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05 November 2023

Important tax changes for Romanian companies starting with 2024

Get ready, Romanian entrepreneurs! Brace yourselves for some game-changing tax modifications that are set to revolutionize the business landscape in 2024. The Romanian government has recently announced a series of important tax changes aiming to create a more favorable environment for businesses, stimulate economic growth, and attract foreign investments | Fiscal changes in force starting with 01.01.2024 concerning the taxation on companies incorporated in Romania | what's important to know when you decide to register a company in Romania


2024 is poised to be a landmark year for Romanian businesses as the government introduces a range of tax reforms. These changes are designed to simplify the tax system, reduce administrative burdens, and foster a more competitive business environment. By streamlining tax procedures and regulations, the Romanian government aims to enhance the ease of doing business, encourage entrepreneurship, and boost the country's overall economic development.


In a bid to propel Romanian businesses into a new era of growth and prosperity, the government has unveiled a comprehensive tax overhaul that will come into effect in 2024. These changes are expected to revolutionize the way companies operate, ensuring a more efficient and transparent tax system. By embracing progress and adapting to the evolving needs of businesses, Romania is positioning itself as an attractive destination for both local and international entrepreneurs, fostering innovation, and paving the way for a thriving business ecosystem.


What and when will enter in force?


On 27 October 2023 it was published in the Official Gazette of Romania the Law no. 296/2023 on fiscal changes and other relevant regulations for the business environment. Among other amendments, the regulation substantially modifies relevant provisions from the Fiscal Code, being of interest for the investors and entrepreneurs who want to open a company in Romania.


Most of the provisions of the Law no. 296/2023 will enter in force starting with 01.01.2024, but there are also exceptions, such as those concerning the tax exemptions applied to some categories of income salaries (in IT, construction, agriculture) which will be in force starting from November 2023, following the adoption of the law and its publication in the gazette.


What is new?


The Law no. 296/2023 has introduced from 2024 a series of amendments regarding the taxation of companies in Romania, essential to be mentioned being the following.


1. The tax rates on the turnover of the Romanian microenterprises will be the following:


The tax rates imposed on the turnover of Romanian microenterprises have been strategically devised to strike a harmonious balance between encouraging entrepreneurship and generating revenue for the country. These rates are a reflection of the government's commitment to supporting the growth of microenterprises while also ensuring that they contribute to the overall tax revenue. By implementing these rates, the Romanian government aims to create a conducive environment for microenterprises to flourish and make a significant contribution to the country's economy.


  • 1% - turnover tax to be paid by Romanian companies whose turnover does not exceed EUR 60,000.


  • 3% - turnover tax to be paid by: a) the companies with revenues exceeding EUR 60,000 and b) the companies engaged in activities corresponding to the following NACE codes: 5821 - Computer game editing activities, 5829 – Editing activities of other software products, 6201 - Custom software development (client-oriented software), 6209 - Other information technology service activities, 5510 - Hotels and other accommodation facilities, 5520 - Accommodation facilities for holidays and short stays, 5530 - Caravan parks, campgrounds, and camps, 5590 - Other accommodation services, 5610 - Restaurants, 5621 - Event catering activities, 5629 - Other food service activities n.e.c., 5630 - Bars and other beverage serving activities, 6910 - Legal activities – only for legal entities not fiscally transparent, established by lawyers according to the law, 8621 - General medical practice, 8622 - Specialized medical practice, 8623 - Dental practice, 8690 - Other human health activities. Additionally, it is provided that in the event that companies which are subject to a 1% tax exceed the revenue threshold of EUR 60,000 in a fiscal year, the company will owe a 3% tax starting from the next quarter after surpassing the threshold. The same rule applies to companies that commence the activities mentioned in the letter b) above during the fiscal year.


  • 16% corporate tax for companies whose turnover exceeds EUR 500,000 in a fiscal year.


2. Mandatory social contributions


Law no. 296/2023 also erase the applicability of the tax exemption on income from salaries as a result of conducting the activity of creating computer programs, until 31 December 2028.


