Developing a business in Romania (brief overview of EU taxation – new taxes in Romania)

Romania, as part of the European Union and the Schengen area, including land borders, has agreed to adopt a fiscal recovery plan starting January 1, 2025, to get the economy back on track, in line with the economic strategies adopted by the European Commission. EU countries, including Romania, had to adopt a bunch of rules to adjust their taxes so they can get through the global crisis caused by various geopolitical and military stuff.

These tax increase measures were adopted in a balanced manner, so that Romania continues to enjoy tax advantages for starting and carrying out investments on its territory. The table below provides an overview of the standard VAT and corporate income tax rates in EU countries.

In our opinion, even with the slight increase in taxation, Romania still offers foreign investors a number of advantages, including low overall labor costs, low wages compared to other countries, digitization—the digitization process is ongoing (numerous fully digitized procedures are currently being implemented, documents can be signed remotely using e-signatures, which ensures the speed and ease of commercial transactions), Romania is and will continue to be an important commercial hub due to its geostrategic position. Romania is a country with a high level of security for citizens and property. Romania’s landscape and natural potential are key arguments for the development and maintenance of a wide range of businesses on its territory.

Currently, as a result of the adoption of new fiscal measures:

  • The tax rate is increased from 10% to 16% for dividends distributed starting January 1, 2026,
  • the standard VAT rate is increased from 19% to 21%, with the application of a reduced VAT rate on housing until August 1, 2026, and an increase in the reduced VAT rate from 9% to 11% for a more limited range of goods and services.
  • The corporate income tax rate remains at 16%;
  • the 1% tax, respectively 3% for micro-enterprises that meet the legal conditions (Note: please find the legal conditions on our website www.legality.ro) remains in place.

This article provides a general overview and should not be considered personalized tax advice. Individual circumstances and specific tax situations may require further analysis by a qualified professional.

EU COUNTRYCOMPANY PROFIT TAX (%)VAT (%)
Austria (AT)23.0%20
Belgium (BE)25.0%21
Bulgaria (BG)10.0%20
Croatia (HR)10-18.0% (>1mil euros)25
Cyprus (CY)12.5%19
Czechia (CZ)21.0%21
Denmark (DK)22.0%25
Estonia (EE)22.0%24
Finland (FI)20.0%25.5
France (FR)25.8%20
Germany (DE)29.9%19
Greece (GR)22.0%24
Hungary (HU)9.0%27
Iceland (IS)21.0%24
Ireland (IE)12.5%23
Italy (IT)27.8%22
Latvia (LV)20.0%21
Lithuania (LT)16.0%21
Luxembourg (LU)24.9%17
Malta (MT)35.0%18
Netherlands (NL)25.8%21
Norway (NO)22.0%25
Poland (PL)19.0%23
Portugal (PT)*20% (16% in case of MSC)23
Romania (RO)16.0%21
Slovakia (SK)21.0%23
Slovenia (SI)22.0%22
Spain (ES)25.0%21
Sweden (SE)20.6%25

 

* The Portuguese Parliament has approved a one percentage point reduction in the standard corporate income tax rate (from 21% to 20%), as well as the reduced rate (from 17% to 16%) applicable to small and medium-sized enterprises and small/medium-sized enterprises for the first EUR 50,000 of taxable income.

Start-ups benefit from a reduced corporate income tax rate of 12.5%, subject to European rules on de minimis aid.

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The main management structure of the company in Romania is the general meeting of associates / shareholders. The constitutive act establishes the rules for convening and adopting decisions and whether the exercise of the vote can be delegated by special mandate by the associate / shareholder who cannot take part in the meeting. In the limited liability company, each shareholder entitles the holder to one vote in the respective meeting. The general meeting of associates has the following main obligations: ✓ to approve the annual financial statement and to establish the distribution of the net profit. ✓ to appoint the administrators and the censors, to revoke / dismiss them and to discharge them, as well as to decide to contract the financial audit, when it is not obligatory, according to the law; ✓ to decide the pursuit of the administrators and censors for the damages caused to the company, designating also the person in charge to exercise it; ✓ to modify the constitutive act.
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The limited liability company is the most common form of company in Romania, being the legal entity that best serves the interests of investors both from the point of view of the reliability of the activity, and from the perspective of its management. The limited liability company is abbreviated "SRL" in Romania and is the equivalent of the American limited liability company Limited Liability Company (abbreviated to LLC) or the German economic structure "Gesellschaft mit beschränkter Haftung" (abbreviated to GmbH), or the structure called "limited" , the structure used in most Latin American states.
The limited liability company is characterized by:
✓ the character intuitu personae, which means that this economic structure is based on the trust between the associates;
✓ the division of the share capital into fractions called shares, which cannot be negotiable securities;
✓ the liability of the associates is limited to their contribution to the share capital.
The limited liability company may also have a single partner, natural or legal person, of Romanian or foreign nationality, who will be the owner of all shares. Instead, the maximum number of associates is 50 people.
At present, the Romanian law no longer conditions the subscription and payment of a certain amount as share capital.
Through registration, the company acquires legal personality, becoming, under the law, a collective subject of law. The conclusion given by the judge is sent, ex officio, to the Official Gazette of Romania for publication at the expense of the company and to the Financial Administration in whose territorial area is the main headquarters of the company for fiscal registration, mentioning the registration number in the Trade Register .

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