Romania Offers 1% Corporate Tax To Attract Entrepreneurs

Romania Is Europe’s Rising Star for Low Taxes, Easy Business, and EU Access

Romania might not be the first country that comes to mind when you think of low-tax jurisdictions in Europe, but it should be. This Eastern European nation is quietly building a reputation as a business-friendly, tax-efficient destination for entrepreneurs, freelancers, and high-net-worth individuals. With a flat income tax, a special low-tax regime for small businesses, and a surprisingly straightforward process for setting up a company, Romania offers a compelling alternative to more established (and expensive) European hubs. This article breaks down the key advantages of Romania’s tax system, residency options, and how Reloc8 Online can help you make the move. If you are an entrepreneur or a digital nomad, this location might provide you with the best opportunities.

Romania’s Tax System Explained

Romania’s tax system is designed to be attractive to both individuals and businesses. Here’s a quick overview:

• Personal Income Tax – A flat 10% rate applies to most types of income, including salaries, freelance income, and rental income.
• Social Contributions – Employees pay 25% for pensions (CAS) and 10% for health insurance (CASS). Employers contribute an additional 2.25%. Self-employed individuals (PFAs) pay similar contributions, but the amounts may vary depending on their income.
• Corporate Tax – The standard rate is 16% on profits.
• Microenterprise Tax – This is where it gets really interesting. If your company has a turnover of less than €500,000, you can choose to pay-
  • 1% on revenue (not profit) if you have at least one employee.
  • 3% on revenue if you have no employees.

This microenterprise tax system is incredibly attractive for small businesses and freelancers, as it simplifies tax calculations and can significantly reduce your tax burden. Reloc8 Online can explain you how to benefit.

Dividends and Other Taxes

• Dividends – Dividends are taxed at 8%.
• Other Investment Income – Generally taxed at 15%.
• Value Added Tax (VAT) – The standard rate is 19%, with reduced rates for certain goods and services.

Zero Tax for Small Businesses? It’s (Temporarily) True

Until 2030, there’s a special rule- If your company or your income as a freelancer is less than 14 million ALL (about €138,000), you might pay zero corporate or income tax. This is a temporary measure, but it’s a significant advantage while it lasts. However, be aware that if you get most of your income from just one or two clients, you might be considered an employee for tax purposes, which changes the rules.

How to start a Business in Romania

Romania makes it relatively easy for foreigners to set up a company-

• Company Types – The most common is a Limited Liability Company (SRL). You can also be a freelancer (PFA) or set up a larger corporation (SA).
• Directors and Shareholders – Can be Romanian or foreign, and they don’t need to live in Romania.
• 100% Foreign Ownership – You can own the entire company yourself.
• Fast Setup – You can register a company online, often in just a few days.
• Low Capital Requirements – For an SRL, you only need a small amount of share capital (around €40).

Reloc8 Online can handle the entire company formation process for you, making it quick and painless.

How to Become a Tax Resident In Romania

To take advantage of Romania’s tax system, you need to become a tax resident. You can do this by:

1. Living in Romania – Spending more than 183 days in the country in a calendar year.
2. Proving “Center of Vital Interests” – Showing that your main home, work, and family ties are in Romania.

You’ll need to file a Tax Residency Questionnaire with the tax authority (ANAF) and provide documents to prove your residency.

Romania Digital Nomad Visa?

Romania doesn’t have a specific digital nomad visa yet, but there are still ways for remote workers to live and work there legally:

• EU/EEA Citizens – Can live and work freely in Romania.
• Non-EU Citizens – Can potentially use a Business Visa (Type C/A) for short-term stays or a Long-Stay Visa (D type) for longer stays, especially if you’re starting a company.

The Business Visa (Type C/A) – A Short-Term Option

This visa lets you:

• Attend business meetings and conferences.
• Negotiate contracts.
• Start the process of setting up a company.

It’s valid for up to 90 days within a 180-day period. You’ll need an invitation from a Romanian company or business partner, and you’ll need to show proof of funds and travel insurance. You will get to start your business with this visa.

Lifestyle in Romania

Romania offers a fascinating blend of traditional charm and modern development. You’ll find:

• Historic Cities – Bucharest, the capital, is known for its architecture and nightlife.
• Beautiful Countryside – The Carpathian Mountains and Transylvania offer stunning scenery.
• Affordable Living – Compared to Western Europe, Romania is very affordable.
• Growing Economy – Romania is one of the fastest-growing economies in the EU.

Potential Risks

While Romania offers many advantages, it’s important to be aware of potential challenges. Bureaucracy can sometimes be slow, and corruption can be an issue in some areas. It’s always wise to do your research and get professional advice.

Start your European relocation journey with RELOC8 ONLINE

At RELOC8 ONLINE, we specialize in helping individuals and businesses navigate the complexities of relocation. Whether you’re moving to Romania, or the US, our experts are here to make your taxation and relocation process seamless. Contact us today to begin your journey in a connected and thriving Romania and the US.

Disclaimer: The information provided in this article is for informational purposes only and was obtained from verifiable sources at the time and date of publication. It is not in any shape or form financial or investment advise and should not under any circumstances be treated as such. This information does not constitute legal advice and should not be relied upon as such. RELOC8 ONLINE is not responsible for any errors, inaccuracies, or inconsistencies that might be present in the content published here and readers are advised to carry out their own research on the topics discussed before making deceisions that might impact their circumstances. For the latest information and most accurate details, please refer to our Latest News page or contact us directly.