The exemption which which will still be in force applies to the place where an employee’s basic function is located, for monthly gross incomes up to and including RON 10,000. Similar to the regime for employees who obtain salary income exempt from income tax for activities conducted in the construction sector, the food industry and in agriculture, for individuals who benefit from a tax exemption on income from wages and salaries as a result of conducting the activity of creating computer programs, the social insurance contribution rate is reduced, until 31 December 2028, by the percentage points corresponding to the contribution rate to privately administered pension funds. However, employees can opt to pay the contributions to these funds. The provisions are applicable starting with the income related to the month following the entry into force of Law no. 296/2023.


Regarding the tax facilities applicable to employees who conduct activities in the construction sector, in the food industry and in agriculture, starting with the income related to the month following the entry into force of Law no. 296/2023, the exemption from the payment of the social health insurance contribution, the social insurance contribution for special and special working conditions, as well as the payment of the reduced share of the insurance contribution for work, has been eliminated. In this case, the tax facilities will be applied to the place where an employee’s basic function is located.


Regarding the fiscal regime applicable to salary advantages, Law no. 296/2023 introduces the value of meal vouchers and holiday vouchers into the basis for calculating the social health insurance contribution, starting with the income related to January 2024. 


For individuals who obtain income from independent activities, starting with the income related to the year 2024, the annual basis for calculating the social health insurance contribution is equal to the net annual realized / gross income or the annual income norm, but not more than the level of 60 gross national monthly minimum wage in force at the time of filing the tax return on the estimated income / income rate to be achieved in Romania and the social contributions owed.


3. Income from unidentified sources


As of 1 July 2024, income ascertained by the tax authorities, under the terms of the Fiscal Procedure Code, for which the source has not been identified will be subject to income tax at a rate of 70% (under the previous regulation, the rate was 16%) applied to the adjusted taxable base.


4. VAT


Starting with 2024, the value added tax (VAT) quota shall increases from 9% to 19% for some trading of specific goods: alcohol-free beer, food which contains more than 10g/100g added sugar (excepting cookies and biscuits.


The VAT quota shall increase from 5% to 9% for:


(i) high-quality food (eco, bio or traditional food);


(ii) housing delivery (usable surface area of a maximum of 120 sqm, excluding the appendixes) for which the value, including the land on which the house is built, does not exceed RON 600,000 (EUR 120,000), without VAT. The reduced quota applies only to houses that can be lived in at the time of their delivery, providing individual free access to the living space, without disturbing the possession and exclusive use of the space owned by another person; access to electricity and drinkable water, controlled disposal of waste water and household waste, at least a space for rest, food preparation and a bathroom; exterior finishes and interior finishes; sanitary installations and sanitary objects; electrical installations;

The transitory measures regulates only the housing delivery for which agreements are concluded before or on 31 December 2023 and which will be delivered between 1 January and 31 December 2024, in order to apply the reduced VAT rate of 5% or 9%. 


(iii) delivery and installation of photovoltaic panels, solar panels, heat pumps and other high-efficiency, low-emission heating systems, including installation kits, as well as all necessary components purchased separately;


(iv) the delivery and installation of components for the repair and/or expansion of systems as a component part of construction deliveries, or as extra options when delivering a construction;


(v) access to events, amusement parks and recreational parks, included in NACE codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events;


(vi) access to sports events;


(vii) the access to the sports facilities whose activities are included in CAEN codes 9311 and 9313;


(viii) people transportation services by trains or steam-powered vehicles on narrow gauge lines or using cable transport facilities - cable cars, chair lifts, ski lifts or in boats, for tourist or leisure purposes and


(ix) transportation services for people with animal-power vehicles, used for tourist or leisure purposes.


But Romania is still a tax heaven in Europe and worldwide, the Romanian authorities policy offering low taxes to investors and entrepreneurs who wants to open a company in Romania.


You may check more here about the advantages on setting up a limited liability company in Romania or why other investors have already decided to register a company in Romania


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