Personal income tax
In Romania, personal income is taxed at a flat rate of 16%.
Corporate income tax
At the same time, the standard corporate income tax rate is 16%. Dividend income distributed as of January 1 2016 is subject to 5% income tax.
Regarding micro-companies tax, the threshold below which a company is classified as a micro-company is EUR 100,000. Also, a tiered system of micro-companies’ tax rates, depending on the number of employees, has been introduced. If you are a micro-company with two or more employees the tax rate is 1%, for micro-companies with one employee is 2% and for micro-companies with no employees the tax rate is 3%.
The government is committed to reducing the tax burden. Starting with January 1 2016, the VAT rate was lowered to 20%, and it will be followed by another drop to 19% in 2017. At the same time, there are lower VAT rates on food items (9%) and some forms of entertainment (5%).
Regarding fiscal incentives, the Romanian fiscal code includes a 16% profit tax exemption for reinvested profits in new technological equipment used for business purposes and an exemption on the 16% income tax is available in Romania for employees working in the IT sector.