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23 septembrie 2023

Taxation for the company incorporated in Romania: 1% income tax or 16% corporate income tax

| Company registration in Romania | Company incorporation in Romania | Setting up a company in Romania | Firma in Rumänien gründen | Firmengründung Rumänien | Unternehmensgründung Rumänien | Aprire societa in Romania | Costituzione societa Romania | Aprire unna ditta in Romania | Creer societe en Roumanie | Ouvrir une entreprise en Roumanie | Creation societe Roumanie |


As per the newly in force amendments brought to the Fiscal Code, starting with 1st of January 2023, 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 500,000, in RON equivalent. So, the maximum threshold of annual turnover is EUR 500.000 for micro companies and if this amount is exceeded, the company shall pay 16% corporate income 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, 2023, micro-companies with no employees is no more subject to the 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.


Contact us for more details about the company formation and taxation in Romania.


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