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 from Romania or from abroad, such as income from the following categories, might have to file the Annual Return (the reporting obligation should be analysed on a case-by-case basis based on the individual's tax residence position and on the income’s source country):
- 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 Return to be filed, the individual has to declare the final income obtained during the previous year, as well as the estimated income to be obtained in the current year, for both income tax and social contributions purposes. The filing deadline is 25 May.
The individual assesses 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 individual, in accordance with the information reflected in the Annual Return, within the same reporting deadline (i.e. 25 May).
Spouses are treated as individual (separate) taxpayers; the concept of joint filing is not regulated 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 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 payment provided that it was agreed as such with the foreign employer, in case the foreign employer is located in the EEA or in a country that concluded a social security agreement 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 the salary income relates with.
For benefits in kind and/or in cash received from third parties based on an employment contract or a contractual relationship between parties, the obligation to compute and withhold the Romanian income tax and social contributions liabilities belongs either to the employer, the income payer, or the individual, as detailed under Social contributions in the Other taxes section and Employment income in the Income determination section.
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.
A tax amnesty was approved by the Romanian authorities based on which taxpayers may claim, not later than 31 March 2021, the annulment of the late payment interest and penalties related to the main fiscal obligations having payment deadlines up to 31 March 2020, provided that certain conditions are met.
In addition, by exception of law, due to the pandemic situation, late payment interest and penalties are not calculated and are not due in Romania in respect of the main income tax and social security liabilities due between 21 March 2020 and 25 December 2020.