Features of taxation in Romania 2024: micro-companies

Romania, as a member of the European Union, is constantly improving its taxation system in order to meet the requirements of the times and ensure the sustainable development of the economy.

In 2024, Romania is introducing updates to the taxation system that will affect citizens, businesses, and investors.

Tax control in Romania is carried out by the National Agency for Fiscal Administration and local tax authorities.

So, let's consider the key aspects of these changes and their consequences.

Legal aspects of micro-companies

Corporate tax rates in Romania can vary and are divided between the standard tax rate and the tax regime applicable to micro-companies.

In Romania, a micro-company is an enterprise that has a limited scope of activity and income.

The specific parameters that define an enterprise as a micro-company are set by Romanian law and may change over time, but currently the main ones may include the following:

• Amount of income: Micro-companies have a limited amount of annual income, which is established by law. For example, until 2022, the maximum amount of annual revenues to recognize an enterprise as a micro-company was 1 million euros, now it is 60,000 euros.
• Number of employees: Usually, micro companies have a limited number of employees. Today, it can be 1 founder, who can also act as a company director (administrator) or an individual employee.
• Simplified taxation system: Micro-companies may have certain benefits or a simplified taxation system that allows them to reduce their tax burden and simplify record-keeping.
• Limited administrative requirements: Micro-companies may have fewer administrative responsibilities compared to larger businesses, allowing them to focus on the core aspects of their operations.

Corporate tax

Corporate tax is calculated quarterly, and for the first three quarters of the year, the company will have to calculate and submit tax returns no later than the 25th of the month following the end of each quarter.

However, the way in which a company will have to pay corporate tax in Romania will differ depending on the place of residence - this is one of the main aspects that are crucial for this type of tax.

The simplified micro-company taxation regime applies from the beginning of the fiscal year (coincides with the calendar year).

The main aspects of the corporate tax rate for micro-companies are as follows:

• For micro-companies, a 1% tax may apply if the company's turnover is less than 60,000 euros;
• The basic corporate tax rate in Romania is 16%;
• A tax rate of 1% will apply if the company has at least 1 employee, while in the case of micro companies with no employees, the tax will be 3%;
• if the minimum share capital of the company is at least 45,000 lei (approximately 9,300 EUR) and it has at least 2 employees,
• the company can choose the standard corporate tax rate in Romania, even if its turnover is up to 60,000 euros;

There is also a category of tax rate that applies to the income of nightclubs and gambling establishments, where such companies can pay either 5% of the annual income or 16% of the taxable profit (the company will have to pay the amount that is higher).

Therefore, the renewal of the corporate tax system in Romania has great potential to stimulate economic growth and attract investment.

Micro-companies must be ready for these changes and take them into account when developing their tax strategies to achieve successful operation and sustainable development.