Romanian Corporate Income Tax: A Guide for Businesses

Romania’s corporate income tax system is relatively straightforward, but understanding its key features is essential for any business operating in the country. This guide covers the main rates, who is liable, how taxable profit is calculated, and the filing obligations you need to meet.

Who is liable for corporate income tax?

Corporate income tax applies to Romanian legal entities, including limited liability companies (SRLs) and joint-stock companies (SAs). Foreign companies that carry out business through a permanent establishment in Romania are also subject to corporate income tax on the profits attributable to that establishment.

Micro-enterprises that meet certain criteria may opt for a special tax regime instead of the standard corporate income tax. This regime is designed to simplify taxation for small businesses and is explained below.

Corporate income tax rates

The standard corporate income tax rate in Romania is 16%. This applies to the taxable profit of most companies. However, micro-enterprises can benefit from a reduced tax rate on their revenue rather than profit.

The micro-company tax regime

A Romanian micro-enterprise is a company that, at the end of the previous fiscal year, had turnover not exceeding €500,000 and meets other conditions set by the Fiscal Code. Micro-enterprises pay income tax on their revenue at a rate of:

• 1% if they have no employees;
• 3% if they have at least one employee.

This regime is optional, but once chosen, a company must remain in it for at least one full fiscal year, unless it no longer meets the criteria.

Calculating taxable profit

Taxable profit is calculated based on accounting profit, adjusted for tax purposes. Common adjustments include:

• Non-deductible expenses, such as fines, penalties, and certain provisions;
• Deductible expenses that exceed accounting limits, such as protocol expenses (limited to 2% of accounting profit);
• Tax depreciation, which differs from accounting depreciation;
• Income that is exempt, such as dividends received from Romanian companies (in most cases).

Companies must keep detailed records and prepare tax computations alongside their financial statements.

Filing and payment

Corporate income tax is declared and paid quarterly, based on the previous year’s tax. Companies must file a quarterly return (Form 100) by the 25th of the month following the quarter. The annual corporate income tax return (Form 101) is due by 25 June of the following year, and any additional tax or refund is settled then.

Micro-enterprises also file and pay quarterly, using the same deadlines.

Loss carryforward

Tax losses incurred in a fiscal year can be carried forward to offset future profits for a limited number of years. The exact period depends on when the loss was incurred, but it is typically five to seven consecutive years.

Understanding corporate income tax in Romania is crucial for financial planning and compliance. Consulting a local tax advisor is recommended to ensure you take advantage of all available deductions and regimes.