03 January 2025
Register a Sole Trader Proprietor in Romania PFA and Benefit of Self Employed Employee Independence
Are you considering breaking free from the constraints of traditional employment and stepping into the world of self-employment? In Romania, becoming a sole trader proprietor, self employed person, self employed employee or Persoana Fizica Autorizata (PFA) is a popular choice for individuals looking to harness their professional independence. From freelancers to small business owners, this legal framework offers flexibility, simplicity, and numerous tax benefits
Whether you’re new to the concept or exploring ways to optimize your self-employment journey, this guide dives deep into what it means to be a PFA in Romania. Discover how to register, manage taxes, and thrive as a self employed individual or sole trader proprietor in Romania PFA.
When to Consider Becoming Self Employed Person in Romania?
If you’re considering becoming a sole trader proprietor, self employed person, self employed employee or "Persoană Fizică Autorizată" (PFA) in Romania, you’re entering a flexible world of self-employment with numerous opportunities. This guide will provide everything you need to know about registering, operating, and managing taxes as a authorized person PFA in Romania. Whether you’re a freelancer, contractor, or small business owner, this article will help you navigate the process with confidence.
What Is a Self Employed Person in Romania (PFA)?
A PFA (“Persoană Fizică Autorizată”) is a legal form of self-employment in Romania, solo professional or self entrepreneur, akin to being a sole trader or sole proprietor in other countries. PFAs can operate independently in various fields, from IT and consulting to creative professions and trades.
The Self Employed Person in Romania PFA (Persoană Fizică Autorizată) in Romania is a popular choice for individuals seeking a simple form of self-employment. This model of sole trader proprietor Romania is ideal for those working independently or with minimal staff. Many self-employed persons choose to establish a PFA in Romania when their income is moderate and does not justify the complexities of other business structures.
For those with higher earnings or more complex business needs, an SRL (Societate cu Răspundere Limitată), the Romanian equivalent of a limited liability company (LLC), might be more suitable. An SRL allows for a single founder or multiple founders, offering greater flexibility and limited liability protection. Understanding the difference between a PFA and an SRL can help self-employed individuals make informed decisions about the best structure for their entrepreneurial goals in Romania.
You can find out more info about Limited liability company in Romania (LLC / SRL) in our Romanian Advocacy blog article Starting SRL in Romania: Your ultimate guide to business success!.
Key Features of Self Employed Person in Romania PFA
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Independence for Self Employed Employee: You operate as a self-employed person.
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Tax Obligations: Specific tax rules apply, including income tax and social contributions.
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Registration of Self Employed Person: Simple process through the Trade Register.
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Flexibility: Ability to deduct certain business expenses.
Benefits of Becoming a Self Employed Person in Romania PFA
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Simplified Registration Process Registering as a PFA is straightforward and can often be done online or through local Trade Register offices.
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Lower Administrative Burden for Self Employed Person Compared to limited companies, PFAs have fewer reporting obligations.
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Significant Tax Deductions for Sole Trader Proprietor: PFAs can deduct certain expenses directly related to their business activities.
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Flexibility in Operations: PFAs can choose their clients and projects, offering a high degree of professional freedom.
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Eligibility for Social Benefits: Paying taxes and contributions as a PFA ensures access to social benefits such as healthcare and pensions.
How to Register as a Self Employed Person in Romania PFA
Step 1: Meet Eligibility Criteria for Sole Trader Proprietor in Romania PFA. Establishing a Persoană Fizică Autorizată (PFA) in Romania, the preferred option for many self-employed individuals, requires meeting specific criteria. To register as a PFA, you need:
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Romanian Residency (CNP). To register as a PFA in Romania, you must hold a Romanian residency, identified by a unique Cod Numeric Personal (CNP). This CNP is essential for paying taxes as a self-employed person and demonstrating your legal connection to the Romanian state.
