Corporate Income Tax in Romania in 2026: The Complete Guide for Foreign Business Owners

Introduction

Romania’s corporate income tax — impozitul pe profit — is the standard tax regime for companies that do not qualify for or do not use the micro-enterprise turnover tax. At 16% of taxable profit, the headline rate is competitive by European standards, placing Romania among the lower-taxed EU member states alongside Hungary (9%), Bulgaria (10%), Ireland (15%), and Poland (19%). For foreign business owners operating through a Romanian SRL, SA, branch, or other taxable entity, understanding how the corporate income tax works in practice — not just the headline rate — is essential for accurate financial planning, cash-flow management, and compliance.

The 16% rate applies to taxable profit, not to accounting profit and not to turnover. The difference matters enormously. Taxable profit is derived from accounting profit through a series of adjustments: certain expenses that appear in the income statement are not deductible for tax purposes, others are only partially deductible, and some items that are not expenses at all create taxable adjustments. A company that shows an accounting profit of €100,000 may have a taxable profit that is higher or lower, depending on the nature of its expenses and income.

This guide explains the complete corporate income tax framework in Romania as it applies to foreign-owned businesses in 2026. It covers who pays, how taxable profit is calculated, what is deductible and what is not, how depreciation works, how losses are carried forward, how the CIT regime compares with the micro-enterprise tax, how foreign income is treated, when a foreign company creates a permanent establishment, how transfer pricing applies, what incentives are available, how tax is filed and paid, and what happens when profits are distributed to the owner. It is written for foreign entrepreneurs, investors, and international companies that need a clear, practical understanding of the Romanian corporate tax landscape.

Romania’s Corporate Income Tax Rate

The standard corporate income tax rate in Romania is 16% of taxable profit. This rate has been stable for many years and applies uniformly to all corporate taxpayers — Romanian SRLs, SAs, branches of foreign companies, and other legal entities subject to profit tax under the Fiscal Code. There is no progressive scale: the first euro of taxable profit and the millionth euro are taxed at the same 16%.

By EU comparison, Romania’s 16% rate is competitive. It is higher than Hungary (9%), Bulgaria (10%), and Ireland (15%), but lower than Germany (approximately 30% including trade tax), France (25%), Italy (24% plus regional surcharge), and the Netherlands (25.8% above €200,000). For companies with substantial deductible expenses, the effective tax rate — the actual tax paid as a percentage of accounting profit — is often lower than 16%, because deductions reduce the taxable base.

Who Pays Corporate Income Tax in Romania

The following entities are subject to Romanian corporate income tax:

• Romanian legal entities. Any Romanian-registered company — SRL (limited liability company), SA (joint-stock company), SNC (general partnership), SCS (limited partnership), and other legal forms — that does not qualify for or has opted out of the micro-enterprise regime pays corporate income tax on its taxable profit.
• Companies that lose micro-enterprise eligibility. A company that exceeds the micro-enterprise revenue threshold (the RON equivalent of €100,000 in turnover), fails to maintain the required number of employees, or otherwise ceases to meet micro-regime conditions must transition to the corporate income tax regime. The transition takes effect from the quarter in which the condition is breached.
• Foreign companies with a permanent establishment in Romania. A foreign company that has a permanent establishment (sediu permanent) in Romania — a fixed place of business through which it carries on its activity — is subject to Romanian corporate income tax on the profit attributable to that permanent establishment.
• Foreign legal entities with effective management in Romania. If the place of effective management of a foreign legal entity is in Romania, the entity may be treated as a Romanian tax resident and taxed on its worldwide income.
• Other entities. Certain associations, foundations, and other legal persons are subject to corporate income tax on their commercial activities as defined by the Fiscal Code.

How Taxable Profit Is Calculated

The fundamental formula for Romanian corporate income tax is:

Taxable profit = taxable revenue − deductible expenses − carried-forward tax losses ± fiscal adjustments

This calculation starts with accounting profit as determined under Romanian Accounting Standards (RAS) or, for qualifying entities, IFRS. The accounting profit is then adjusted for items that the Fiscal Code treats differently from accounting standards.

