.2% of the fiscal value. Non-residential (commercial) buildings: 0.2–1.3%. Properties owned by companies are generally taxed at the higher commercial rate. Land tax depends on location, category, and area. Payment is due in two instalments (31 March and 30 September), with a discount for full early payment.

Special Tax on High-Value Property

From 2026, the special tax on high-value residential property and expensive vehicles/movable assets has been increased from 0.3% to 0.9%. The tax applies to the value exceeding the defined threshold. The owner must file a declaration and pay the tax annually.

Rental Income Tax

Rental income is taxed at 10% after a standard expense deduction (currently a percentage of gross rent defined by the Fiscal Code). The landlord files the single declaration (declarația unică) and pays the tax. CASS (10% on a capped base) may also apply if total non-salary income exceeds the threshold. Non-resident landlords are also taxed at 10%. Short-term rentals (Airbnb-style) have specific rules including potential VAT obligations above the registration threshold.

Tax on Selling Property

Individuals selling Romanian property pay transfer tax: 1% if the property was held for more than 3 years, 3% if held for 3 years or less, applied to the transfer value above a defined exempt amount. The tax is withheld by the notary at the time of sale. Companies include the gain in taxable profit at 16% CIT. VAT may apply to new buildings. Non-residents are taxed under the same rules and should check their home-country obligations under the applicable treaty.

Property Owned Through an SRL

Owning property through an SRL changes the tax profile: building tax is at the commercial rate, depreciation reduces taxable profit, rental income is taxed as company revenue (under CIT or micro), VAT may apply to commercial leases, and extracting the proceeds requires dividend distribution with the 16% dividend tax. Buying through an SRL is not automatically cheaper — the total tax chain (property tax + company tax + dividend tax) must be compared with direct individual ownership for each specific case.

TAX COMPLIANCE AND REPORTING

Romanian Tax Calendar

Electronic Reporting: SPV, e-Factura, SAF-T

All tax declarations must be filed electronically through ANAF’s SPV portal. RO e-Factura is mandatory for B2B, B2G, and increasingly B2C transactions — invoices must be transmitted in XML format through the national system. SAF-T (D406) reporting requires companies to submit detailed accounting data to ANAF periodically. E-Transport applies to certain goods movements. Non-compliance with electronic reporting obligations results in fines and potential VAT deactivation.

Tax Audits and Penalties

ANAF conducts desk audits, field audits, VAT audits, and transfer pricing audits. The standard limitation period is 5 years. Late-payment interest is 0.02% per day; late-payment penalties are 0.01% per day. For undeclared obligations discovered during audit, a penalty of 0.08% per day may apply. Non-filing penalties apply for missed declarations. Payment plans may be negotiated for significant amounts.

Tax Incentives

Available incentives include: reinvested-profit exemption (qualifying technological and IT assets exempt from CIT in the year of investment), R&D super-deduction (additional deduction above actual R&D expense), accelerated depreciation (50% in year one for machinery), industrial park benefits (local tax exemptions), state aid for large investments, and EU-funded programmes for SMEs. Each incentive has specific eligibility conditions and clawback provisions.

Tax Planning Versus Tax Avoidance

Legitimate planning: choosing the optimal legal form (SRL vs PFA), selecting micro vs CIT based on cost analysis, using treaty relief with proper documentation, claiming all lawful deductions, timing reinvestment for the profit exemption, structuring compensation efficiently within the law.

Risky or illegal: fictitious expenses, hiding beneficial ownership, sham contracts, shell companies without substance, unrecorded cash revenue, personal expenses through the company, fake loans to the shareholder, splitting businesses solely to stay under the micro threshold.

PRACTICAL CHECKLISTS

Tax Checklist for a Foreign Entrepreneur

1. Determine your personal tax residence.
2. Choose the business form (SRL, PFA, branch).
3. Assess micro-enterprise eligibility.
4. Register for CUI and VAT if required.
5. Open SPV and set up electronic reporting.
6. Appoint a Romanian accountant.
7. Configure e-Factura and SAF-T.
8. Register employees and directors properly.
9. Review transfer pricing for related-party transactions.
10. Plan dividend distributions (model the full tax chain).
11. Check home-country tax obligations.
12. Review the structure annually.

Tax Checklist for an Investor

1. Identify the type of investment income.
2. Check the applicable Romanian rate.
3. Obtain a tax residence certificate from your home country.
4. Check the double tax treaty.
5. Determine withholding obligations.
6. Calculate CASS if applicable.
7. Verify broker and withholding mechanism.
8. Declare foreign accounts and income in your home country.
9. Retain acquisition cost documentation.
10. Monitor rate changes (investment tax rates changed significantly in 2026).

Tax Checklist for a Property Owner

1. Register the property with the local tax authority.
2. Check building tax and land tax rates.
3. Pay local taxes by the deadlines (31 March, 30 September).
4. Register the rental agreement with ANAF.
5. Declare rental income (single declaration).
6. Calculate CASS on rental income.
7. Check VAT for short-term rentals.
8. Retain purchase documents and expenses.
9. Check the high-value property tax.
10. Calculate transfer tax before selling.

Common Tax Mistakes Foreigners Make

• Treating 1% micro tax as the total burden. Dividend tax (16%), possible CASS, and home-country tax all apply on top.
• Forgetting the dividend rate doubled. From 8% to 16% since 1 January 2026.
• Choosing micro without margin analysis. For low-margin businesses, CIT may be cheaper.
• Ignoring CASS. Up to 10% on a capped base for dividends and other non-salary income.
• Missing the tax residence certificate. Treaty relief requires a valid certificate before payment.
• Using personal accounts for business. Mixing personal and company finances creates audit exposure.
• Paying personal expenses through the SRL. Non-deductible and may be reclassified as taxable income.
• Not registering a permanent establishment. Back-assessments, interest, and penalties.
• Undocumented related-party transactions. Transfer pricing adjustments are common.
• Ignoring local property taxes. Building and land taxes are due regardless of income.
• Not declaring foreign income after becoming resident. Worldwide income reporting is mandatory.
• Missing e-Factura or SAF-T. Fines and potential VAT deactivation.
• Relying on outdated rates. 2026 brought significant changes to multiple tax rates.