Romania’s tax system is relatively straightforward, especially compared to other EU countries. Whether you're a local resident or a foreigner living and working in Romania, understanding your tax obligations is essential for staying compliant and avoiding unnecessary penalties. Here’s a practical overview of how taxes work in Romania and what you need to do.

1. Overview of the Romanian Tax System

Romania operates on a flat tax system for most types of income. This means:

• Personal income tax: 10% (flat rate)
• Corporate tax: 16%
• Microenterprise tax: 1% or 3% (depending on whether the company has employees)
• VAT (TVA): Standard rate is 19%; reduced rates of 9% and 5% apply to specific goods and services

The National Agency for Fiscal Administration (ANAF) is the authority responsible for collecting taxes and managing fiscal policies.

2. Tax Residency: Who Needs to Pay Taxes in Romania?

You are considered a tax resident in Romania if:

• You spend more than 183 days in a calendar year in the country, or
• You have your center of vital interests (home, family, economic interests) in Romania

Once you're a tax resident, you must declare and pay taxes on your worldwide income.

If you're non-resident, you only pay taxes on income earned from Romanian sources.

3. Obligations for Locals and Expats

a. If You’re an Employee (Local or Expat)

• Income tax (10%) is withheld automatically by your employer
• You also pay social security contributions, such as:
  • Pension (CAS): 25%
  • Health insurance (CASS): 10%
• These contributions are also managed by the employer and deducted from your salary

📌 No additional tax filing is needed if your only income is from a salary in Romania.

b. If You’re Self-Employed or Freelancing

You are required to:

• Register with ANAF
• File an annual tax declaration (Form 212)
• Pay:
  • 10% income tax
  • 25% pension contribution (optional if you earn below a threshold)
  • 10% health insurance (if income exceeds a set level)

Deadlines for tax declarations usually fall in May of the following year.

c. If You Own a Company

• Corporate tax is 16% for standard companies
• Microenterprises (annual turnover under €500,000) pay:
  • 1% if they have employees
  • 3% if they don’t
• VAT registration is mandatory if turnover exceeds 300,000 lei/year

Company owners must also:

• Submit quarterly and annual reports
• Pay dividend tax (8%) if distributing profits

d. If You Own Property or Earn Rental Income

• Rental income is taxed at 10%, and you can deduct a 40% standard expense allowance
• You must declare rental income annually or quarterly, depending on the lease terms
• Property tax must also be paid to the local municipality, based on property type and location

4. How to Pay Taxes and File Declarations

• Taxes are managed through ANAF (anaf.ro) – they now offer an online platform: SPV - Spațiul Privat Virtual
• Declarations can be filed electronically
• Payments can be made online via internet banking, ghișeul.ro, or through a local treasury

5. Common Deductions and Exemptions

While Romania has a flat tax system, you may benefit from:

• Personal deductions (for low-income individuals)
• Family-related deductions (for dependent children)
• Exemptions for specific income types (e.g. scholarships, EU grants)

6. What Happens If You Don’t Comply?

Late declarations or unpaid taxes can lead to:

• Penalties and interest
• Tax audits by ANAF
• Restrictions on certain financial operations or registrations

7. Final Tips for Expats

• Keep all tax documents and proof of income organized
• Consider hiring a local accountant or tax advisor
• If you're moving to or from Romania, notify ANAF about changes in tax residency
• Check if Romania has a double taxation treaty with your home country

Summary

Romania’s tax system is flat and relatively transparent, but it’s important to stay informed and organized. Whether you’re working, freelancing, running a business, or renting out property, being aware of your tax obligations helps you avoid fines and keep things running smoothly.