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23 September 2023

Discover the benefits of 1% income tax for company incorporation in Romania

How the 1% income tax rate can help companies startup thrive in Romania | Explore the Benefits: A comprehensive guide on how the 1% turnover tax can be advantageous for open company in Romania. Cost savings, simplified tax calculations and increased competitiveness | Start your business in Romania with 1% turnover tax rate

 

Road to success: company incorporation in Romania

 

Understanding the 1% income tax rate for company incorporation in Romania. Open a company in Romania can offer various benefits, including the opportunity to take advantage of the country's 1% turnover tax rate. Learn more about the process and requirements for company incorporation in Romania and how to benefit from the reduced income tax rate.

 

Take advantage of Romania's 1% income tax rate for small businesses. Learn how to incorporate and operate a low tax company in Romania with this complete guide. As per the newly in force amendments brought to the Fiscal Code, starting with 1st of January 2024, a newly incorporated entity in Romania shall follow the micro-enterprise tax regime beginning with the first year of its registration and will remain under this tax rules only and only if the company fulfilled all the following conditions simultaneously:

 

1. The incomes gained did not exceed EUR 60,000, in RON equivalent. So, the maximum threshold of annual turnover is EUR 60.000 for micro companies and if this amount is exceeded and will be up to EUR 500,000, the company shall pay 3% turnover income tax. If is more then EUR 500,000, the company will pay 16% corporate tax, determined on the company's profit, resulted as the difference between the turnover and expenses.

 

2. At least 80% of its incomes are generated from other activities than consulting and management activities. In other words, if a micro-enterprise revenues from consulting and management activities are 20% or more of the total incomes during a fiscal year, it owes corporate income tax as of the quarter in which they exceeded those limits.

 

The micro-enterprise taxation cannot be applied by Romanian entities conducting activities in banking, insurance and reinsurance of the capital market, gambling, upstream oil and natural gas activities.

 

Romanian entities, excepting those that carry out activities corresponding to HORECA (Hotels, Restaurants, Bars and Coffee shops) codes, may opt to apply micro-enterprise tax starting the fiscal year following that in which they meet the conditions. Romanian legal entities that carry out activities corresponding to the CAEN codes for HORECA can opt for the payment of micro-company tax (without having to fulfill the above conditions) or for the payment of corporate income tax of 16%.

 

3. The company has at least one employee. This employee must be contracted within one month starting from the moment of company incorporation in Romania. Regarding the steps for the company formation in Romania, please check the following relevant info, as presented in the previous blog article 5 steps for setting up a business in Romania

 

Starting with 1st of January, 2024, micro-companies with no employees is no more subject to the 1% / 3% income tax, as such regulation has been repealed, but only to the 16% corporate income tax, determined on the difference between the turnover and expenses. 

 

4. The company has shareholders that hold more than 25% of the value/number of participation titles or voting rights in no more than 3 (three) Romanian micro-enterprises.

 

5. The company's share capital is owned by persons other than the state and administrative-territorial units.

 

6. The company is not under dissolution, followed by liquidation.

 

If at least one requirement of the above is not fulfilled, the company shall pay the 16% corporate income tax, determined on the company's profit (the difference between the income and expenses). The Romanian entities that meet the conditions for applying micro-enterprise taxation may opt for the payment of corporate income tax only as of the following fiscal year.

 

Together with other main advantages as explained in our article Top 5 reasons to set up a business in Romania, this 1% income tax for micro-companies qualifies Romania in the category of countries with an optimum investments profile of any kind., placing our country in top of the list the investors want to develop businesses in.

 

So, open a company in Romania has never been more favorable for the investors and entrepreneurs.

 

Do you need additional information or you want our help with open company in Romania? Do not hesitate to contact us at tudor@roadvocacy.ro or by calling at +40 723 77 37 59 or use the contact form on our website at www.roadvocacy.roContact us for more details about the company formation and taxation in Romania.

 

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Romanian Advocacy

 

| Your Business | Our Mission |

Romanian Advocacy

 

| Your Business | Our Mission |

Romanian Advocacy

| Your business | Our mission |

 

Full range of legal services for businesses, companies and individuals. Your lawyers in Romania.

 

Romanian Advocacy

| Your business | Our mission |

 

Full range of legal services for businesses, companies and individuals.

 

Visit us at our headquarters:

 

Romanian Advocacy

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