Tax Laws — Romania

Romania's Tax System for Immigrants: Complete Guide

*Note: Tax rules can change annually via government emergency ordinances. Always verify current figures with ANAF (Romania's tax authority) or a licensed Romanian tax advisor before making decisions.*

Overview of Romania's Tax System

Romania operates one of the simplest tax regimes in the EU, featuring a flat tax system rather than progressive brackets—unusual among European nations. This simplicity is often cited as an advantage for expats and digital nomads.

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Income Tax Rates and Brackets

Flat Tax Structure

Unlike most Western countries, Romania does not use progressive tax brackets.

• Standard personal income tax rate: 10% (flat, applies to most income types)
• This applies uniformly regardless of income level—someone earning €20,000/year and someone earning €200,000/year both pay 10% income tax

Income Categories and Rates

• Employment income (salaries): 10%
• Self-employment/freelance income: 10% (plus social contributions—see below)
• Rental income: 10% (on 80% of gross income after a standard 20% deduction, or on net income if choosing real system)
• Investment income (dividends): 8% (as of 2023; previously 5%)
• Interest income: 10%
• Capital gains (securities): 10%
• Capital gains (real estate): 3% on properties held under 3 years; various rules apply for longer holdings

*Note: Micro-enterprise tax rules for small businesses differ significantly (1-3% on revenue) and have changed frequently—verify current thresholds.*

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Worldwide Income vs. Local Income Taxation

This is critical for immigrants to understand:

Tax Residents

• Romanian tax residents are taxed on WORLDWIDE income
• This includes foreign salary, foreign rental income, foreign investment gains, foreign business income

Tax Non-Residents

• Non-residents are taxed only on Romanian-source income
• Foreign income remains untaxed by Romania if you're a non-resident

Practical Implication

If you become a tax resident, you must declare and potentially pay Romanian tax on:

• Foreign employment income
• Foreign business profits
• Foreign investment returns
• Foreign pension income

Double taxation treaties (covered below) typically prevent being taxed twice on the same income.

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When You Become a Tax Resident

Romania uses several tests to determine tax residency:

Primary Criteria (meeting ANY typically triggers residency)

• 183-Day Rule: Physical presence in Romania for more than 183 days in any 12-month period
• Center of Vital Interests: Romania is where your personal and economic interests are centered (family, property, business)
• Domicile: You have a permanent home/domicile registered in Romania
• Habitual Abode: Romania is where you customarily live

Practical Timeline

• Tax residency is generally assessed from the date you meet these criteria
• If you arrive and intend to stay long-term, you may be considered resident from your first day if you have a domicile/residence permit indicating permanent intent
• EU citizens registering for long-term residence typically trigger tax residency considerations immediately

Registration Requirement

• Foreign nationals staying beyond 90 days must register with Romanian immigration authorities (for non-EU) or obtain residence certificates (EU citizens)
• This registration often coincides with tax residency determination

Non-Resident Status

• Short-term visitors, tourists, and those present under 183 days typically remain non-residents taxed only on Romanian-source income

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VAT (Value Added Tax) Rates

Romania's VAT system (TVA in Romanian):

| Rate | Applies To |

|------|-----------|

| 19% | Standard rate (most goods/services) |

| 9% | Reduced rate (food, non-alcoholic beverages, water, medicines, hotel accommodation, restaurants) |

| 5% | Super-reduced rate (books, newspapers, certain housing under specific conditions, cultural events, some cross-country transport) |

• VAT registration threshold: Businesses with turnover exceeding RON 300,000 (~€60,000, verify current EUR equivalent) annually must register for VAT
• Voluntary VAT registration is available below this threshold

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Social Security and Pension Contributions

This is a significant cost component often overlooked by immigrants.

