Romania has established itself in recent years as a top destination for European expats, digital freelancers, and entrepreneurs seeking competitive taxation. An EU member since 2007, the country offers one of the most attractive tax frameworks on the continent, combined with a very low cost of living.
In this guide, we review all aspects of Romanian taxation: income tax, micro-enterprise regime, corporate tax, VAT, social contributions, and more. If you're considering relocating to Romania, this article is your starting point.
1. Income Tax: The 10% Flat Tax
One of Romania's main fiscal advantages is its 10% flat income tax. Unlike France or Belgium where rates are progressive and can exceed 45%, Romania applies a single fixed rate on all personal income.
10% flat tax: Romania applies a single rate on all personal income, compared to up to 49% in France.
Who Is Subject to It?
All Romanian tax residents are subject to this tax on their worldwide income. You become a tax resident if:
- You have your domicile in Romania
- You spend more than 183 days per year on Romanian territory
- Your center of economic interests is in Romania
The 10% rate applies to salaries, self-employment income, rental income, and dividends. Capital gains on securities are also taxed at 10%.
Comparison with Other Countries
To put this rate in perspective, here's what expats pay elsewhere in Europe:
- France: up to 45% (+ 4% exceptional contribution)
- Spain: up to 47% (depending on the autonomous community)
- Portugal: up to 48% (excluding the IFICI regime)
- Romania: flat 10%
Check our ranking of countries with the lowest taxation for a complete overview.
2. The Romanian Micro-Enterprise (SRL Micro)
The micro-enterprise regime is arguably Romania's most well-known tax advantage. It allows small companies to pay a tax on turnover instead of on profits.
Eligibility Conditions
- Annual turnover below EUR 500,000
- At least one employee (the director can be an employee of their own company)
- Share capital not held more than 25% by the state
- The company must not operate in certain excluded sectors (banking, insurance, gambling)
The Tax Rate
Following recent reforms, the micro-enterprise tax rate is 1% of turnover if the company has at least one employee. This rate is exceptionally low compared to any other European country.
For EUR 100,000 turnover, the micro tax is only EUR 1,000. Total tax burden (with dividends): approximately 11% of turnover.
Concretely, for a turnover of EUR 100,000, the tax would be only EUR 1,000. Add 8% dividend tax and social contributions, and the total tax burden remains highly competitive.
Creating an SRL in Romania
Creating a limited liability company (SRL) is simple and fast:
- Minimum share capital: RON 200 (approximately EUR 40)
- Creation time: 3 to 5 business days
- Total cost: between EUR 500 and 1,500 (accountant + administrative fees)
- Registered office: required, can be a virtual office
To understand the tax implications when moving, check our article on tax mistakes to avoid when expatriating.
3. Corporate Income Tax
For companies not eligible for the micro regime (turnover > EUR 500,000 or excluded sectors), the corporate income tax rate is 16%. This rate remains below the European average of 21.3%.
Companies subject to corporate income tax can deduct all legitimate business expenses, which can significantly reduce the taxable base.
4. Social Contributions
This is the point that nuances Romania's fiscal attractiveness. Social contributions are relatively high:
- CAS (pension insurance): 25% borne by the employee
- CASS (health insurance): 10% borne by the employee
- CAM (work insurance): 2.25% borne by the employer
For SRL directors, the optimization strategy often involves paying a minimum salary (approximately RON 4,050 gross in 2025) and supplementing with dividends (taxed at 8%). This considerably reduces the overall social burden.
5. VAT in Romania
The standard VAT rate is 19%, one of the lowest in the EU. There are also reduced rates:
- 9%: food, tourist accommodation, medications
- 5%: books, social housing, cultural admissions
Micro-enterprises with turnover below RON 300,000 (approximately EUR 60,000) can benefit from a VAT exemption, greatly simplifying accounting management.
6. Dividends and Optimization
Dividends paid by a Romanian SRL are taxed at 8%. Combined with the 1% micro rate, the total tax burden on distributed profits is approximately 8.92% — an exceptionally low rate.
