DOING BUSINESS IN ROMANIA

Posted By Romain Ponsot on Oct 6, 1907 in Doing Business


Date de publication : 06-10-1907

modèle générique Placeholder
modèle générique

Complete list of the other countries…

 

The following information are for the sole purpose  of providing a general overview of  the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.

 

Yes we tax in Romania

 

Flash News

New tax reform: No specific information

New tax treaties: No specific information

Local tax advisors

No specific information on the local tax advisors.

Useful Links

Website Ministry of Finance: Click here

Website Tax administration: Click here

VAT identification number within EU:

Permanent Establishment

The definition of Permanent Establishment follows the wording of article 5 of the OECD Model:

  • Dependent agent who habitually concludes contracts in the name of a non-resident company (except if the activity is limited to purchase of goods);
  • Fixed place of business, building site, construction, assembly or installation and any related supervisory activity, for a period of 6 months.

Resident companies are taxed on their worldwide income.

Entities are considered to be resident for tax purposes in Romania if, they are incorporated under the Romanian law, if they have a registered office in Romania, or if their place of management & control is in Romania.

Note: the definitions of permanent establishment and place of residence are subject to the relevant provisions of any applicable double tax treaty, if any.

Corporate Income Tax

The general CIT tax rate is 16%.

Non-taxable income includes the following:

  • Dividends received from qualifying participations

 

Non-deductible expenses includes the following:

  • Dividends benefiting from the participation exemption
  • Interest in excess of the thin-capitalization threshold
  • Fines and penalties
  • CIT and similar taxes (including foreign withholding taxes)
  • Late interest penalties related to payment of taxes

Carry forward: Yes 7 years, but some restrictions may apply.

Carry back: No

Companies should submit the tax return annually before the 25 March of the following year.

Annual tax returns are established by the company on a self-assessment system.

Companies shall pay quarterly advance payments on the current taxable year.

Whithholding Taxes (payment to foreign companies)

The local tax rates in Romania are the following, subject to the provisions of an applicable double tax treaty, if any.

There is no WHT on the profits paid from a branch to its foreign head office.

The general rate of WHT on dividends is 5% of the gross amount.

The general rate of WHT on interest is 16%.

The general rate of WHT on Royalties is 16%.

The general rate of WHT on management fees is 16%.

The general rate of WHT on technical services is 16%.

Capital gains

Generally, capital gains are taxed under the regular CIT as general income.

VAT

Standard VAT tax rate is 19%

Reduced tax rates are:

  • 9% (among others, medicines for human and animals, restaurant, …);
  • 5% (among others, delivery of new real estate, museum, cultural events, books, newspaper,…)

Zero-rated supplies include, subject to certain conditions:

  • exports of goods;
  • intra-Community supplies of goods;
  • Passenger transportation

Exempt supplies include, subject to certain conditions:

  • Certain financial services (except for financial lease)
  • Certain insurance services
  • Training and education

Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.

EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.

In case where for a tax period, Input VAT exceeds Output VAT, certain non-resident companies (which are not required to register and incur Romania-VAT in the course of their business activities in Romania) may apply for a refund under the same conditions than resident companies.

Refunds are subject to the reciprocity principle, which means that Romania only refunds VAT to foreign companies in countries that offer similar refunds to Romania companies.

No other specific information of VAT in Romania.

Miscellaneous

The general statute of limitation is 5 years starting 1st July of the following year in which the tax return had to be filed.

The statute of limitation could be extended to 10 years for negligent tax fraud and for wilful tax fraud.

There is no foreign exchange control in Romania. Income and capital could be freely repatriated.

There are thin capitalization rules in Romania. The interest derived from loans between related parties may not be deductible in case where interest exceeds some ratios (3 times the taxpayer’s net equity).

 

 

 

Do not hesitate to share your experience in Romania with us in the comments below. Any comments are welcome !

 

Romain Ponsot

Romain est conseiller en fiscalité au sein d’un leader mondial du shipping. Grâce à son expertise tant en matière de TVA, fiscalité internationale, problématiques intragroupe qu’en matière de fiscalité des particuliers, Romain vous guidera au travers d’articles professionnels et humoristiques. 

Romain, poète dans l’âme, aime particulièrement le couscous et passe beaucoup de temps à glacer ses souliers. Profil LinkedIn
Romain Ponsot

Les derniers articles par Romain Ponsot (tout voir)

Submit a Comment

Votre adresse de messagerie ne sera pas publiée. Les champs obligatoires sont indiqués avec *

Ce site utilise Akismet pour réduire les indésirables. En savoir plus sur comment les données de vos commentaires sont utilisées.