Skip to Navigation

Romania: entering a gateway to new markets

Helen Cowley, Senior Director and tax specialist at Cassons, part of the Baldwins Group.

With a domestic market of nearly 20 million consumers and where English is widely spoken, it’s no surprise that more than 4,700 UK companies currently operate in Romania. The country benefits from regular low-cost flights between Romania and the UK and is regarded by many as a gateway to markets of the CIS and Balkans.

The UK is Romania’s 11th largest inward investor with EUR 6.5 billion invested, with machinery and textiles among the UK’s top exports.

Broadly, and entity is tax resident in Romania if it is incorporated in accordance with Romanian legislation or its place of effective management is in Romania.  .  

A resident company is taxed in Romania on its worldwide income, unless otherwise stipulated in a double tax agreement with the country in which the income arises.  Non-resident companies are liable to Romanian tax only on Romanian sourced income.

Calculated and paid on a quarterly basis, the standard rate of corporate tax is 16% of taxable profits.  This applies to companies resident in Romania or foreign companies operating through a Romanian branch.

For ‘micro-enterprises’, a mandatory revenue tax is payable on turnover, instead of corporate profit tax, at a rate of 1% for entities with at least one employee, and a rate of 3% for entities with no employees. 

The maximum turnover for a company to be considered a ‘micro-enterprise’ has recently been raised from EUR 500,000 to EURO 1,000,000 bringing far more companies within the regime.  In addition, newly established entities with capital of less than EUR 10,000 are required to follow this tax regime for at least the first fiscal year and until certain conditions have been met.

Once a micro-enterprise reaches turnover in excess of EUR 1,000,000, it becomes a profit taxpayer and will be able to claim a deduction for expenses with a higher marginal rate of tax on a lower taxable base.  If you are planning to establish a presence in Romania then you should be aware that the ‘micro-enterprise’ regime could result in a start-up paying tax from the outset even if losses are sustained in the early years of trade.

For advice on Taxes in Romania it is imperative you take specialist advice.

This article was first published in the March / April 2018 edition of Lancashire Business View magazine.

Cassons, part of the Baldwins group, are members of BKR International, a leading global association of accounting firms, and work with firms across the globe to assist businesses with international trade.

19 Mar 18
Helen Cowley