Taxable revenue includes all income recognised in the profit and loss statement, with certain exceptions. Revenue that is explicitly exempt — such as qualifying dividend income received from Romanian companies or from EU/EEA subsidiaries meeting participation-exemption conditions — is excluded from the taxable base.

Deductible expenses are those incurred for the purpose of the company’s economic activity, properly documented, and not specifically limited or excluded by the Fiscal Code. The general principle is that an expense is deductible if it is incurred in the course of the company’s business, is supported by appropriate documentation (invoices, contracts, receipts), and is not on the list of non-deductible or limited-deductibility items.

Fiscal adjustments account for differences between accounting treatment and tax treatment. Common adjustments include adding back non-deductible expenses, adjusting depreciation to reflect tax depreciation rates rather than accounting rates, and applying specific rules for provisions, write-downs, and foreign-exchange differences.

Deductible Expenses

Expenses that are fully deductible for corporate income tax purposes include those that are directly and exclusively related to the company’s economic activity and properly documented. The main categories are:

• Salaries and mandatory social contributions. Gross salaries, the employer’s 2.25% work insurance contribution (CAM), meal vouchers, and other salary-related costs provided under employment contracts are fully deductible.
• Rent and office costs. Rent paid under a valid lease agreement for premises used in the company’s activity is deductible. This includes rent for offices, warehouses, production facilities, and co-working spaces.
• Utilities. Electricity, gas, water, heating, telecommunications, and internet costs for business premises are deductible.
• Professional services. Fees paid to accountants, lawyers, tax advisers, auditors, consultants, and other professional service providers are deductible, provided the services are documented and related to the company’s activity.
• Advertising and marketing. Costs of advertising, marketing campaigns, online promotion, trade fairs, and brand development are deductible.
• Business travel. Travel expenses — transport, accommodation, and daily allowances (diurnă) — are deductible within the limits set by Romanian law. Daily allowances for domestic and international business travel are deductible up to 2.5 times the statutory level for public-sector employees.
• Software and IT costs. Licence fees, SaaS subscriptions, software development costs, and IT infrastructure expenses are deductible.
• Depreciation. Tax depreciation of tangible and intangible fixed assets is deductible according to the rules and rates prescribed by the Fiscal Code. This is covered in detail in the depreciation section below.
• Insurance. Premiums for business insurance — property, liability, vehicle, professional indemnity — are deductible.
• Bank charges and interest. Bank fees, transaction charges, and interest on business loans are generally deductible, subject to the interest-limitation rules for related-party borrowing.

The overarching requirement is that every deductible expense must be incurred for the purpose of the company’s economic activity and must be supported by proper documentation — an invoice, a contract, a receipt, or another document that meets the requirements of Romanian accounting and fiscal legislation.

Limited and Non-Deductible Expenses

Not all expenses recorded in the accounting system are fully deductible for tax purposes. The Fiscal Code identifies several categories of expenses that are either partially deductible or entirely non-deductible.

• Entertainment expenses (protocol). Entertainment and hospitality costs — business dinners, gifts to clients, event hosting — are deductible only up to 2% of the company’s accounting profit plus fully deductible salary costs. Amounts exceeding this cap are non-deductible.
• Social expenses. Certain employee social benefits — gifts for employees, holiday vouchers, cultural vouchers — are deductible up to a limit of 5% of total salary costs. Amounts above this limit are non-deductible.
• Vehicle costs for mixed use. When a company vehicle is used for both business and personal purposes, only 50% of the related expenses (fuel, maintenance, insurance, leasing payments) and depreciation are deductible, unless the company can demonstrate that the vehicle is used exclusively for business through a detailed trip log (foaie de parcurs) or other evidence.
• Interest and borrowing costs. Interest expenses on loans from related parties are subject to interest-limitation rules. The net borrowing costs exceeding the threshold defined by the Fiscal Code (currently €1,000,000 for the consolidated group or standalone entity) are deductible only up to 30% of fiscal EBITDA. Excess interest can be carried forward indefinitely.
• Provisions and impairments. Provisions and write-downs of receivables are generally non-deductible when created. They become deductible only when the underlying loss is realised — for example, when a receivable is definitively uncollectible under the conditions specified by the Fiscal Code (insolvency proceedings, expiry of the limitation period, derecognition under specific conditions).
• Fines and penalties. Fines, penalties, and surcharges imposed by Romanian or foreign public authorities are entirely non-deductible. This includes late-payment penalties on taxes, traffic fines, and administrative sanctions.
• Undocumented expenses. Expenses that are not supported by valid documentation — no invoice, no contract, no supporting evidence — are non-deductible. This is one of the most common issues identified in tax audits.
• Personal expenses of shareholders or directors. Any expense that benefits the shareholder or director personally rather than the company — personal travel, personal purchases, private accommodation — is non-deductible and may also be reclassified as a benefit in kind subject to personal income tax and social contributions.
• Expenses unrelated to the business activity. Any expense that cannot be justified as being incurred for the purpose of the company’s economic activity is non-deductible.

