Episode 5: What changes in 2023 as regards taxation in Romania?


Starting with 1st of January 2023, important tax changes have entered into force due to the adoption of the Government Ordinance no. 16/2022 amending and supplementing the Law no. 227/2015 on the Fiscal Code, repealing certain regulatory acts and other financial-fiscal measures (hereinafter referred to as “GO no. 16/2022“).

In this regard, here are the main changes set into force by GO no. 16/2022 provisions:


IMPORTANT CHANGES FOR MICRO-COMPANIES

The two main difference consists in:

  • lowering the income taxation level from 3% to 1%
  • raising the dividend taxation level from 5% to 8%

However, in order to benefit from the micro-company special tax regime, there are a few more conditions that have to be fulfilled, as follows:

  • the income threshold which a Company must not exceed for the duration of a year has been lowered from EUR 1,000,000 to EUR 500,000;
  • the Company must limit its revenue coming from business consultancy activities to 20% of the total income;
  • the Company must have at least one full time employee, which can also be the Sole Shareholder of the Company;
  • The Shareholders of a micro-company are not allowed to hold such position in more than 3 Companies which benefit from such tax regime, having a shares percentage higher than 25%.


Having in view the recent changes, the taxes paid for an yearly gross income of EUR 100,000 are as follows:


GROSS INCOME EXPENSES
1% INCOME TAX
8% DIVIDEND TAX
NET SALARY NET PROFIT TOTAL NET EARNINGS
EUR 100,000 EUR 3,000* EUR 1,000 EUR 7,680 EUR 4,200 EUR 88,320 EUR 92,520


* The expenses are calculated for the minimum monthly wage amounting to EUR 600 according with the Romanian legislation. 

Also, the abovementioned calculation have't included any additional expenses of the Company which once included will lower the amount taxed by the 8% dividend tax.


VAT

Considering that the standard VAT is 19%, there are certain goods and services which benefit of a reduced tax rate, as follows:

The reduced VAT rate of 9% is applied to:

  • Hospitality field including hotel sector as well as fields with similar purpose;
  • Provision of chemical fertilizers and chemical pesticides
  • Restaurant and catering services, except alcoholic and no-alcoholic beverages

The reduced VAT rate of 5% is applied to:

  • Supply of Houses, apartments, and condos having a value under RON 600,000, including the land beneath;