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Romania: Domestic Taxation

Tax System

The corporate income tax rate is 16%, which applies to both resident companies, and those operating through a permanent establishment in the country.

However, a lower rate (3% at the time of writing) is imposed on qualifying small companies. In order to qualify for the reduced rate, the small business in question must have between 1 and 9 employees, an annual turnover of less than EUR100,000, and must be either engaged in 'productive activity', or in the provision of brokerage, banking, insurance, or consultancy services.

Corporate income tax payments should be made quarterly.

An exemption on gains (although there is no capital gains tax as such) made on shares listed on the Romanian stock exchange is available for non-resident companies and other legal entities during 2009.

A 16% withholding tax is imposed on dividends paid to non-resident companies (reduced to 10% for payments to other EU countries in 2009), unless exemption is available under the terms of the EC parent-subsidiary directive.

A standard 24% VAT rate and is applied to supplies of goods and services within the country and exports and imports. There are reduced rates of 9% and 5%, which apply to medicines, some books and newspapers, certain accommodation related services, inter alia.

Zero rating applies to exports and services related to them, and exemptions from VAT are in place for services relating to immovable property, financial services, insurance services, and services relating to education, health and welfare.

A range of employment related taxes, including social security, health fund and unemployment contributions are payable by employers in Romania.



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