Romania micro company tax rules change announced today

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gab1

New member
See article here.

- Dividend tax increases from 5% to 8%.

- Income tax is 1% of turnover, but you MUST have at least one employee. If you have no employees you are not considered micro and therefore will have to pay 16% tax.

- Turnover must be 500k or less.

- Only 20% of the revenue can be from consulting and management

- Must not be banking, insurance, capital markets, gambling, oil and gas

Personally I am more concerned about the 'must employ at least 1 person' thing. Can I employ myself? How much extra is that going to cost me?
 

Larin

New member
Maybe I am missing something, but why would one spend effort on these less established jurisdictions when rules can be changed so quickly? Oh, look now its 500k not 1m. And now its at least one employee, etc.?
Get established in a stable jurisdiction like the UK, Ireland, or the Netherlands and not worry about the potential rule changes?
 

marzio

Mentor Group Gold
why would one spend effort on these less established jurisdictions when rules can be changed so quickly?

Because of the shiny object syndrome.

1% tax is more appealing than 12.5% or more ina more established jurisdiction.
 

Mel

New member
Because of the shiny object syndrome.

1% tax is more appealing than 12.5% or more ina more established jurisdiction.

Which jurisdiction would you suggest / combination of company - residence for less than 1 o o o k yearlly? So far I've been established in Romania, now it won't make sense anymore. Any suggestion would be appreciated.
Thanks!
 

boogieboogie

New member
Well that sucks. There were a couple of people in this forum that wanted to create substance in Romania and moved there relatively recently. I myself seriously considered moving earlier this year and ended up postponing it. IMO the worst part is not the tax raise itself, which isn't that high (RO is probably still the best country for small businesses tax-wise apart from UAE), but the precedent that this sets and the unstability of the jurisdiction. Today it's 500k, tomorrow might be 100.
Dead for all freelancers?
I don't think so, it's still the lowest tax for businesses in the EU (and Europe). But it's like Larin said: Is it worth it to deal with Romanian accountants and law firms, create substance, etc etc... only to have this potentially change from one day to the other? Plus we know that the EU is after that 1% on turnover... I'd be surprised if we don't see another legislation change by 2024 (at the latest).
 

no1d

Active Member
Its not the Romanian gov who wanted to reduce the threshold of micro companies, Brussels pushed them to do so because its tax heaven rates, but you can own many micro companies and that's still good.
Of course it won't last many years even with 500k but I won't worry about that, there's no place in EU with these conditions anyway.
 

gab1

New member
What about the condition of employing a person though, can I employ myself or do I literally need to employ someone else? Anyone knows? If it's the latter then that's a serious hurdle.
 

benbao

New member
What about the condition of employing a person though, can I employ myself or do I literally need to employ someone else? Anyone knows? If it's the latter then that's a serious hurdle.
Yes, you may employ yourself with the condition that you have a Romanian tax number/NIF.

Well that sucks. There were a couple of people in this forum that wanted to create substance in Romania and moved there relatively recently. I myself seriously considered moving earlier this year and ended up postponing it. IMO the worst part is not the tax raise itself, which isn't that high (RO is probably still the best country for small businesses tax-wise apart from UAE), but the precedent that this sets and the unstability of the jurisdiction. Today it's 500k, tomorrow might be 100.

I don't think so, it's still the lowest tax for businesses in the EU (and Europe). But it's like Larin said: Is it worth it to deal with Romanian accountants and law firms, create substance, etc etc... only to have this potentially change from one day to the other? Plus we know that the EU is after that 1% on turnover... I'd be surprised if we don't see another legislation change by 2024 (at the latest).
While changes always suck its important to keep in mind Romania is still a beautiful country, extremely cheap to live at, has good infrastructure and talent and even 16% tax rate on profit is not a bad deal should the micro scheme end at some point. There are many businesses that need the EU and entrepreneurs that wish to move only within EU so Romania has its place.

The EU has its agenda and it will continue to annoy many of us no matter if incorporating in EU or outside until this beast implodes at some point.
 

EliasIT

Corporate Services
Mentor Group Gold
- Income tax is 1% of turnover, but you MUST have at least one employee. If you have no employees you are not considered micro and therefore will have to pay 16% tax.
the question may be, what is the cost of such an employee compared to what will the consequences be if you have to pay 16% !

I believe you can find a cheap guy sitting in your office for roughly 400 euro a month.
 
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