Romania’s “micro‑enterprise” tax regime allows companies with annual revenue up to €1 million to benefit from a reduced turnover tax of 1 percent, provided they meet specific employment and payroll conditions.
Eligibility and payroll requirements
- Revenue cap: Up to €1 million per calendar year.
- Employee minimum: At least one employee must be on the payroll. The employee can be the director or a managing shareholder.
- Salary floor: The employee must receive a gross monthly salary of €510 or more.
- The salary is subject to normal Romanian income‑tax and social‑security contributions.
- Any profit remaining after salary can be distributed as dividends.
Tax rates
| Situation | Tax rate | Notes |
|---|---|---|
| Revenue ≤ €1 M with ≥ 1 employee (salary ≥ €510) | 1 % turnover tax on total revenue | Calculated quarterly; payment due by the 25th of the following month. |
| Revenue ≤ €1 M without any employee | 3 % turnover tax on total revenue | Same filing schedule as above. |
| Revenue > €1 M | 16 % corporate income tax (standard rate) | Applies to the portion of income exceeding the €1 M threshold. |
| Dividends paid to shareholders | 5 % withholding tax | Paid on the dividend amount after salary distribution. |
Administration
- Quarterly filing: Tax is calculated each quarter and must be paid no later than the 25th day of the month following the quarter’s end.
- Initial registration: It is advisable to opt for the micro‑enterprise regime from the first calendar year of operation to avoid later re‑classification.
Practical uses
- EU tax residency: Because Romania is an EU member, a company incorporated there can support a personal tax residency claim in any other EU country, such as Portugal. The modest salary requirement (≥ €510) satisfies many EU residency programs that demand a genuine employment relationship.
- High‑margin businesses: Firms with substantial profit margins benefit most, as the 1 % turnover tax is applied to total revenue rather than net profit, reducing overall tax burden dramatically compared with the standard 16 % corporate rate.
Decision criteria
Consider the Romanian micro‑enterprise regime if:
- Your projected annual turnover is ≤ €1 million.
- You can maintain at least one employee with a gross salary of €510/month (or are willing to meet the 3 % rate without employees).
- You prefer a simple quarterly filing schedule over more frequent reporting.
- You seek an EU‑based corporate structure that can complement personal residency plans in other member states.
Risks and caveats
- Revenue growth: Exceeding the €1 million threshold triggers the higher 16 % corporate tax on the excess, potentially eroding the tax advantage.
- Salary compliance: The €510 salary must be genuine; artificially low salaries could be challenged by tax authorities.
- Administrative burden: Quarterly tax calculations and timely payments are mandatory; missed deadlines may incur penalties.
- Dividend tax: While the 5 % withholding tax on dividends is relatively low, it still adds to the overall tax cost and must be accounted for in cash‑flow planning.
Summary
Romania offers a competitive tax framework for small‑to‑medium enterprises: a 1 % turnover tax for companies with revenue up to €1 million and at least one employee earning a minimum gross salary of €510 per month, with a 5 % dividend withholding tax and a standard 16 % corporate tax on income beyond the threshold. The regime’s simplicity, EU membership, and compatibility with other residency programs make it an attractive option for entrepreneurs seeking to minimize tax exposure while maintaining a legitimate European corporate presence.
