Romania corporate tax guide

Which businesses Romania taxes

Romanian legal entities are generally resident and taxed on worldwide profit under the corporate-profit regime. Foreign legal entities can also become resident through their place of effective management. Fiscal Code article 7(18) examines real economic activity and, among its tests, strategic decisions made in Romania by executive directors/board members or at least 50% of those directors/board members being resident. Article 8¹ contains the residence-notification procedure.

A foreign certificate of incorporation therefore does not establish that a founder can run the whole business from Bucharest without Romanian corporate exposure. Map who makes strategic decisions, where they do it and what authority they exercise. A genuine local or foreign management arrangement must match the business’s conduct. Offshore Capitalist can assess the structure and coordinate appropriate providers; we do not ourselves provide foreign management and control.

Nonresident enterprises may be taxable through a Romanian permanent establishment, and source-specific withholding can apply without one. Employees, premises, contract authority and actual service delivery should be reviewed under domestic law and the applicable treaty. VAT establishment and payroll registration are related operational questions but not identical legal tests.

16% profit tax and the layers around it

The ordinary corporate income-tax rate under article 17 is 16% of taxable profit. Accounting profit is adjusted for taxable/exempt income, deductible/nondeductible expenses, depreciation, loss rules and related-party transactions. This is not a 16% tax on turnover and not a complete measure of the owner’s eventual tax.

For a simple illustration, 100 units of fully taxable profit leave 84 after 16 units of corporate tax. A further 16% shareholder dividend tax on those 84 leaves 70.56, a combined 29.44 before any health contribution or other charge. Participation exemptions, treaty relief and the shareholder’s residence can change that result; the illustration assumes none applies.

Large businesses must separately test the minimum turnover tax. ANAF’s 2026 material reduces the IMCA rate to 0.5% for 2026 and provides its later discontinuation; the qualifying turnover threshold, statutory adjusted base and exceptions matter. Financial and other designated sectors have additional rules. This library does not present the standard 16% rate as overriding sector taxes or global minimum-tax obligations.

The 1% micro-company regime is conditional

In 2026 the optional micro regime applies a single 1% rate to its statutory income base. Entry generally requires prior-year turnover within the €100,000 equivalent threshold, tested with linked enterprises, as well as the workforce, private ownership, financial-statement, ownership-selection and activity conditions. It is not a 1% tax on distributable profit and does not remove dividend tax, payroll, VAT or accounting.

The February 2026 reform matters. OUG 8/2026 removed the earlier restriction preventing certain former micro taxpayers from returning, changed the entry ceiling to accounting turnover and introduced specific treatment of repeated fixed-asset/land disposals for the in-year threshold. March ANAF notices supersede older January summaries. Owners with direct/indirect holdings above 25% must examine the one-selected-micro-company condition rather than multiply the allowance across companies.

A new 2026 company has 90 days from registration to meet the employee condition under the current notice. Eligible equivalent workforce/management arrangements and continued compliance require review. Exceeding the ceiling during the year can switch the business to profit tax from the relevant quarter. Do not sign a quote or forecast based only on last year’s revenue.

A 100,000-unit revenue business with 10,000 of profit pays 1,000 under a pure 1% revenue illustration, equivalent to 10% of that profit before distributions. At only 2,000 profit, the same 1,000 is 50% of profit. These simplified examples exclude statutory base adjustments and other taxes; they demonstrate why a low turnover-tax rate is not automatically the best commercial result.

Costs, losses and reinvestment

A deductible business cost needs a commercial purpose and adequate records. Related-party pricing must satisfy the arm’s-length rule, including cross-border services, loans, royalties and transfers of functions. An invoice headed “management” does not by itself prove a service was delivered or benefit obtained. Contracts, work products, cost allocation and actual decision-making should agree.

Loss relief, financing-cost limits, depreciation and qualifying reinvested-profit or research relief are technical provisions, not blanket exemptions for all spending. Model eligibility before committing to an investment and preserve the evidence at the time. The current guide identifies these review areas but does not supply an unverified deduction calculator for every asset or a guarantee that an incentive will be approved.

