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Open a micro company in Romania

Contributed by Darie, Manea & Associates
04 June, 2018

Opening a micro company in Romania has become the easiest and most advantageous way to start a small business in this country, since the legislation regulating this kind of companies have changed in 2017. A micro company has a maximum turnover of 500.000 euros and has taxation benefits: 5% dividen tax, 1% income tax (when it has minimum 3 employees) or 3% income tax when there is no employees. Therefore, opening a micro company is a good ideea since the procedure of opening a micro company is the same one like opening a limited liability society (SRL) and also, there are no more conditions regarding the number of employees.

On the other hand, in order to be able to benefit from the taxation regulations of a micro company in Romania you need to meet a series of conditions: 

  • The income should not exceed 500.000 euros anually
  • Only 20% of your revenue can come from management and consulting, while the rest of 80% come from other activities (except insurance, gambling or banking, which are regulated under other laws)
  • You do not have local or public authorities as shareholders in the company

Still, after certain conditions of the ones mentioned above are exceeded, you will become a profit tax payer (16% of your profit). You become a profit tax payer if you exceed the 20% revenus coming from consultation and management or exceed the 500.000 euro income limit in one fiscal year. The 16% profit tax is calculated from revenues and expenditures from the start of the fiscal year and it is paid quaterly (just like the income tax). This calculation is made as a difference between the income tax payable in the year and the tax that was calculated at the beggining of the fiscal year to the end of the reporting period.

In addition, the tax base has expanded once the new regulations have taken effect, and besides teh exploitation, the subsequent billing for exchange rates differeneces, income from grants and trade discounts has become taxable. When a micro company meets all the above conditions, the level of taxation specified must be payd from the first fiscal year. After the limits are exceeded, and the company becomes a profit tax payer, this will apply from the next fiscal year after the one that it achieved the new statut.

There are certain categories of activities that can not be performed unde a micro company according to regulations in Romania, such as: casino, banking, betting, gambling, capital market or insurance (except performing intermediaries activities). Regarding the other sectors of activities, paying 3% income taxes is much more affordable and efficient for your businesses growth than being a profit tax payer.


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