Starting your Business in Romania
Taxation in Romania
For revenues not exceeding €60,000, with at least one full-time employee*, the tax rate on income is 1%. For income up to €500,000, the rate is 3%. Dividend tax is 8%, and VAT in Romania stands at 19%.
*Total monthly social contributions for minimum wage employment: approximately €220.
Information about dividend tax
Citizens of the European Union are free to choose the member state in which they wish to become taxpayers, typically by establishing residence there.
If someone has residences in multiple countries, their tax residency is determined by their main country of residence.
Consequently, to take advantage of favorable tax conditions, it’s advisable to establish a residence in Romania, especially if income from a Romanian company is your primary income source, as this primary income justifiably designates Romania as their main country of residence.
As a general rule, if dividends come from another country, they must be taxed at the rate of the country where tax residency is established.
Example
In the case of a European citizen:
In Hungary, the dividend tax rate is 15%. If a Hungarian taxpayer receives a dividend from a Romanian company, they pay the 8% tax in Romania. However, under the double taxation agreement between Hungary and Romania, the 8% paid in Romania can be deducted from the 15% dividend tax due in Hungary. This means the remaining 7% is payable in Hungary.
With Romania as their main country of residence and obtaining a residence card it remains at 8%.
If you have any questions, feel free to reach out to us!