Among the most common forms of business in Romania are the limited liability company (SRL) and the sole proprietorship. The sole proprietorship is characterized by a low PIT tax rate of 10% and a high degree of freedom for international activities. In general, foreigners are eligible for self-employed status in Romania.
What is a sole proprietorship in Romania?
Intreprinderea individuala este o forma de organizare a activitatii economice, care apartine unei singure persoane fizice, denumita intreprinzator, si care raspunde cu intreg patrimoniul sau pentru obligatiile intreprinderii individuale[1].
“Intreprinderea individuala” stands for a sole proprietorship in Romania. It is a form of business organization that is owned by an individual (entrepreneur). In a sole proprietorship, the self-employed person has full control over the business. There is no legal distinction between the owner and the business entity, which means that the entrepreneur is personally responsible for all debts and obligations of the company.
What can you do while running a sole proprietorship?
The owner of a sole proprietorship can engage in a wide range of business activities, which are regulated by relevant legal requirements. Self-employed entrepreneurs have the option of using 8 CAEN codes, meaning they can have 8 different business activities. Clasificarea Activităților din Economia Națională (CAEN) is a system for classifying different business activities based on their main business functions.
For example, a sole proprietor in Romania can:
- offer professional services (such as consulting, IT, legal or medical services);
- sell goods in stationary stores and online;
- operate small businesses, such as a restaurant or retail store;
- offer personal services (such as hairdressing or beauty treatments);
- provide services in the construction industry;
- provide transportation services;
- offer services online.
Advantages and disadvantages of sole proprietorship in Romania
The one-person form of business organization has advantages that can effectively encourage the establishment of a company with this structure. However, before making a decision, it is also worth considering the most significant disadvantages of a sole proprietorship in Romania.
Pros
Cons
On the one hand, those who choose to establish a sole proprietorship may be positively surprised at how easy and inexpensive it is to register a business in Romania. Unlike other business forms, in this case the process requires only a few steps and takes about three days. Moreover, an important advantage of self-employment is full control over all aspects of the business. The entrepreneur has the independence to freely adjust the size and scope of his business without consulting, for example, his partners.
On the other hand, choosing a sole proprietorship in Romania means full liability with personal assets. This means that the entrepreneur has to reckon with liabilities and possible debts of the company, which can contribute to financial problems. In addition, the owner may face problems related to growth potential – limited financing, limited resources may contribute to inefficiency and thus lack of profitability of the business. The final disadvantage of a sole proprietorship is the inability to choose any name. In Romania, the name of a sole proprietorship is created from the full name or first and last name, to which the phrase “Intreprinderea individuala” is added.
Key considerations for opening a Sole Proprietorship in Romania
Establishing a sole proprietorship in Romania requires meeting several legal and administrative conditions.
Requirements:
- at least 18 years of age and having full legal capacity;
- citizenship or resident status or other legal residence status in Romania;
- legal registration at the Trade Register (onrc.ro);
- tax registration at the National Tax Administration Agency (anaf.ro);
- social insurance registration at the National Health Insurance Agency (cnas.ro);
- possession of licenses and relevant permits (depending on the type of business or company).
No share capital is required to establish a sole proprietorship in Romania.
Required documents:
Company Romania’s registration service requires only an ID card and a few basic details, making the process quick and hassle-free. In contrast, registering a company on your own involves a more complex process with additional requirements.
- Application for registration in the Commercial Register – the form can be found onrc.ro;
- annex 1 for tax registration;
- photocopy of the identity card or passport of the business owner;
- specimen signature of the natural person of the entrepreneur;
- a statement stating that the business is not conducted at the company’s headquarters, auxiliary
- offices or other location, or confirming compliance with the legal conditions required to conduct
- business (as specified in specific health, veterinary, environmental and labor regulations);
- a statement of self-responsibility in meeting the legal conditions for conducting business as an
- authorized individual;
- document confirming the right to use the business premises/workplace.
A foreigner is required to obtain and deliver a few more documents to be eligible to run a sole trader company.
Taxation of a sole trader in Romania in 2025
As of 2025, sole proprietorships in Romania are subject to two taxation methods: the actual (real) system and the income norm system.
