Taxes and Tax Schemes in Romania | What You Need to Know in 2025

Romania, a dynamic Southeastern European country with a rich cultural heritage and a rapidly developing economy, operates a comprehensive tax system that impacts both residents and non-residents. Located at the crossroads of Central and Eastern Europe, Romania offers a competitive tax environment that attracts international professionals and businesses.

The Romanian economy has shown significant growth and transformation since joining the European Union in 2007, with strong sectors including IT, manufacturing, agriculture, and services. The country's tax system is designed to balance economic development, attract foreign investment, and maintain social welfare standards. Recent reforms have focused on digital tax compliance and creating a more transparent tax environment.

The expat community in Romania continues to grow, particularly in major cities like Bucharest, Cluj-Napoca, and Timișoara. The country has become increasingly attractive for international professionals in technology, shared service centers, and various innovative industries.

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Romanian Income Tax

Romania employs a flat income tax rate system, which is notably different from the progressive system in many other European countries. The key characteristics of Romanian personal income taxation include:

• Flat Income Tax Rate: 10% for most income types
• Special Rates for Certain Income Types: Some categories have different tax treatments

Tax residents face the following key taxation principles:

• Taxation on worldwide income for residents
• Special exemptions for certain types of income
• Social security contributions that fund public services

Social security contributions are substantial:

• Employee social security contribution: Approximately 25% of gross salary
• Employer social security contribution: Around 2.25% of gross salary

If you want to have a better understanding of the taxes you should pay on personal income in Romania, you can use the personal tax calculator in the Taxation section of the Romania page.‍

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Romanian Tax on Overseas Income

‍Romania's approach to foreign income depends on an individual's tax residency status:

1. Residents: Taxed on worldwide income
2. Non-residents: Taxed only on Romania-sourced income

The residency status is typically determined by:

• Spending more than 183 days in Romania within a 12-month period
• Having a permanent home in Romania
• Having primary economic interests in Romania

Special provisions exist to prevent double taxation through bilateral tax treaties with numerous countries.‍

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Romanian Tax on Investments

‍Investment income in Romania receives specific tax treatment:

• Dividends: Taxed at 5%
• Capital Gains: Generally taxed at 10%
• Interest Income: Typically taxed at 10%
• Rental Income: Taxed at the standard 10% flat rate, with potential deductions for expenses

Real estate investments are subject to both national and local taxation, with opportunities for deductions related to property maintenance and improvements.‍

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Romanian Corporate Taxation‍

Corporate taxation in Romania is designed to be competitive and attractive to businesses:

• Corporate Tax Rate: 16% (with some exceptions for small businesses)
• Microenterprise Tax: 1-3% of turnover for qualifying small businesses
• Value Added Tax (VAT):
  • Standard rate: 19%
  • Reduced rates: 9% (for certain foods, pharmaceuticals)
  • 5% (for some specific goods and services)
• Withholding Tax: Applicable to dividends, interest, and royalties paid to non-residents

The tax system includes various incentives for research and development, particularly in the technology and innovation sectors.‍

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Special Tax Regimes‍

Romania offers several specialized tax arrangements:

1. IT Sector Tax Exemption: Zero income tax for IT professionals working in the tech sector
2. Research and Development Incentives: Tax credits for companies investing in R&D
3. Startup Tax Benefits: Reduced tax rates and social security contributions for new businesses
4. Investment Zones: Tax incentives for investments in certain developmentally prioritized regions

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Regional Comparison‍

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Tax Planning for Romania‍

Effective tax management in Romania requires strategic approach:

1. Residency Status Optimization: Carefully managing days spent in the country
2. Investment Strategy: Utilizing tax-efficient investment vehicles
3. Comprehensive Documentation: Maintaining detailed records of income and assets
4. Professional Consultation: Engaging with local tax experts to navigate complex regulations

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