Romania: dividend tax rises again

An entrepreneur does not receive a salary but distributed profits. The cost of their income therefore combines the tax paid by the company and the levy due on distribution.

The Romanian income tax rate, set by Article 64 of the Fiscal Code at 10%¹, therefore describes only part of their situation — and often the least important part.

Corporate profit tax is set by Article 17 at 16%². The micro-enterprise regime replaces this tax with a levy on turnover, at a rate of 1%³ or 1%⁴ depending on the situation.

We do not publish the old or new Romanian dividend tax rate, or the date the increase takes effect: they do not appear in the extracts we were able to verify. They must be confirmed with the National Agency for Fiscal Administration.

This gap is decisive. An increase in dividend tax passes through in full to a director's net income, and it can cancel out the advantage of the micro-enterprise regime on which Romania's appeal rests.

This regime made Romania's reputation among digital freelancers. Its mechanics need to be understood: the levy is charged on revenue, not on profit.

A consulting business with no expenses is therefore greatly favoured; a low-margin business that buys to resell is penalised. The headline rate means nothing until it has been set against the actual margin.

The turnover thresholds for this regime, as well as the conditions distinguishing the two rates, have been changed several times. We do not put figures on them: they must be checked as at the date of the project.

This instability is a feature of the Romanian scheme, and it contrasts with the stability of the personal rate. One is an optimisation regime, the other is the ordinary law; they do not offer the same guarantees.

The 10%¹ rate is part of the ordinary law and applies to the whole population. It is neither limited in time nor conditional on recent arrival.

This is a difference in nature from the Portuguese, Italian or Greek regimes, which are incentive schemes that can be closed to new entrants. An ordinary-law rate does not expire.

Romania also belongs to the European Union and the Schengen area. A French national can settle there freely, with simple registration beyond three months, and tax residency is acquired in particular beyond 183 days⁵ of presence.

The currency is the leu, not the euro: income received in euros benefits from an exchange-rate differential, but is also exposed to it. This is a difference from Bulgaria, whose currency is pegged to the euro through a currency board.

1. Recalculate the combined cost — corporate tax, then dividend tax — at the current rate.
2. Check the micro-enterprise regime thresholds as at the date of the project.
3. Set the turnover levy against the business's actual margin.
4. Factor in social contributions, which weigh heavily on the scheme's return.
5. Handle the departure from France according to its own criteria and under the France–Romania tax treaty.

The general lesson of this increase goes beyond Romania. A country that attracts people with an exceptional regime eventually corrects its budgetary effects, and it often does so by a side route — here dividend tax — that leaves intact the rate highlighted in comparisons. Reading only the headline figure therefore means missing precisely what is changing.