For Employees

Contributions are typically split between employer and employee, though Romania shifted most burden to employees in 2018 reforms:

Employee Contributions (withheld from salary):

• Pension (CAS): 25%
• Health Insurance (CASS): 10%
• Total employee burden: 35% of gross salary

Employer Contributions:

• Work Insurance Contribution (CAM): 2.25%
• (Employers pay relatively little compared to pre-2018 system)

For Self-Employed/Freelancers

Self-employed individuals face mandatory contributions if income exceeds certain thresholds (tied to minimum gross wage):

• CAS (Pension): 25% owed if annual net income exceeds 12 times the minimum gross wage
• CASS (Health): 10% owed if annual net income exceeds 6 times the minimum gross wage
• These thresholds change annually with minimum wage adjustments—verify current minimum wage figures

EU Regulation Coordination

• EU/EEA/Swiss citizens can often use A1 certificates to remain in home-country social security systems temporarily (typically up to 24 months) instead of paying into Romanian system
• This prevents double social security contributions

Non-EU Immigrants

• Generally must contribute to Romanian social security once employed locally, unless a bilateral social security agreement exists with their home country
• Romania has bilateral social security agreements with several non-EU countries (verify specific country coverage)

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Annual Tax Filing Requirements and Deadlines

Single Declaration (Declarația Unică)

Romania consolidated most personal tax filing into one annual form:

• Form Name: Declarația Unică (Single Declaration)
• Filing Deadline: May 25th of the following year (for prior year's income)
• Covers: Self-employment income, rental income, foreign income, investment income, and estimated contributions for current year

Who Must File

• Self-employed individuals and freelancers
• Those with rental income
• Those with foreign-source income (as tax residents)
• Investment income in certain circumstances
• Anyone owing CAS/CASS based on income thresholds

Who Typically Doesn't Need to File Separately

• Standard employees with only Romanian W-2 style employment income (employer withholds and remits taxes automatically)

Payment Deadlines

• Tax payments generally align with the May 25th filing deadline
• Some estimated payments/prepayments may be required during the year for self-employed individuals

Penalties

• Late filing and late payment penalties apply, including interest charges (rates set by ANAF, historically around 0.02%/day, but verify current rate)

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Special Expat Tax Incentives

IT Sector Exemption

• Software developers/IT professionals may qualify for income tax exemption on salary income if working for companies meeting specific criteria (revenue thresholds, specific NACE codes, university degree requirements)
• This has been a longstanding incentive to attract tech talent, though eligibility criteria have tightened over the years

Research & Development

• R&D personnel may receive tax exemptions similar to IT sector benefits under certain conditions

Construction/Agriculture Sector Incentives

• Reduced contribution rates have historically applied to construction and agricultural workers (specific percentages and eligibility change—verify current status)

No Special "Digital Nomad" Visa Tax Regime

• Unlike Portugal (NHR) or Greece, Romania does not currently offer a specific preferential flat-tax regime targeted at wealthy foreign retirees or digital nomads
• Romania does offer a Digital Nomad Visa (for non-EU remote workers), but this addresses immigration status, not special tax rates—normal tax residency rules apply once triggered

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Double Taxation Treaties

Romania maintains an extensive treaty network (approximately 80+ treaties), including major economies:

Key Treaty Partners

• United States
• United Kingdom
• Germany
• France
• Canada
• Australia
• Most EU member states
• China, India, Japan
• UAE, Israel

What Treaties Typically Cover

• Prevention of double taxation on the same income
• Determination of which country has primary taxing rights for specific income types
• Reduced withholding tax rates on dividends, interest, and royalties between treaty countries
• Tie-breaker rules for dual-residency situations

Practical Application

• If you're taxed in Romania on foreign income already taxed abroad, treaties typically allow a foreign tax credit to avoid double taxation
• Specific mechanisms (exemption method vs. credit method) vary by treaty—check the specific treaty with your home country

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Key Takeaways for Immigrants

• Simple flat 10% income tax is attractive compared to many Western countries
• Social contributions (35% for employees) are the real cost—often higher than income tax itself
• Worldwide income taxation kicks in once you're a tax resident (183+ days or domicile-based)
• IT sector exemptions can be valuable if you qualify
• No specific "expat regime" like Portugal or Italy—standard rules apply to everyone
• May 25th deadline for Single Declaration is critical if self-employed or receiving foreign income

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Recommended Next Steps

• Confirm current-year rates and thresholds directly with ANAF (www.anaf.ro)
• Consult a Romanian tax advisor (consultant fiscal) familiar with your specific residency status and home country
• If from a treaty country, review the specific double taxation treaty text for your situation
• Verify current minimum wage figures, as many thresholds (VAT registration, CAS/CASS obligations) are indexed to this figure and change annually

More about immigrating to Romania