Romania Income Taxes and Tax Laws

Romania Income Taxes

(Last partial update, May 2010)

Individual Income Tax: Romania's individual income tax rates for 2010 are flat at 16%..
Corporate Tax: Romania's corporate tax rate for 2010 is 16% too. Certain small companies pay tax of 3% of their turnover.
A minimum is imposed on companies if the annual tax payable is less than the minimum tax fixed by the tax authority.
Capital Gains: Capital gains of companies and individuals are taxed at 16%. For individuals the tax rate for gain from sale of real estate is 1%-3%.

Residence

Romanian companies and individuals pay tax on their Romanian and worldwide income. Non -residents companies and individuals pay tax only on Romanian source income.
A foreign company is resident if the management is in Romania.
An individual is resident if the center of living is in Romania, or if staying in Romania for 183 days within 12 months.

Romania Tax Deductions

Losses are carried forward for 5 years.There is no carryback for losses.
Depreciation is deducted using one of the 3 methods,the straight line method, the reduced balance depreciation and the accelerated method.
Provisions for bad debts are allowed under certain terms.
There is no company consolidation for tax purpose.

Romania Deduction of Tax at Source

In Romania tax is deducted at source from the following payments to non-residents:
Dividend- 16%. (10% to EU/EFTA residents).
Interest- 16%.
Royalties- 16%.

Note: the tax withholding rates are subject to double taxation treaties.

Romania Social Security

The contributions by the employer and the employee are subject to to ceiling defined by law.

	Employer	Employee
Social Security	20.8%-30.8%	10.5%
Health Fund	5.2%%	5.5%
Unemployment Fund	0.5%	0.5%
Risk Fund	0.25%	--
Labor Chamber	0.25%-0.75%	--

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