If the group owns valuable IP, inventory or customer relationships, moving them between entities is a transaction with valuation and transfer-pricing consequences. Incorporating a new company is only one step; the contracts, employees, bank flows and economic functions must be implemented consistently.

Payments to foreign shareholders and lenders

The ordinary domestic rate on dividends to a nonresident company is 16% in 2026. Interest and royalties to a nonresident company are generally 16% of the gross covered payment. These are corporate-recipient baselines: the Code includes different treatment for specified individual recipients, so the table must not be read as a universal personal withholding schedule.

Treaties and EU parent/subsidiary or interest/royalty provisions may reduce or eliminate withholding when their residence, holding, beneficial-ownership and other conditions are satisfied. Obtain the residence certificate before payment and review anti-abuse rules. A holding percentage alone is not a complete exemption file. Artificial payments into certain non-information-exchange jurisdictions can trigger punitive treatment; ordinary 16% is not a safe fallback for every arrangement.

Controlled foreign companies: what is attributed

Article 40⁵ applies to a corporate-profit-tax taxpayer controlling more than 50% of votes, capital or profits, alone or with associated enterprises, alongside the low-foreign-tax comparison. The test compares actual foreign profit tax with the difference between a Romanian-law calculation and that actual tax; a foreign headline rate alone does not resolve it.

Covered undistributed categories include interest, royalties, dividends/share disposals, financial leasing, specified financial activity and low-value related-party invoicing income. Inclusion follows the taxpayer’s participation. The law provides an EU/EEA substantial-economic-activity exception supported by staff, equipment, assets and premises, and one-third income tests with specific conditions. The EU/EEA geography of that substance exception must not be silently expanded to every country.

For example, a Romanian company owning a low-tax overseas IP company must examine control, the recomputed tax comparison, royalty income and the available exception before relying on retained foreign earnings. A real staff and premises file is stronger evidence than a rented address. Previously included distributions/disposals and foreign tax have double-taxation relief mechanisms; they need reconciliation in the return.

Corporate migrations and exit charges

Article 40³ taxes qualifying transfers of assets, tax residence or permanent-establishment activity when Romania loses the right to tax, generally using market value less tax value at 16%. Assets remaining effectively connected to a Romanian permanent establishment and the statute’s temporary-transfer conditions require separate attention.

Qualifying EU/EEA movements may access payment in equal instalments over five years, with assistance-agreement, interest, guarantee and acceleration conditions. This is deferral, not exemption. A later disposal, onward transfer or payment default can make the remaining liability collectible. Value the assets and plan cash flow before management or ownership functions move; corporate-law continuation abroad does not settle the tax charge.

VAT and transaction design

Romania’s standard VAT rate is 21% and its main reduced rate 11%, effective 1 August 2025. Reduced rates depend on the exact supply; they do not apply to all food, accommodation-related receipts or professional services. The transitional 9% housing window ended 31 July 2026 and is not presented as an available new option.

The domestic small-business exemption threshold is RON 395,000 from 1 September 2025. ANAF states that registration is required by the crossing date and normal taxation starts with the transaction that crosses the ceiling. Cross-border services, intra-EU acquisitions, distance sales, reverse charge and nonresident supplies can create obligations before that domestic ceiling. Registration, invoice wording, input recovery and reporting should be designed with the supply chain.

Registration, banking and the annual compliance file

Law 239/2025 sets minimum capital of RON 500 for a newly incorporated SRL and a RON 5,000 requirement for companies meeting the over RON 400,000 prior-year net-turnover test, with transition and increase rules. Capital remains company money subject to company law; it is neither a government fee nor a complete formation price. Existing-company obligations need their own review.

Plan the registered office, beneficial-owner records, ONRC filing, payment account, tax registration, chosen tax regime and accountant together. Law 239 also introduces payment-account obligations for covered legal entities; AML and sanctions checks remain applicable. Company registration does not grant the owner a right to live or work in Romania.

The compliance file should allocate responsibility for financial statements, corporate or micro returns, VAT, payroll D112, invoicing and any applicable SAF-T/reporting obligations. Deadlines vary with regime and taxpayer category. The authoritative calendar and accountant’s schedule should govern, especially where 2026 measures revise prior conventions. Our engagement should specify which filings are included and who signs, rather than treating formation as the end of the project.