Tax laws Romania
Romania's taxation system comprises various taxes, including corporate, personal, and value-added taxes (VAT).
Corporate Taxes:
Microenterprise Tax: Companies with annual revenues under €1 million and at least one employee are subject to a 1% tax on all sales and an 8% tax on dividends.
Standard Corporate Tax: Companies exceeding €1 million in revenue or lacking employees pay a 16% tax on profits and an 8% tax on dividends.
Personal Income Taxes:
Employees contribute approximately 41.5% of their gross income, comprising:
Income Tax: 10% of gross income (post pension and health deductions).
Pension Contribution: 25% of gross income.
Health Contribution: 10% of gross income.
Gross incomes below RON 3,600 benefit from personal deductions of up to RON 1,310 from taxable income.
Value-Added Tax (VAT):
Romania applies a standard VAT rate of 19%, with reduced rates of 9% and 5% for specific goods and services.
Recent Developments:
Debt Amnesty Measures: In September 2024, the government introduced a partial debt amnesty, waiving penalties on unpaid taxes if paid within the year. This aims to enhance tax compliance and address the budget deficit, projected to reach 6.9% of GDP by the end of 2024.
Minimum Wage Increase: Effective January 2025, the monthly gross minimum wage rose by 9.5% to 4,050 lei ($884.61). While intended to support workers, this increase contributes to inflation and a growing budget deficit.
Budget Cuts and Public Discontent: To reduce the budget deficit, the government has implemented spending cuts, including freezing public sector pay and pensions. These measures have led to protests from state workers concerned about job and pay cuts.
Fiscal Transparency Concerns: In December 2024, coalition negotiations were hindered by demands for clarity on taxation and spending plans, amid concerns over a fiscal deficit forecasted at 8.6% of GDP.
Digital Tax Reporting Initiatives:
Romania has adopted the Standard Audit File for Taxation (SAF-T) system, requiring businesses to electronically submit accounting and tax data to the National Agency for Fiscal Administration (ANAF). This initiative aims to enhance tax compliance and streamline reporting processes.
Fiscalization System:
Romania employs a hardware-based fiscalization system, mandating that fiscal devices, such as cash registers, are certified and communicate transaction data to ANAF in real-time. This system ensures transparency and accountability in financial transactions.
Conclusion:
Romania's tax system is evolving, with recent measures aiming to improve compliance and address fiscal challenges. Staying informed about these changes is crucial for businesses and individuals to navigate the taxation landscape effectively.
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