The tables below present the main taxes and social and health insurance rates in Romania.

For domestic entities, VAT registration is mandatory when annual turnover of EUR 88,500 (RON 300,000) is exceeded. Below this threshold, voluntary registration is possible. However, if the entity makes EU goods acquisition of over RON 34,000, it must obtain a normal VAT code or special VAT code, even if RON 300,000 annual turnover is not exceeded.

For foreign businesses trading in Romania that are VAT registered in their home countries, there is no threshold for registration. A non-resident taxable person must register for VAT purposes in Romania before commencing taxable business transactions.

For distance selling, the threshold is EUR 35,000 (RON 118,000).

For VAT registration, EU-based businesses are required to submit the following information:

• Excerpt from company’s national trade register
• VAT certificate when the company is registered for VAT in other EU member state, or a letter from the home-state tax office confirming VAT registration in that country
• Proof that the business will carry out transactions within the scope of VAT in Romania, e.g. sales or orders.

Romania offers many investment incentives, including the following:

• Tax exemption on profits reinvested in new and specific technology equipment
• Tax incentives for R&D activities (an extra deduction of 50% of eligible expenses for such activities)
• Exemption from profit tax for taxpayers that exclusively perform R&D and innovation activities (for the first 10 years of activity).

Romanian law recognizes two types of regular employment contracts:

• For a definite period, which can be concluded for a maximum period of 3 years, with a limit of three such contracts in a row
• For an indefinite period.

Both types of contracts may include a trial period. For indefinite contracts it is a maximum of 90 days for standard positions and 120 days for managerial positions. In the case of contracts for a definite period, it depends on the period and position and can range from 5 to 45 working days.

Real estate can be acquired in two ways:

• Directly, e.g. by acquiring the real estate (asset deal)
• Indirectly, e.g. by acquiring a corporation owning real estate (share deal).

In either case, there is no stamp duty or tax. The only fees are these related to the notary and registration (Land Book/Commercial Registry) requirements.

Companies with maximum revenue at the end of the previous year of EUR 1 million are subject to the mandatory revenue tax rate. The tax rates used for micro-enterprise income tax are:

• 1% for micro-enterprises with at least one employee
• 3% for micro-enterprises with no employees.

Micro-enterprises may opt to be corporate income tax payers if they fulfil both of the following conditions:

• Share capital is at least RON 45,000
• They have a minimum two employees.

A newly established Romanian company is required to follow the micro-enterprise tax regime starting with the first fiscal year.

For buildings owned by companies, the tax rate depends on the building’s designated use:

• For residential buildings, the tax rates are between 0.08% and 0.2% of the building’s tax value.
• For non-residential buildings, the tax rates are between 0.2% and 1.3% of the building’s tax value.
• For buildings used for agricultural purposes, the tax rate is 0.4% of the building’s tax value.

Local authorities also have a right to increase local tax rates by 50%.

The increased tax rate of 5% is applied when the building owner has not revised the taxable value of the building in the last 3 years.

Withholding tax rates for non-residents are as follows:

• Non-taxable—depends on specific criteria
• 5% for dividend income
• 50% for payments made by Romanian residents to non-residents in countries that have not concluded an agreement on exchange of tax information with Romania, and applicable only if such payments result from artificial transactions

16% for any other income obtained from Romania.