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Proof of Education or Professional Experience. Aspiring sole traders must provide evidence of formal education or relevant professional experience in their chosen field. This documentation ensures compliance with the required activity code (CAEN code) and establishes you as a qualified professional for your intended work. Without these credentials, you cannot register as a self-employed employee or authorized person under the Romanian system.
Understanding these prerequisites is crucial for anyone looking to operate as a PFA in Romania, ensuring a smooth path to becoming a sole trader proprietor.
Step 2: Choose Your Activity Code (CAEN Code) for Self Employed Person in Romania PFA. Select the appropriate NACE (CAEN) code(s) for your business activity from the official list. This code determines the type of work you’re authorized to perform. NACE code of activities is the same to the object of activity when setting up a limited liability company. The sole trader proprietor PFA cannot have more than 5 NACE activities’ codes.
Step 3: Prepare the Required Documents for Sole Trader Proprietor in Romania PFA: copy of your ID, proof of qualifications (diplomas, certificates), proof of your business address and completed registration forms (available at the Trade Register).
Step 4: Submit Your Application for Sole Trader Proprietor Registration in Romania PFA. File your application at the local Trade Register office or online via the government’s portal.
Step 5: Obtain Authorization. Once approved, you’ll receive a registration certificate, and you’re officially a PFA.
Taxes for Sole Trader Proprietor in Romania PFA in 2025
1. Income Tax for PFAs in 2025 – 10% of the taxable income. This tax is calculated based on taxable income, which is determined through the following steps:
Step 1: Calculate Net Income. Net income is the difference between gross income earned and deductible expenses paid during the fiscal year (business expenses directly related to your activity can be deducted). This net income also determines whether the individual owes social contributions (CAS and CASS).
Step 2: Determine Taxable Income. From the calculated net income, subtract the following: the reported losses from previous years and the social contributions owed (CAS and CASS).
The result is the taxable income, which is used to calculate the 10% income tax owed by the PFA in Romania.
2. Social Security Contribution (CAS) for Self-Employed in Romania in 2025
In 2025, individuals earning income from independent activities or intellectual property rights in Romania are required to pay social security contributions (CAS), if their net income in the current year reaches at least 12 or 24 times the national gross minimum wage, valid as of January 1, 2025. To meet the thresholds for 12 or 24 gross minimum wages, individuals can accumulate net income or annual income norms from independent activities:
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12 times the national gross minimum wage: 48,600 RON – CAS due: 12,150 RON
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24 times the national gross minimum wage: 97,200 RON – CAS due: 24,300 RON
To meet the thresholds for 12 or 24 gross minimum wages, individuals can accumulate net income or annual income norms from independent activities.
The CAS contribution for 2025 is calculated by applying the 25% contribution rate to the selected income base. The results are as follows:
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For 48,600 RON: 48,600 RON × 25% = 12,150 RON (minimum CAS due for 2025 if PFA income exceeds 12 gross minimum salaries)
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For 97,200 RON: 97,200 RON × 25% = 24,300 RON (minimum CAS due for 2025 if PFA income exceeds 24 gross minimum salaries)
3. Health Insurance Contribution (CASS) for Sole Trader Proprietor in Romania in 2025. In 2025, the CASS (health insurance contribution) is calculated by self employed person (PFA Romania) through the application of a 10% contribution rate to the annual income base.
CASS Calculation and Social Contribution Limits in 2025 for PFA. The base for calculating CASS is the net income earned, which cannot exceed the cap of 60 times the national gross minimum wage:
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Maximum Cap: 60 times the national gross minimum wage = 243,000 RON and the Maximum CASS: 24,300 RON per year
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6-times Salary Cap: 24,300 RON – the maximum contribution would be 2,430 RON per year.
If the self-employed individual earns a net income lower than the cap of 6 times the national gross minimum wage, and does not qualify for exemptions, the CASS contribution is calculated based on the 6-times salary cap. If the PFA meets the exceptions, CASS is calculated on the actual net income, regardless of the amount.
