Income tax rate for Micro-companies in Romania
In Romania there are two income tax schemes for companies under commercial law:
- 1% Revenue tax rate up to 30 000 euro, 3% up to 250 000 euro – This applies if the company has at least one employee throughout the fiscal year. The annual revenue cap is basically €250,000, but entrepreneurs can increase this limit with our company formation service.
- 16% Corporate Income Tax (CIT) – This is calculated based on the company’s profit.
Company must choose one of them or is obliged to follow the second scheme if the yearly turnover is over 250 000 euro.
Example of income tax calculation for a micro company
The following exemplary calculation of micro-company income tax will let you understand the details.
Imagine this is year 2025 and here is the Profit and Loss statement of a Romanian micro company (LLC/LTD):
Revenue: 100000 RON
Costs: 5000 RON (operating costs) + ca 15000 RON (social security contributions)
Head count: 1
Company revenue tax: 1% * 100000 = 1000 RON
Net profit of the company: 80000 RON – 1000 RON = 79 000 RON
Calculation is simple as that!
Nevertheless there is also another nice surprise for business owners who hold personal residence of Romania. Romanian Residents’ dividend tax is 10% and corporate costs decrease the tax amount due. Social security contributions that are paid for hired owner in the company decrease directly the dividend tax amount due significantly. That’s a counterpart of CIT tax shield. Every company has some costs so the effective dividend tax rate is less than 10%.
Example of dividend tax calculation for a business owner
A business owner wants pay out 79 000 RON as a dividend for whole 2025 year. He is a tax resident of Romania.
Dividend tax: 79 000 RON * 10% = 7900 RON
Money in business owner’s pocket after all taxes: 71 100 RON
Cross-border tax implications
Cross-border tax implications can be complex, especially when it comes to company dividends. To ensure compliance and optimize tax efficiency, it’s important to stay informed about the latest regulations. For expert guidance and practical insights, reach out to the Company Romania team, who can provide up-to-date advice tailored to your specific situation.
Standard CIT scheme
Romania has a 16% Corporate Income Tax (CIT) rate. For large companies with annual revenues in the tens of millions of euros, the CIT-based tax scheme is the only option. If a micro-company exceeds the €250,000 revenue threshold, it is required to switch to the CIT system.
Summary
In conclusion, an income tax calculation for a micro-company in Romania and its owner is very simple. As a result, simplicity of tax calculation is well appreciated especially by foreign small European business owners. They are used to heavy taxation and misty tax law with a range of tax deductions in western Europe countries. If you would like to find out more learn about tax rates in Romania.