Depreciation of Assets

Tax depreciation (amortizarea fiscală) allows a company to deduct the cost of tangible and intangible fixed assets over their useful lives. The Fiscal Code prescribes three depreciation methods — straight-line (liniară), declining-balance (degresivă), and accelerated (accelerată) — with specific rules for each asset category.

Accelerated depreciation allows up to 50% of the asset’s value to be deducted in the first year of use, with the remainder spread evenly over the remaining useful life. This method is available for machinery, equipment, and technological installations and provides a significant front-loaded tax benefit for capital-intensive businesses.

It is important to note that accounting depreciation and tax depreciation may differ. A company may depreciate an asset over a different period for accounting purposes than for tax purposes. The difference creates a fiscal adjustment in the corporate income tax calculation.

Tax Loss Carry-Forward

A company that reports a taxable loss in a given year can carry that loss forward and offset it against taxable profits in subsequent years. The key rules are:

• Carry-forward period. Tax losses can be carried forward for five consecutive fiscal years following the year in which they were incurred. Losses not utilised within this period expire permanently.
• Annual offset limit. In each subsequent year, carried-forward losses may be offset against no more than 70% of the taxable profit of that year. This means that even in a highly profitable year, the company must pay corporate income tax on at least 30% of its taxable profit.
• Separate tracking. Each year’s losses must be tracked separately, and the five-year expiry is calculated independently for each year’s loss.
• Reorganisations. Special rules apply when companies undergo mergers, divisions, or other reorganisations. In general, the successor entity can inherit the carried-forward losses of the absorbed entity, subject to conditions.

Loss carry-forward is particularly relevant for startups, investment projects, and businesses that are loss-making during their initial years. Proper planning ensures that losses are utilised before they expire.

Corporate Income Tax vs Micro-Enterprise Tax

Romania offers two fundamentally different corporate tax regimes, and a foreign business owner must understand the distinction to choose the optimal structure.

When CIT is more advantageous than micro tax. A company with high deductible expenses relative to its revenue — for example, a trading company with a 10% margin, a construction company with heavy material costs, or a startup investing heavily in R&D and equipment — will generally pay less tax under the CIT regime than under the micro-enterprise tax. If a company earns €100,000 in revenue and has €85,000 in deductible expenses, its CIT liability is 16% × €15,000 = €2,400. Under the micro regime, it would pay 1% × €100,000 = €1,000. In this case micro is cheaper. But if expenses are €95,000, CIT is 16% × €5,000 = €800, while micro remains €1,000 — and CIT becomes cheaper.

When micro tax is more advantageous. A company with high margins and low expenses — for example, a consulting firm, an IT company with few costs beyond salaries, or a freelancer’s SRL — will typically pay less under the micro regime. If a company earns €80,000 and has only €20,000 in deductible expenses, CIT is 16% × €60,000 = €9,600, while micro tax is 1% × €80,000 = €800. The difference is dramatic.

The right regime depends on the company’s revenue, cost structure, and growth trajectory. Professional tax modelling before choosing is strongly recommended, and the choice should be revisited annually as circumstances change.

Minimum Turnover Tax

Romania introduced a minimum turnover tax (impozitul minim pe cifra de afaceri) that applies to large companies. The key features are:

Scope. The minimum turnover tax applies to corporate income tax payers with annual turnover exceeding defined thresholds (generally large taxpayers and companies with turnover above a high threshold as defined by the Fiscal Code).