Total tax burden for a freelancer at EUR 80,000/year: approximately 11% of turnover, compared to 40-55% in France.
Here's a concrete example for a freelancer generating EUR 80,000 in annual turnover:
- Micro tax (1%): EUR 800
- Minimum annual gross salary: ~EUR 2,900 net after charges
- Social contributions on salary: ~EUR 2,200
- Distributed dividends: ~EUR 74,000
- Dividend tax (8%): ~EUR 5,920
- Total tax burden: ~EUR 8,920, or approximately 11% of turnover
Compare this with the 40-55% overall burden in France for a similar profile. To explore other low-tax destinations, check our guide on Hong Kong's tax advantages.
7. Cost of Living
Beyond taxation, the cost of living in Romania is another compelling argument. Bucharest is 50-60% cheaper than Paris for daily life:
- Rent (2-room apartment in city center): EUR 500-700/month
- Restaurant (meal for two, mid-range): EUR 30-50
- Internet (fiber optic): EUR 8-12/month (one of the cheapest and fastest in Europe)
- Public transport (monthly pass): EUR 20
Cities like Cluj-Napoca, Timișoara, and Brașov offer excellent quality of life with a dynamic tech ecosystem.
8. Advantages and Disadvantages for Expats
Advantages
- 10% flat income tax
- 1% micro-enterprise on turnover
- 8% dividend tax
- Very low cost of living
- EU member (freedom of establishment)
- Ultra-fast internet and strong tech ecosystem
- Simple and fast company incorporation
Disadvantages
- High social contributions on salaries
- Sometimes slow and complex bureaucracy
- Road infrastructure still developing
- Language barrier (Romanian is the only official language)
- Frequent legislative changes (tax rules evolve often)
9. Tax Treaties and Double Taxation
Romania has signed double taxation treaties with over 90 countries, including France, Belgium, Switzerland, and Canada. This means you won't be taxed twice on the same income if you comply with tax residency rules.
Before expatriating, carefully check the tax exit conditions of your country of origin. France, for example, imposes an exit tax on unrealized capital gains for portfolios exceeding EUR 800,000. Read our article on tax mistakes to avoid when expatriating.
10. How to Settle in Romania
For EU citizens, the process is straightforward:
- Residence registration: visit the Inspectoratul General pentru Imigrări with a lease contract
- Obtaining a TIN (tax identification number): required for any economic activity
- Opening a bank account: Romanian banks readily accept European residents
- Creating the SRL: via the Registrul Comerțului, 3 to 5 day processing time
For non-EU citizens, a long-stay visa and possibly a work permit are required.
Romania offers one of the most attractive tax environments in Europe, particularly for freelancers, developers, consultants, and digital entrepreneurs. The 1% micro-enterprise regime, combined with the 10% flat tax and 8% dividend tax, allows you to keep a very significant portion of your income.
However, it's essential to understand social contributions, reporting obligations, and frequent legislative changes. Working with a local accountant is strongly recommended.
To compare Romania with other popular destinations, check our Romania country page or use our Romania vs Portugal comparator.
FAQ
What is the tax rate in Romania for a freelancer?
A freelancer operating through an SRL micro in Romania pays 1% tax on turnover, plus 8% on distributed dividends. The total tax burden is around 11% of turnover, much lower than the 40-55% typical in France.
Do I need a visa to move to Romania?
EU citizens don't need a visa. You only need to register with local authorities after 90 days of stay. Non-EU citizens must obtain a long-stay visa.
How much does it cost to create an SRL in Romania?
The total cost is between EUR 500 and 1,500, including accountant and administrative fees. The minimum share capital is only RON 200 (approximately EUR 40).
Does Romania have a tax treaty with France?
Yes, France and Romania have signed a double taxation agreement that prevents being taxed twice on the same income. Check our Romania country page for more details.
What is the cost of living in Bucharest?
Bucharest is approximately 50-60% cheaper than Paris. A 2-room apartment in the city center costs EUR 500-700/month, and the total monthly budget for a single person is around EUR 1,000-1,500.
