The standard CIT rate is 16% for Romanian companies, foreign companies operating through a permanent establishment (PE) in Romania and foreign companies that are tax resident in Romania due to place of effective management. Resident companies are taxed on their worldwide income unless a double tax treaty (DTT) stipulates otherwise.
The CIT due for nightclubs and gambling operations is either 5% of the revenue obtained from such activities or 16% of the taxable profit, whichever is higher.
Micro-company tax regime
Micro-companies are subject to a mandatory revenue tax rate (see details below) in lieu of the standard CIT.
The condition for a company to be considered a micro-company is to have a maximum revenue at the end of the previous year of EUR 1 million.
The tax rates used for micro-company income tax are:
- 1% for micro-companies with one or more employees.
- 3% for micro-companies with no employees.
Newly established companies are required to follow the micro-company tax regime starting with the first fiscal year.
Micro-companies can opt once for applying CIT if they fulfil both of the following conditions:
- Have a subscribed share capital of at least RON 45,000.
- Have at least two employees.
The calculation and payment of tax for micro-companies shall be performed quarterly, by the 25th day (inclusive) of the month following the quarter for which the tax is calculated.
Micro-company tax becomes optional starting 1 January 2023
As per GO no. 16/2022, micro-company tax becomes optional starting 1 January 2023. A Romanian legal entity can opt for the application of micro-company revenue tax if it cumulatively meets the following conditions as of 31 December of the previous year:
- The revenues derived did not exceed the Romanian leu equivalent of EUR 500,000 (per a modified condition, the threshold is currently EUR 1 million).
- The share capital is owned by persons other than the state and administrative-territorial units (unmodified condition).
- It is not under dissolution, followed by liquidation (unmodified condition).
- At least 80% of its total revenues are generated from other than consulting and management activities (newly introduced condition).
- Has at least one employee (newly introduced condition).
- Has associates/shareholders that hold more than 25% of the value/number of participation titles or voting rights in no more than three Romanian micro-companies (newly introduced condition).
The micro-company regime cannot be applied by Romanian legal entities conducting activities in banking; insurance and reinsurance of the capital market, including intermediation activities in those fields; gambling; or exploration, development, or exploitation of oil and natural gas deposits.
Romanian legal entities, with the exception of those that carry out activities corresponding to the above CAEN HORECA codes, can opt to apply micro-company tax as of 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 fulfil the above conditions) or for the payment of CIT.
Romanian legal entities that meet the conditions for applying micro-company tax can opt for the payment of CIT only as of the following fiscal year.
The tax rate on micro-company revenues remains only 1% (the 3% rate is thus repealed).
If a micro-company derives revenues of more than EUR 500,000 or its revenues from consulting and management are 20% or more of the total revenues during a fiscal year, it owes CIT as of the quarter in which they exceeded those limits.
The dividend income received from a subsidiary located in another member state of the European Union can be deducted when calculating the micro-company tax, to the extent that both the micro-company and the subsidiary meet the EU Parent-Subsidiary Directive conditions.
Local income taxes
There are no county or local taxes on corporate income.