Calculation. The minimum turnover tax is calculated at 0.5% of an adjusted revenue base. The adjusted base is derived from total revenue with certain exclusions and adjustments as specified by law.

Comparison mechanism. The company calculates both its standard corporate income tax (16% of taxable profit) and the minimum turnover tax (0.5% of the adjusted base). It pays whichever is higher. The minimum turnover tax thus acts as a floor — ensuring that large companies pay a minimum level of tax even when their taxable profit is very low or when significant deductions reduce their CIT liability.

Relevance for foreign investors. The minimum turnover tax primarily affects large enterprises. Small and medium-sized foreign-owned businesses operating through SRLs are unlikely to be affected in their early years. However, investors planning large-scale operations should model the minimum turnover tax impact from the outset.

Foreign-Source Income and the Foreign Tax Credit

A Romanian tax-resident company is taxed on its worldwide income — meaning all income from Romanian and foreign sources. When a Romanian company earns income abroad on which foreign tax has been paid, the Romanian Fiscal Code provides a foreign tax credit mechanism to avoid double taxation.

Foreign dividends. Dividends received by a Romanian company from a foreign subsidiary may be exempt from Romanian CIT if participation-exemption conditions are met — typically a minimum holding of 10% held for at least one year in a company resident in an EU/EEA member state or a country with which Romania has a double tax treaty. If the exemption does not apply, the dividends are included in taxable income and a credit is given for the foreign withholding tax paid.

Foreign interest, royalties, and services income. Income from foreign sources that does not qualify for an exemption is included in the Romanian company’s taxable profit. Tax paid abroad on this income can be credited against the Romanian CIT liability, up to the amount of Romanian tax attributable to that income.

Foreign permanent establishments. If a Romanian company has a permanent establishment abroad, the profit of that establishment is generally included in the company’s worldwide taxable profit. Tax paid in the foreign country is credited against the Romanian CIT.

Double tax treaties. Romania has over 90 double tax treaties that allocate taxing rights between Romania and the treaty partner country. Treaties may reduce withholding rates on dividends, interest, and royalties, and provide mechanisms for resolving conflicts of tax residence and permanent establishment.

Permanent Establishment of a Foreign Company

A foreign company that does not have a Romanian-registered subsidiary may still be subject to Romanian corporate income tax if it has a permanent establishment (sediu permanent) in Romania. A permanent establishment is defined as a fixed place of business through which the foreign company wholly or partly carries on its business. Common examples include:

• A fixed office or premises. An office, branch, workshop, or other fixed location in Romania from which business is conducted.
• A construction site or installation project. A building site or construction, assembly, or installation project that lasts longer than 12 months (or a shorter period if specified by an applicable double tax treaty).
• A dependent agent. A person who acts in Romania on behalf of the foreign company and habitually exercises the authority to conclude contracts in the company’s name may create a permanent establishment.
• Effective management. If a foreign company’s day-to-day management decisions are effectively made in Romania — even if the company is registered elsewhere — this can create a permanent establishment or even full Romanian tax residence.

The profit attributable to the permanent establishment is taxed at the standard 16% corporate income tax rate. The attribution of profit follows the arm’s-length principle, meaning the permanent establishment is treated as if it were a separate and independent enterprise. Foreign investors who conduct significant activities in Romania without a local subsidiary should assess whether a permanent establishment exists, as failure to recognise and tax it can result in substantial back-assessments, interest, and penalties.

Transfer Pricing and Related-Party Transactions

When a Romanian company transacts with related parties — its foreign parent company, sister companies, shareholders, or other affiliated entities — the prices and terms of those transactions must comply with the arm’s-length principle. This means that the terms must be comparable to those that would apply between independent parties in similar circumstances.

