Tax Rates in Romania
for Expats 2026

Impozit pe Veniturile Microîntreprinderilor — flat rate 1%

1% tax on turnover (up from 1% to 3% if no employee or revenue >€60,000). Replaces 16% corporate profit tax. No quarterly advance profit tax payments.

Eligibility: Companies with revenue <€500,000, <50% consulting revenue, at least 1 employee

Source: Fiscal Code Art. 47-57; OUG 31/2022

Income Tax Exemption for IT Professionals — flat rate 0%

Complete income tax exemption (0% IT on salary) for qualifying software development roles. Condition: employer must have software development as main activity. Social contributions still apply.

Eligibility: Software developers employed by Romanian companies

Source: Fiscal Code Art. 60, pt. 2

Income Tax — The 10% Flat Rate

Romania's 10% flat income tax is one of Europe's most competitive. It applies to all tax residents earning income from employment, business, or capital sources. However, the full tax picture requires understanding social contributions. Employees in Romania pay 35% in social security contributions on top of the 10% income tax — a total of 45% before tax benefits or deductions. This split is crucial: while the headline 10% income tax is among the lowest in the EU, the effective employee tax burden is substantial.

Social Contributions Breakdown:

• CAS (Pension insurance): 25% of gross salary
• CASS (Health insurance): 10% of gross salary
• Combined: 35% employee contribution
• Employer side note: Since 2018, employers pay no social contributions; all burden shifted to employees

Effective Tax Rate Example

An employee earning EUR 2,000 gross per month faces: EUR 700 (35% social contributions) + EUR 130 (10% income tax on net EUR 1,300) = EUR 830 total deduction (~41.5% effective rate). This is significantly higher than the headline 10% suggests, though still competitive versus Western Europe.

Corporate Tax

Romania offers two main corporate tax regimes: the standard profit-based system and the highly attractive micro-enterprise revenue-based regime. The micro-enterprise option has made Romania a hotspot for freelancers and small consulting firms.

Standard Corporate Tax — 16%

Applied to net profit (revenue minus deductible expenses). Companies must file annual tax returns and maintain accounting records. Small businesses below RON 300,000 annual turnover may use simplified accounting. Since 2018, employers do not pay social contributions for employees — a significant reduction in payroll costs compared to pre-2018.

Micro-Enterprise Regime — 1–3% Revenue Tax

One of Europe's most competitive regimes for solo entrepreneurs, freelancers, and small consulting practices. Tax is calculated on gross revenue (turnover), not profit, making deductions largely irrelevant. This simplifies accounting and reduces administrative overhead.

• 1% revenue tax: For businesses with annual turnover under RON 500,000 (~EUR 105,000)
• 3% revenue tax: For businesses with annual turnover above RON 500,000
• Eligibility: Must be micro-enterprise (typically under 10 employees, under EUR 2M turnover)
• Advantage: No need to track profit; minimal accounting; tax scales with revenue, not complexity

Example: A freelance consultant earning EUR 50,000 annually under the micro-enterprise regime pays EUR 500 (1% micro tax). Under standard corporate tax, they might pay 16% on EUR 35,000 net profit (after deductions) = EUR 5,600. The micro-enterprise regime advantage is obvious for service providers.

VAT & Consumption Taxes

Romania's VAT system follows EU guidelines with a standard rate of 19% and reduced rates for essential goods and services. VAT registration is mandatory for businesses exceeding EUR 300,000 annual turnover — a relatively high threshold in European context, allowing small businesses to operate without VAT compliance for longer.

• Standard VAT: 19%
• Reduced VAT (9%): Food, medicines, books, hotels, restaurants, passenger transport
• Super-reduced VAT (5%): Social housing, educational materials, certain energy sources
• VAT registration threshold: EUR 300,000 annual turnover

Capital Gains & Investment Income

Capital gains from the sale of assets (stocks, real estate, cryptocurrency) are subject to the 10% flat capital gains tax — identical to the income tax rate. This simplicity is attractive for investors. Real estate gains: capital gains on residential property sales are typically exempt if held for over two years; commercial real estate gains face the 10% flat tax.

Dividend income for resident individuals was subject to dividend withholding tax of 8% (introduced in 2023), reducing the previous zero withholding. This aligns with EU norms but requires awareness for portfolio investors.