Romania's Tax Framework and Regulatory Environment in 2025

Romania’s tax landscape continues to evolve, shaped by both national reforms and alignment with European Union directives. Since the implementation of the updated Fiscal Code through Law No. 227/2015—which took effect on January 1, 2016—the country has consolidated various amendments introduced since the original code was established in 2004. While this legal consolidation brought greater clarity, local tax authorities still exercise significant discretion, leading to variations in interpretation and enforcement across regions. As of 2025, Romania maintains a balanced approach to taxation aimed at encouraging investment while ensuring fiscal stability.

Key Taxes and Applicable Rates

Corporate Income Tax (CIT)

In Romania, corporations are subject to a flat corporate income tax rate of 16% on taxable profits. However, certain service-oriented businesses—such as bars, nightclubs, and other entertainment venues—are required to pay a minimum presumptive tax equivalent to 5% of their gross revenue, regardless of actual profitability. This measure aims to prevent underreporting in sectors where cash transactions are prevalent. Additionally, dividend distributions have benefited from a reduced withholding tax rate of 5%, effective from January 1, 2016, making Romania an attractive destination for foreign investors seeking efficient repatriation of profits.

Personal Income Tax (PIT)

Both Romanian residents and non-residents earning income within the country are liable for personal income tax. A major reform implemented on January 1, 2018, lowered the standard PIT rate from 16% to 10% for most types of income, including employment, pensions, and self-employment earnings. This competitive rate enhances Romania’s appeal as a cost-effective location for skilled professionals and expatriate workers. Special rates may apply to capital gains and high-income brackets depending on regional or municipal regulations.

Value Added Tax (VAT)

Romania operates a dual-tier VAT system consisting of a standard rate and reduced rates. The standard VAT rate was reduced from 20% to 19% starting January 1, 2017, and remains unchanged through 2025. Reduced rates of 9% and 5% apply to essential goods and services such as food, books, pharmaceuticals, and public transportation, supporting affordability and social equity.

Excise Duties

Excise taxes are levied on specific categories: alcoholic beverages, tobacco products, and energy-related goods including electricity, natural gas, and motor fuels. These duties align with EU-wide standards designed to regulate consumption and generate targeted revenue. In recent years, excise rates on tobacco and fuel have seen periodic adjustments to reflect inflation and environmental goals.

Stamp Duty

Stamp duty applies primarily to official documents, certifications, and notarized agreements. It is typically a nominal fee but plays a role in formalizing legal and administrative procedures. The obligation to pay stamp duty often arises during property transfers, corporate registrations, or court filings.

Digital Services Tax

As of 2025, Romania does not impose a standalone digital services tax. This follows the European Commission’s decision in mid-2021 to pause the EU-level proposal for a digital levy, opting instead for broader international coordination under OECD frameworks. Nevertheless, digital companies operating in Romania remain subject to standard VAT and corporate tax rules, particularly if they meet thresholds for permanent establishment or significant economic presence.

Carbon Tax and Emissions Regulation

Romania adheres to the European Union Emissions Trading System (EU ETS), which functions as a cap-and-trade mechanism rather than a direct carbon tax. Certain energy-intensive industries must comply with emissions reporting and allowance purchasing requirements. While no domestic carbon tax exists independently, compliance costs associated with EU climate policies indirectly influence operational expenses for manufacturing, power generation, and heavy transport sectors.

Withholding Tax for Non-Residents

Non-resident entities or individuals receiving income sourced in Romania—including interest, royalties, technical service fees, and rental income—are subject to withholding taxes. Rates vary by income type: dividends (5%), interest (up to 16%), and royalties (16%). Double taxation treaties can reduce these rates for eligible taxpayers, reinforcing Romania’s integration into global business networks.

Tax Obligations for Representative Offices

Foreign companies maintaining representative offices in Romania cannot engage in profit-generating activities but must still fulfill annual reporting and tax obligations. Although these offices are generally not subject to corporate income tax due to lack of revenue, they are required to file financial statements and may be liable for payroll taxes and administrative levies related to staff compensation.

Building Tax

Owners of real estate in Romania must pay an annual building tax determined at the local level. The rate depends on the property’s use—residential, commercial, or industrial—as well as its location, size, and construction materials. Municipalities set their own valuation criteria, resulting in variation between urban and rural areas.

Land Tax

Landowners, whether individuals or legal entities, are required to pay an annual land tax based on factors such as land classification (agricultural, buildable, forested), geographic zone, and intended use. Local councils determine the exact rates, which tend to be modest but contribute to municipal budgets.

Vehicle Tax

All vehicles registered in Romania are subject to an annual motor vehicle tax calculated based on engine capacity, fuel type, and CO₂ emissions. Electric and hybrid vehicles benefit from partial or full exemptions in many municipalities, reflecting national incentives for sustainable mobility.

Tax on Construction Permits

A fee is imposed when issuing construction permits, licenses, or authorizations for development projects. In urban zones, this tax is structured into six tiers based on total floor area, promoting transparency and equitable contributions to infrastructure planning. Revenue supports urban development and public works programs.

Advertising Tax

Municipalities may levy an advertising tax ranging from 1% to 3% of the value of advertising contracts. This applies to outdoor signage, digital displays, print media, and broadcast promotions conducted within city limits. The discretionary nature of this tax means rates and enforcement differ significantly across jurisdictions.

Entertainment or Performance Tax

Cultural events, concerts, theatrical performances, and similar public shows may be subject to a performance tax. This can be assessed either as a percentage of ticket sales or as a fixed fee per event, depending on local regulations. The purpose is to fund community arts initiatives and manage public space usage.

Local Special Taxes

Romanian local councils have the authority to introduce special taxes tailored to regional needs. For example, some tourist-heavy areas impose temporary visitor levies or eco-fees on accommodations to support tourism infrastructure and environmental preservation. These measures reflect decentralized governance and adaptability to economic conditions.

Special Economic Zones and Investment Incentives

Legal Basis for Special Economic Areas

The foundation for Romania’s special economic zones (SEZs) includes legislation such as the Law on the Establishment and Operation of Industrial Parks and Government Decisions establishing inter-ministerial committees to streamline approvals for new developments. These frameworks aim to accelerate project implementation and attract foreign direct investment (FDI).

Overview of Incentive Programs

Romania offers robust incentives through designated industrial parks, technology hubs, and free trade zones. Benefits include corporate tax exemptions for up to 10 years, reduced land prices, simplified customs procedures, and access to EU-funded infrastructure. Notable examples include the Timișoara High-Tech Park and the Brașov Automotive Cluster, both of which have drawn multinational manufacturers and IT firms. Investors also benefit from skilled labor pools and favorable operating costs.

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