The most common types of related-party transactions for foreign-owned Romanian companies include:

• Management fees. Payments to the foreign parent for management, strategic, or administrative services. ANAF scrutinises these closely: the services must be real, documented, and priced at arm’s length. Generic or vaguely described management fees without supporting evidence of actual services rendered are a frequent audit target.
• Intercompany loans. Loans from the foreign parent or related entities to the Romanian subsidiary. The interest rate must be at arm’s length, and the interest-limitation rules (30% of fiscal EBITDA above the €1,000,000 threshold) apply.
• Royalties and licence fees. Payments for the use of intellectual property, trademarks, patents, or know-how. These must reflect the actual value of the IP used and be benchmarked against market rates.
• Intercompany sales and purchases. Sale or purchase of goods and services between the Romanian entity and related companies abroad. The prices must be consistent with what unrelated parties would agree.

Transfer pricing documentation. Romanian law requires companies that engage in related-party transactions above certain thresholds to prepare a transfer pricing file (dosarul prețurilor de transfer). The file must document the nature of the transactions, the transfer pricing method used, the comparability analysis, and the conclusion that the prices are arm’s length. ANAF can request this file during a tax audit, and failure to provide it may result in penalties and an adverse adjustment.

For foreign business owners, the key takeaway is that every payment between the Romanian company and a related party must be documented not only with an invoice and contract, but with evidence that the transaction is real, the service or goods were actually provided, the price is at market terms, and the transfer pricing analysis supports the conclusion.

Tax Incentives and Reliefs

Romania offers several corporate income tax incentives that can reduce the effective tax burden:

• Reinvested-profit exemption. Profit that is reinvested in certain qualifying assets — primarily technological and IT equipment, machinery, and other productive assets as defined by the Fiscal Code — can be exempt from corporate income tax. The exemption applies in the year the investment is made, subject to conditions including that the asset is maintained for a minimum period.
• R&D super-deduction. Expenses incurred for eligible research and development activities can benefit from an additional deduction (super-deduction) above the actual expense amount. This effectively reduces the taxable base by more than the R&D cost, creating a powerful incentive for innovation-intensive companies.
• Accelerated depreciation. As noted in the depreciation section, accelerated depreciation allows up to 50% of an asset’s cost to be deducted in the first year. This front-loads the tax benefit of capital investment.
• Industrial park incentives. Companies operating in designated industrial parks may benefit from exemptions or reductions on local taxes (building tax, land tax) and, in some cases, reduced utility costs.
• State aid and EU-funded programmes. Large investment projects may qualify for state aid in the form of grants, tax credits, or other financial support under EU-compliant schemes. EU-funded programmes also provide co-financing for SME development, digitalisation, and energy efficiency.

Each incentive has specific eligibility conditions, documentation requirements, and clawback provisions. Professional advisory is essential to ensure that the incentive is correctly applied and that the conditions are maintained throughout the required holding period.

Filing, Reporting and Payment Obligations

Corporate income tax in Romania is assessed and paid on a quarterly basis during the year, with an annual reconciliation.

Tax year. The standard tax year is the calendar year (1 January to 31 December). Companies may apply for a modified fiscal year that aligns with the group’s financial year, subject to ANAF approval.

Quarterly declarations and payments. CIT payers must calculate and declare corporate income tax on a quarterly basis. The quarterly declaration (declarația 100) is due by the 25th of the month following the end of each quarter — 25 April, 25 July, 25 October, and 25 January. The tax payment is due by the same deadline.

Annual declaration. The annual corporate income tax declaration (declarația 101) is filed by 25 June of the following year (or 25 March for certain categories). The annual declaration reconciles the quarterly payments with the actual annual tax liability. Any additional tax due is paid by the filing deadline; any overpayment can be carried forward or refunded.

Annual financial statements. Companies must prepare and file annual financial statements with the Ministry of Finance within the statutory deadline (typically 150 days after the end of the fiscal year for most companies). The financial statements form the basis for the corporate income tax calculation.

Electronic filing (SPV). All tax declarations must be filed electronically through ANAF’s Spațiul Privat Virtual (SPV) online portal. A digital certificate or SPV authentication is required.

Related compliance obligations. In addition to corporate income tax declarations, companies must comply with e-invoicing obligations through the RO e-Factura system, SAF-T reporting (D406 declaration) for tax auditing purposes, and other periodic filings as required by the Fiscal Code and the Fiscal Procedure Code.