Actual (Real) System: This method involves taxation based on the net income, calculated as gross income minus deductible expenses. Sole proprietors whose gross income in 2024 exceeded the threshold of RON 100,000 are required to adopt this system in 2025. The applicable income tax rate is a flat 10%. Additionally, if the annual net income surpasses 12 times the national minimum gross salary (RON 48,600 for 2025), the proprietor is obligated to pay social insurance contributions (CAS) at 25% and health insurance contributions (CASS) at 10% on the chosen assessment base. For incomes below this threshold, these contributions are optional.
Income Norm System: This simplified taxation method applies to specific activities predefined by Romanian tax authorities. Under this system, the tax is calculated by applying the 10% rate to a fixed income norm, irrespective of the actual income earned. Eligibility for this system depends on the nature of the activity and the gross income not exceeding the RON 100,000 threshold in the previous fiscal year. Similar to the actual system, if the net income (as per the income norm) exceeds 12 times the national minimum gross salary, CAS and CASS become mandatory.
It’s important to note that the national minimum gross salary for 2025 is RON 4,050 per month. Tax obligations, including income tax and any due social contributions, must be declared and paid through the annual tax return by May 25 of the following year. For 2025 incomes, the deadline is May 25, 2026.
The current taxation system for a sole proprietorship in Romania consists of:
- income tax – 10% tax rate on net income[2];
- VAT tax – if a sole trader’s annual revenue does not exceed RON 300,000, they are exempt from VAT registration.;
- social security contributions
Social security contributions
As of 2025, sole proprietors in Romania are subject to specific social security and health insurance contributions, which are determined based on their annual income relative to the national minimum gross salary. There are 3 thresholds in total. You can read about two of them below:
National Minimum Gross Salary for 2025: RON 4,050 per month.
Social Insurance Contribution (Pension – CAS):
- Rate: 25% of the chosen assessment base.
- Obligation Threshold: Mandatory if annual net income exceeds 12 times the national minimum gross salary (i.e., RON 48,600 for 2025).
- Assessment Base: Sole proprietors can choose an assessment base, but it cannot be less than 12 times the national minimum gross salary.
Health Insurance Contribution (CASS):
- Rate: 10% of the chosen assessment base.
- Obligation Threshold: Mandatory if annual net income exceeds six times the national minimum gross salary (i.e., RON 24,300 for 2025).
- Assessment Base: Sole proprietors can choose an assessment base, but it cannot be less than six times the national minimum gross salary.
Key Points:
- Income Below Thresholds: If the annual net income is below the specified thresholds, payment of CAS and CASS is optional.
- Declaration and Payment: Sole proprietors must declare their income and pay the corresponding taxes and contributions by May 25 of the following year. For income earned in 2025, the deadline is May 25, 2026.
Effective tax rate for a sole proprietorship
The effective tax rate for a sole proprietorship in Romania depends on multiple factors, including the taxation system applied (real system or income norm system), social contributions, and deductible expenses. Calculating the actual tax burden is complex, as it varies based on annual income, deductible costs, and whether social security and health contributions apply.
Given the intricacies of Romanian tax laws, it is crucial to conduct a detailed simulation to understand the overall tax impact. Company Romania offers expert guidance in assessing the tax burden of a sole proprietorship, ensuring accurate projections based on individual financial circumstances.
Moreover, when evaluating the tax efficiency of a sole proprietorship, it is essential to compare it with a Limited Liability Company (SRL), which can benefit from Romania’s 1% microenterprise tax rate under specific conditions. This comparison helps entrepreneurs determine whether transitioning to an LLC structure would be more tax-efficient.
To make an informed decision, reach out to Company Romania for a tailored analysis and tax simulation that compares the financial implications of a sole proprietorship versus a limited liability company in Romania with a 1% tax rate.
Is it worth starting a sole proprietorship in Romania?
Compared to other EU countries in the west Europe, this country stands out for its attractive taxation for a large sole proprietorship. Fiscal compliance is quite friendly in comparison to other states in the region, for example to Poland. Due to its favorable economic conditions, Romania is worth considering as a place to establish your business. Romania offers quite competitive and attractive environment for entrepreneurs looking to grow their businesses. With over 20 million consumers, Romania presents a great opportunity for expanding sales.
Contact us to start a sole proprietorship business.
