Romania: taxation remains under budgetary watch

Article 64 of the Romanian Fiscal Code sets the income tax rate at 10%¹. This rate falls under the standard rules and applies to the whole population.

Corporate profit tax is set by Article 17 at 16%². These two rates form the stable foundation of the system.

The micro-enterprise regime, on the other hand, has been amended several times: turnover thresholds, eligibility conditions, and the split between the two rates of 1%³ and 1%⁴.

It is therefore this regime, not the personal rate, that serves as the budgetary adjustment variable. The distinction is decisive for a self-employed person, since this is precisely the regime that applies to them.

We do not quantify the thresholds in force, the conditions separating the two rates, or the rates of social contributions and dividend tax: they have been amended several times and must be checked at the date of the plan with the National Agency for Fiscal Administration.

Changing a rate applicable to the whole population is politically costly: it affects every employee and every retiree, and the debate becomes national.

Tightening a special regime affects a small, identified population, often perceived as privileged. The political cost is in no way comparable.

This asymmetry explains the Romanian trajectory, and it applies well beyond Romania: it is the same mechanism that led Portugal to close its non-habitual resident status and Spain to abolish its residency by real estate investment.

The practical rule that follows is simple: a plan based on a special regime must factor in a probability of closure; a plan based on a standard rate does not carry this risk.

Bulgaria has the same profile, with its rate of 10%⁵ and its final withholding tax on dividends of 5%⁶.

One nuance should, however, be added. A standard rate is not immutable: it is merely more costly to change. Estonia raised its income tax from twenty to twenty-two per cent, and Cyprus its corporate tax, under budgetary and international pressure.

The micro-enterprise levy applies to turnover, not to profit. A consulting business with no costs is strongly favoured; a low-margin business is penalised.

The advertised rate therefore says nothing until it has been set against the actual margin of the business, and this exercise must be repeated each time the thresholds change.

The full cost of income also combines the company levy, social contributions and dividend taxation. A structure designed around the rate of 1%³ alone loses most of its appeal once these elements are included.

Finally, Romanian tax residency is acquired beyond 183 days⁷ of presence over twelve months, or by having one’s centre of vital interests in Romania.

1. Check the micro-enterprise regime thresholds at the date of the plan, and in every financial year.
2. Set the turnover-based levy against the actual margin of the business.
3. Calculate the full cost, including contributions and dividends.
4. Distinguish what falls under the standard rules from what falls under an adjustable regime.
5. Deal with your departure from France according to its own criteria and the France–Romania tax treaty.

What you lose in Romania lies elsewhere: slow administration, a deficient public health system, and the legislative instability that forces you to recheck the rules every year. What you gain — membership of the European Union, the Schengen area, first-class digital infrastructure and the lightest personal taxation in the Union — remains remarkably stable.