Late filing and late payment attract interest (currently calculated at the rate set by the Fiscal Procedure Code) and penalties. Persistent non-compliance can result in ANAF deactivating the company’s VAT registration or initiating enforcement proceedings.

Distribution of Profits to the Owner

A critical concept for foreign business owners is that corporate income tax at 16% is not the end of the tax cycle. When the company distributes its after-tax profits to the shareholder as dividends, additional taxes apply.

Dividend tax. From 2026, the standard Romanian tax on dividends distributed to individual shareholders (natural persons) is 16%. This is a withholding tax: the company deducts the tax before paying the net dividend to the shareholder. For a company with €100,000 of taxable profit, the CIT is €16,000, leaving €84,000 of distributable profit. The dividend tax is 16% × €84,000 = €13,440. The shareholder receives €70,560. The combined effective tax rate on profit that reaches the individual owner is approximately 29.4%.

CASS on dividends. If the total dividend income received by an individual in a calendar year exceeds a threshold (currently defined as a multiple of the minimum gross salary), the individual may also owe CASS (health insurance contribution at 10%) on the dividend income, up to a capped base. This further increases the effective tax burden on distributions.

Treaty relief. If the shareholder is a tax resident of a country with which Romania has a double tax treaty, the treaty may reduce the Romanian dividend withholding tax rate — commonly to 5%, 10%, or 15% depending on the treaty and the shareholding percentage. The reduced rate must be claimed with the appropriate documentation (certificate of tax residence of the shareholder).

Dividends to corporate shareholders. Dividends paid to a corporate shareholder (a parent company) may qualify for the participation exemption if the conditions are met — typically a minimum 10% holding for at least one year in an EU/EEA company. If the exemption applies, the dividend is not taxed in Romania. This is particularly relevant for companies held by foreign corporate structures.

For foreign business owners, the total tax cost of earning profit in Romania and extracting it as dividends must be modelled as the full chain: revenue → expenses → taxable profit → CIT (16%) → distributable profit → dividend tax (16% or reduced treaty rate) → possible CASS → net amount received.

Common Mistakes Foreign Business Owners Make

• Confusing accounting profit with taxable profit. The profit shown in the accounting system is not necessarily the taxable profit. Non-deductible expenses, fiscal adjustments, and differences between accounting and tax depreciation mean that the two figures often diverge. The tax return must be prepared using the fiscal rules, not simply by applying 16% to the accounting profit.
• Assuming all expenses are fully deductible. Entertainment costs, mixed-use vehicle expenses, provisions, and other items are subject to limits or are entirely non-deductible. Treating them as fully deductible understates the tax liability and creates exposure on audit.
• Paying personal expenses through the company. Personal travel, private purchases, and lifestyle expenses paid by the SRL are non-deductible and may be reclassified as personal income subject to income tax and social contributions. This is a frequent audit finding.
• Failing to document related-party transactions. Payments to the foreign parent or affiliated companies for management fees, royalties, or intercompany services must be supported by contracts, evidence of services actually rendered, and transfer pricing analysis. Vague or unsupported payments will be challenged.
• Ignoring transfer pricing obligations. Companies above the transfer pricing documentation threshold must prepare and maintain a transfer pricing file. Not having one when ANAF requests it results in penalties and adverse adjustments.
• Staying on the micro regime when CIT is cheaper. Business owners sometimes assume that 1% of revenue is always better than 16% of profit. For companies with high costs and low margins, CIT can be significantly cheaper. The calculation should be reviewed every year.
• Not recognising a permanent establishment. Foreign companies that conduct significant activities in Romania through local staff, offices, or long-term projects may create a permanent establishment without realising it. The tax consequences of an unrecognised PE are severe.
• Treating 16% CIT as the final tax burden. The 16% corporate income tax is paid by the company. When the remaining profit is distributed as dividends, additional tax applies. The total effective rate for an individual owner is approximately 29.4% at domestic rates, or lower with treaty relief. Financial planning must account for the full chain.
• Missing electronic filing deadlines. All declarations are filed through SPV. Missing quarterly deadlines attracts interest and penalties that accumulate rapidly.

Frequently Asked Questions