Personal income tax

In Romania, personal income is taxed at a flat rate of 16%. As it can be seen from the graph bellow it is one of the lowest individual tax rates in EU, the EU average being 40%.


Corporate income tax

At the same time, the standard corporate income tax rate is 16%.  Also in this case, it is one of the lowest in Europe, above the average of 22% for EU.

Dividend income distributed as of 1 January 2016 is subject to 5% income tax. Starting 1st of January 2018 0% tax will be applied to the income from dividends distributed.

chart (1)

Fiscal incentives

The government is committed to reducing the tax burden. Starting with 1 January 2017, the VAT rate was lowered to 19%, and it will be followed by another drop to 18% in 2018. At the same time, the VAT rates on food items are 9% and on some forms of entertainment is 5%. It is planed from 1 March 2017 the extension of the 0% VAT for sale of housing, advertising and inputs in agriculture.

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 for employees working in the IT and R&D sector.

chart (2)