Romania micro company tax rules change announced today

[MiltonStone]

If you already setup the Romanian SRL and 500K turnover is acceptable because your business have low costs and it allows you to hire an employee with minum salary you could pair that with Portual NHR paying 1% total taxes because Romania levies no withholding taxes on dividends to non resident individuls.

Something OP should take into consideration for sure.

 

[CoffeeCherryTea]

Noteworthy: Starting 1 January 2023, the gross monthly minimum wage is 3,138 RON (€643) during a working schedule of 167.333 hours per month.

Source

 

[Bimblis]

I am thinking the deal is:

- Have a Romanian girlfriend.
- Ask her to be your special secretary
- She gives you back the salary money in cash at the end of the month

So in the end, you only pay the social security of the employee.

 

[ilpablo]

If you already setup the Romanian SRL and 500K turnover is acceptable because your business have low costs and it allows you to hire an employee with minum salary you could pair that with Portual NHR paying 1% total taxes because Romania levies no withholding taxes on dividends to non resident individuls.

The employee also would allow you to protect you from potential PoEM issues even though that Romanian micro company could be seen as a CFC because of the low taxation but probably the fact that the company has an office and an employee would be exempted.

Yes this is what I thought when I moved here last year. But now they changed the rules and if I'm not mistaken I must employ myself to benefit from the 1% tax and pay like 2500€ a year minimum tax. This apart from the fixed tax seems to overcomplicate things if I want to move abroad somewhere else in the upcoming years.

For example, let's say I want to move to Portugal, I can't be the director of my Romanian company or afaik it will be considered a local company for tax purposes.

 

[Bimblis]

I think you can only employ a Romanian for that condition. You may only be able to employ yourself if you are romanian.

 

[pucecacou]

The 3% rate of the micro company with no employee is dumped already ?

 

[benbao]

I think you can only employ a Romanian for that condition. You may only be able to employ yourself if you are romanian.

That is not correct, anyone who has a Romanian NIF or CNP is fine.

The 3% rate of the micro company with no employee is dumped already ?

No, starting January it's 1% with one employee to be eligible.

 

[pucecacou]

That is not correct, anyone who has a Romanian NIF or CNP is fine.


No, starting January it's 1% with one employee to be eligible.

So 1% or 16% but no more 3% ? Hum what's the catch with the "20% consultancy rule" ? Can anyone explain what does it consist and why it's a bummer ? Only briefly heard of it. Cheers

 

[benbao]

So 1% or 16% but no more 3% ? Hum what's the catch with the "20% consultancy rule" ? Can anyone explain what does it consist and why it's a bummer ? Only briefly heard of it. Cheers

Yes, it's 1 or 16 for corporate income tax and 8 for dividend from 2023 onwards.

The changes are essentially all in line with what the EU demands, so every other country offering a better deal (e.g. Bulgaria) will have to change that as well in the coming years.

 

[Marzio]

So the change is to basically avoid having a company without substance in Romania. Fair enough

 

[ADROCK123]

I can confirm that if you have a proper residence permit(with cnp) you can hire yourself

 

[ImKing]

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?

Mot me it is still a good a valid option for the company setup.

 

[freegeek]

as I understand it the micro company setup is not available anymore for consultants, correct?

 

[benbao]

as I understand it the micro company setup is not available anymore for consultants, correct?

The total income from consulting has to be below 20% to qualify for the micro enterprise scheme.

 

[AlexRon]

You're talking about 1% and 500K limit per year. It's great. But what about additionally VAT 19% rate which applies to all supplies of goods and services?
Or is it not applicable to micro-companies?

 

[ADROCK123]

as I understand it the micro company setup is not available anymore for consultants, correct?

Consulting is really loose definition, you can kind of change your job title and it's ok

 

[benbao]

You're talking about 1% and 500K limit per year. It's great. But what about additionally VAT 19% rate which applies to all supplies of goods and services?
Or is it not applicable to micro-companies?

VAT will need to be charged to customers in the EU if you go above the limit for VAT registration, I believe it was EUR75k. If you do B2B or non EU it is irrelevant anyhow and if you do B2C simply add the prevailing VAT rate of the country of residence of your customer onto the invoice and done.

 

[qwjwqieajs]

The latest summary of the changes coming in 2023: Romania: micro-enterprise income taxation in 2023 - KR Group

For me they killed it.

Additionally to be in such an unstable ever changing environment is not good.

 

[RealDude]

The latest summary of the changes coming in 2023: Romania: micro-enterprise income taxation in 2023 - KR Group

For me they killed it.

Additionally to be in such an unstable ever changing environment is not good.

They will not be the last...

 

[SARAH22]

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).

Hello,! And Happy new year!!
About the micro regulation in Romania, please be inform that starting with 1January 2024 the max turnover will be 300k, !
Don't bet on the romanian taxation allways is changing during the game,! But you ha e solutions ,. Where are you come from???