The Romanian tax system is regulated by the Romanian Fiscal Code. During the last few years, there have been frequent changes in the Fiscal Code, causing important modifications in the types of taxable income, the reporting procedures as well as the computation of the payable taxes, for both persons and companies. It is highly recommended to consult on the latest modifications in the tax code before moving.
The fiscal year in Romania coincides with the calendar year, ending on December 31.
Individual tax is payable by all tax residents, i.e. persons who have their permanent residence or habitual abode in Romania. A person who is present in Romania for at least 183 days (in aggregate) during a tax year is considered to be a tax resident.
Individuals pay income tax on several types of income:
The employment income is taxed with a flat 16% rate for both residents and non-residents, with the exception of employees with disabilities. Additionally, employees from the IT sector have been exempt from paying income tax during the past decade. However, the government has recently announced its plans to modify the income tax conditions for the IT sector.
The taxable base is computed as the gross income less any deductions and social security contributions. The Fiscal Code grants monthly personal deductions ranging from 300 RON to persons without dependents, to 800 RON to persons with four or more dependents. Voluntary health insurance premiums are also deductible.
For other types of income, returns need to be filled at the beginning of the activity and annually. Payment is due quarterly. There is a flat 16% tax rate, except for interest income and income from the sale of immovable property, which is taxed at 1-3%. A health insurance contribution is also payable on rental income, investment income and other income.
Net wealth or net worth tax, capital gains tax and inheritance tax are not applicable in Romania.
The tax calculation is not significantly different for Romanians and resident foreign citizens. Expats are generally subject to the same taxation levels as locals.
Relocation packages for expatriates and their families are not taxable, and should not be included in the taxable basis computation.
Non-Romanian citizens earning income in Romania and abroad are only liable to pay income tax on their Romanian income, during the first year in the country. However, starting from the second year they become tax residents, income tax is payable in Romania for the person's worldwide income.
Personal Income Tax returns should be filed by 25th of May of the year following the year in which the income was gained. Tax is due to the authorities within 60 days of the receipt of the tax assessment. No income is deducted at the source of income.
Taxes should be filed at the nearest branch of the Romanian National Agency for Fiscal Administration (ANAF) or online at the e-government portal.
Tax payments may be done at the bank account included in the tax assessment, or online, through the Ghiseul.ro website.
There is no end year regularization on salary income.
The value added tax (Taxa pe valoare adăugată, TVA) in Romania has also been subject to frequent changes during the past years. As of 2017, the standard VAT rate is 19%, with reduced rates applying for food and beverages, medical treatments, accommodation, etc. A 5% rate is applied to school books, newspapers, social housing, cultural events and others.
The VAT is levied on the sale of goods and services, and registration is required only for persons carrying out taxable transactions, or where the place of taxation is abroad and the VAT would have been deductible in Romania.
Romania has concluded tax treaties with approximately 80 countries, in order to residents to pay tax on the same income in more than one country. Contact your nearest embassy or consulate in order to find out the details of your country's tax agreement with Romania.
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