2021. The fiscal regime of a Limited Liability Company in Romania:

The best type of company for the vast majority of investors in Romania is the LLC, the Limited Liability Company. It provides more advantages comparing to Personal Companies (which pay more taxes), while Pulbic Limited Companies (PLC or S.A.) pay more taxes and have more obligations and restrictions.

There is fiscal stability in Romania.

The tax on profit is flat and remains unchanged since 1st of January, 2005.

The tax for microcompanies remains very low since 1st of January, 2009.

The taxes your LLC company will pay in Romania

  • With revenues up to 1.000.000 Euros, for any kind of activities, including commerce, services, production etc, you pay 1 – 3% tax on revenue and you have no other fiscal obligation (tax for microcompanies).
  • Exceptions of activities can be: Banks, Insurance companies etc
  • You pay 1% tax on revenues, if the company has 1 employee. This can be the company’s shareholder or administrator as well.
  • You pay 3% tax on revenues, if the company does not have an employee.
  • With revenues over 1.000.000 Euros, your company enters in the 16% tax on profit regime.

The dividend tax

  • The dividend tax is 5% on the dividends to be distributed (in the end of the text you have a detailed example*)
    Dividends can be paid once per trimester.
    Dividends are optional. You can receive as much as you wish (limited to the company’s profits) or receive less or do not receive at all, ever.
  • Depending on your fiscal residency, we will study the bilateral agreement between your country and Romania and set up everything in the correct way, to make sure that we will prevent you from paying double taxation on the dividend).

There are no other taxes to be paid!

  • There is no obligation for the company’s shareholder or its administrator to pay monthly social security taxes in Romania, just because he owns / administrates the company.

** Usually the same stands for other countries out of EU, such as the United States of America and many more. Available for all our clients: Careful and detailed information for every country of their interest + any potential custom duties to be paid etc.

PS: Banks, insurance companies and SA companies are subject to a different taxation comparing to the above mentioned one.

The VAT regime

Basic Facts

  • There are many countries where every new company receives its VAT code immediately after it is set up. Afterwards, it charges and pays VAT from the very beginning. This is not the case in Romania.
  • This is why in Romania a new company receives its fiscal number, then also obtains its VIES code but it will need to apply for VAT code separately, if it needs this facility.
  • VAT code will substitute VIES code and it will be the final figure you will introduce in your documentation.

 

The 300.000 Lei threshold and up to what level is VIES code enough for us?

  • With revenues up to 61.000 Euros you can choose not to obtain the VAT code. Without VAT code, you will not be obliged to charge VAT to our clients when they are based inside the limits of Romanian territory.
  • If your company exceeds 61.000 Euros of revenues, you will need to obtain the VAT code, as an obligation.
  • The calculation of the 300.000 Lei threshold is irrelevant to the headquarters of your clients. It is valid as a total, either they are based in Romania, the European Union or anywhere else in the world.

When do you definitely need to obtain the VAT code

  • If you sell services to / from companies inside the limits of European Union **, then you need to obtain VIES code for our company, to avoid charging / paying VAT.
  • If you buy / sell products or goods to / from companies or buy services from companies inside the limits of European Union **, then you need to obtain VIES code but obligatory VAT code as well for your company, to avoid charging / paying VAT.
    (So in this case, obtaining the VAT code allows you not to charge it to your intra-community clients).

 

Rest of the world (non European Union countries)

  • Usually the same stands for other countries out of EU, such as the United States of America, Canada, UK and many more.
  • Available service for all our clients: Careful and detailed information for every country of your interest + any potential custom duties to be paid etc.

 

What do we offer

  • Obtaining VIES code is included in our services. We will make sure that your company will receive it few days after it has been set up, without additional costs.
  • For VAT code there is a documentation to be submitted to the Fiscal Authorities and there is a charge for its preparation work. It is paid once and it is valid forever.
  • Success rate of obtaining VIES and VAT codes for our clients: 100%

*A detailed example of paying dividents to shareholders

  • Company revenues: 500.000 Euros
  • Profits: 200.000 Euros
  • Tax on revenues, 1% with 1 employee 5.000 Euros
  • Tax on Dividend 5%: 9.750 Euros
  • (on the 195.000 Euros profit)
  • = 5.000 + 9.750 Euros = 14.750 Euros total taxes to be paid in Romania.

The same company in Bulgaria would pay:

  • Company revenues: 500.000 Euros
  • Profits: 200.000 Euros
  • Tax profit 10%: 20.000 Euros
  • Tax on Dividend 5%: 9.000 Euros 
  • (on the 180.000 Euros profit)
  • = 20.000 + 9.000 Euros = 29.000 Euros taxes to be paid in Bulgaria, excluding the mandatory social securities and other costs that a company owner must pay there.

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