Romania legal and accounting and tax considerations in 2023
- Corporate taxation in Romania is fixed at a 16% rate with alternative minimum tax imposed on micro-companies;
- The standard Value Added Tax (VAT) in high at 22% with tax-exempt regime of for medical, educational and financial goods and services. Mandatory VAT registration is required for companies with annual return higher than €65,000. VAT payments are filed and submitted on a monthly basis;
- Withholding taxation on i) dividends; ii) interest; iii) royalties and iv) technical service fees incur 16% withholding tax unless reduces by a double-taxation treaty;
- Employers are required to submit social security contributions of up to 15.8% of the gross employee salary, health fund contribution of 5.2% and 0.5% unemployment contribution.
- Tax returns are filed on a quarterly basis and one final year-end submission. Payments are done by the 25th day following the tax period;
- Late payments of corporate tax will incur progressive penalties of 0.3% daily tax rate on the outstanding amount.
- There is no stamp or capital duty applicable in Romania;
- Romania does not implement net wealth tax, which is applicable to other EU countries, including France, Spain and Netherlands;
- Romania has signed 80 double taxation avoidance agreements with 60 countries including i) Hong Kong; ii) Syria; iii) Mexico and iv) Morocco;
- Healy Consultants will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparing financial accounting records and iv) preparing forecasts, budgets and performing sensitivity analysis.
Legal and compliance
- The Romanian Trade Register allows users to view information about Romanian companies including: i) company’s name, business address; ii) identification of managing body and ownership; iii) contact details and iv) subscribed capital and business activity;
- In Romania, as most countries in the region, the most popular types of business are the limited liability company (societate cu raspundere limitata, SRL.) and joint stock companies (societate pe actiuni, SA);
- The minimum issued share capital of the Romanian LLC is only €50 (RON200) fully paid-up before company formation and for the JSC company is €25,000, with 30% paid in cash before registration from each of the shareholders;
- There is no requirement to appoint a local director or shareholder for both LLC or JSC companies;
- JSCs in Romania are not required to submit annual audited accounts.
- Each foreign-speaking employee is entitled to receive their employment contract in both Romanian and a language they can comprehend;
- The maximum probation (trial) period in Romania is low at only 30 calendar days. Only for managerial positions this period is extended to 90 calendar days. No notice is required for termination during the probation period;
- The minimum wage in Romania is fixed at €275 from January 2015;
- The standard work week i) for full time positions cannot exceed 40 hours of work (8 per day) and ii) standard five working days from Monday to Friday. Staff under 18 years old cannot work for more than 30 hours per week. Night work is limited to i) 8 hours each work date and ii) enjoy 15% higher pay;
- Staff in Romania are granted:
- Up to 20 days of paid annual leave;
- 25 days of national holidays;
- First 5 days of sick leave are paid by the employer;
- 63 days of paid pre-maternity leave and
- 63 days of paid post-maternity leave.
- The employer may terminate an employee only in following cases: i) criminal offence ii) negligence and iii) redundancy with 15 days of termination notice. Terminated employees are not entitled to severance payments. In case of conflict, the local civil court must be approached within 30 days of contract termination;
Other business regulations
- Romania joined the European Union on the 1st of January, 2007 and is in the waiting list to join the Eurozone. In most cases both business and financial laws follow the European Union guidelines and regulations;
- Romania strengthened its ties to the west with the membership with in the multinational military alliance – North Atlantic Treaty Organization (NATO) since 29th of March 2004, agreeing on the terms of mutual defense between member countries;
- The country is a member of the International Monetary Fund (IMF) and the World Bank;
- Romania is a member of the World Intellectual Property Organization, since 1970 which consequently allows i) non-resident companies to apply for patent or a trademark free and ii) foreigners the same intellectual property protection rights as Romanian nationals;
- The country is a member of the Organization of Economic Co-operation and Development (OECD);
- Romania is taking part of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention). Consequently, in case of arbitration awards made in countries that are party to this convention should be enforceable in Romania.