The Romanian tax year runs from 1 January to 31 December.
In case of salary income derived from a Romanian employer, under a local employment contract, the income tax and mandatory social contributions are withheld from the employee’s salary at the time the salary is paid. The taxes have to be reported and paid by the local employer to the tax authorities by the 25th day of the month following the one the salary income relates to.
Individuals deriving income, such as income from the following categories, might have to file the Annual Single Return (the situation should be analysed on a case-by-case basis):
- Salary income, under certain conditions.
- Income from independent activities.
- Income from IP rights.
- Rental income.
- Income from partnership with a legal entity.
- Income from agricultural, forestry, and fishery activities.
- Income from prizes/gambling.
- Income from pensions.
- Income from the transfer of immovable properties.
- Income from investments.
- Income from other sources.
Through the Annual Single Return to be filed, the individuals have to declare the final income obtained during the previous year, as well as the estimated one to be obtained in the current year, for both income tax and social contributions purposes. The filing deadline is 15 March.
The individuals assess the income tax and social contribution liabilities due for income by applying the rates for income tax / social contributions on the computation base determined in accordance with the provisions of the Fiscal Code for each type of income.
The payment of tax liabilities due (income tax and/or social contributions) is to be made based on a self-assessment made by the individuals, in accordance with the information reflected in the Annual Single Return, within the same reporting deadline (i.e. 15 March).
Spouses are treated as individual (separate) taxpayers; the concept of joint filing does not exist in the Romanian tax legislation.
Payment of tax
The standard procedure in case of a local employment contract is for the Romanian employer to withhold the full amount of income tax and social contributions due from the employee’s monthly salary income.
For the salary income received from abroad by foreign individuals working in Romania based on a foreign employment contract, the 10% flat income tax rate, as well as the social contributions, if the case, are due on a monthly basis, and it is the personal obligation of the individual to report such income and pay the income tax due on a monthly basis. Social contributions might also fall in the individual’s obligation of reporting and paying, provided it was agreed as such with the foreign employer, in case the foreign employer is located in a country that falls under a social security agreement concluded with Romania.
To ensure the reporting and payment of social contributions in Romania in respect of the salary income derived from foreign employers for employment activities performed in Romania, a specific registration procedure has to be undertaken in Romania.
In case of individuals seconded to Romania by employers located in countries with which Romania does not have a social security agreement in place, the mandatory Romanian social contributions due arise directly for the individual undertaking the employment activities in Romania.
In cases where the EU regulation on the coordination of social security systems or the social security agreements concluded by Romania with other countries apply, no social contributions / limited social security contributions are due in Romania on the salary income received from abroad for activities carried out here (as provided by each agreement) if certificates of coverage are available in this respect; in situations where social security contributions are not due at all in Romania, no registration for Romanian social security purposes should be undertaken.
The general deadline for both reporting and paying the income tax and social contributions, if the case, is the 25th day of the month following the one for which these liabilities are due.
Currently, the level for late-payment interest is set at 0.02% per day of delay. In addition to the late-payment interest, a late-payment penalty of 0.01% per day of delay applies.