4. Self-Employment Tax Deductions and Benefits. PFAs can take advantage of several deductions and benefits. Ability to claim deductions regards office expenses (rent, utilities, and business activities equipment), travel costs and other professional expenses and development costs (courses, certifications, and training programs).
5. Using a Self-Employment Tax Calculator. Use tools like the self-employed income tax calculator or employed and self-employed tax calculator to estimate your liabilities. Estimate your combined taxes to ensure you’re meeting obligations for both income streams.
Transitioning from Employee to Self Employed Employee in Romania
If you’re currently employed and considering self-employment, you can operate as both an employee and a PFA. Here’s what you need to know about the dual status: Employed and Self-Employed: tax implications (you’ll need to pay taxes on both employment income and self-employment income) and advantages (combine the stability of a job with the freedom of freelancing).
Sole Trader Proprietor Romania PFA vs. Limited Liability Company in Romania LLC
Advantages of PFA: easier to set up and manage and lower initial costs.
Advantages of Limited Liability Company LLC: more advantageous taxation (micro-company tax regime), limited liability for shareholders and directors, and greater opportunities for expansion and investment.
Common Challenges for Self Employed Person in Romania PFAs
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Understanding Tax Obligations: Use tools like a self-employed tax form or income tax calculator to simplify.
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Cash Flow Management: Ensure you’re saving enough to meet quarterly tax payments.
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Work-Life Balance: Managing your own business can blur the lines between personal and professional life.
Frequently Asked Questions FAQs about Self Employed Person PFA in Romania
1. What is actually the PFA in Romania?
PFA is an abbreviation for the Romanian term „Persoană Fizică Autorizată”. It refers to an individual operating as a solo entrepreneur or sole professional. This legal structure allows a person to work independently as a self-employed person or certified / authorized legal person, conducting business under their own name.
2. How Long Does It Take to Register a Self Employed Person in Romania PFA?
Setting up a PFA in Romania is a relatively fast and straightforward process and it usually lasts 3 working days.
3. Which is the best choice for your Romanian business between PFA and LLC?
Choosing to operate as a PFA (Persoană Fizică Autorizată) in Romania depends on your business goals and income level. A PFA in Romania is ideal for those with moderate income levels or individuals working independently, as it involves fewer administrative requirements and lower setup costs. However, if your income is higher, or if you plan to have multiple shareholders or more complex operations, other business structures like an SRL (Societate cu Răspundere Limitată) or an SA (Societate pe Acțiuni) may be better options. An SRL, the Romanian equivalent of an LLC, offers limited liability protection and flexibility for one or more founders. On the other hand, an SA, a joint-stock company, is suited for businesses seeking to attract larger investments or operate on a larger scale. While a PFA is a practical solution for sole traders and self-employed persons, it’s essential to weigh the tax implications and scalability needs of your business before making a decision.
4. Can You Open a PFA in Romania Without Professional Help?
While it’s technically possible to open a sole trader proprietor on your own, the process can be challenging, especially for those unfamiliar with Romanian legal and bureaucratic systems. This is particularly true for expats, as all the required paperwork and documentation must be completed in Romanian, which can create language barriers. And errors in drafting the necessary documents can lead to delays and additional costs to correct them. For these reasons, it’s highly recommended to seek legal assistance from a lawyer since the befinning. With professional help, you can ensure that your application is completed accurately and efficiently, saving you both time and money in the long run.
Conclusion: Start your self employed employee journey registering PFA in Romania
Becoming a PFA in Romania offers independence, flexibility, and opportunities for growth. By understanding the registration process, tax obligations, and available benefits, you can confidently start your journey as a sole trader or self-employed individual. Whether you’re a freelancer, contractor, or small business owner, the PFA framework provides a solid foundation for success.
For any question regarding the PFA in Romania, feel free to reach out to us at tudor@roadvocacy.ro or give us a call at +40 723 77 37 59. Alternatively, you can also use the contact form on our website at www.roadvocacy.ro. We're here to assist you in any way we can!
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