What is Romania’s Microenterprise Tax Regime?
Romania offers a favorable tax environment for small businesses through its microenterprise tax regime. This regime is designed to simplify tax compliance and reduce the fiscal burden, making it ideal for smaller businesses that meet certain revenue thresholds.
Who Qualifies for the Microenterprise Tax System?
To qualify as a microenterprise, a company must generate annual revenues under EUR 250,000. This threshold helps ensure that the benefits of the regime are targeted at SMEs, supporting their growth and easing their administrative burdens.
Microenterprise Tax Rates & Thresholds Explained
The tax rates under this regime are tiered based on the company’s revenue:
- 1% for those with revenues up to EUR 60,000.
- 3% for revenues between EUR 60,001 and EUR 250,000.
This tiered system incentivizes small businesses to grow while managing their tax liabilities efficiently.
Dividend Tax
A 10% tax rate applies to dividends distributed by the microenterprise to its shareholders. This rate is in line with broader fiscal policies aimed at ensuring equitable taxation across different business structures.
Benefits of the Microenterprise Tax System for Businesses
Key advantages include:
- Simplified accounting and financial reporting requirements.
- Reduced tax rates compared to the standard corporate tax regime, potentially improving cash flow and profitability for small businesses.
Operational Requirements
- Maintaining eligibility for the microenterprise regime requires not only staying within the revenue threshold but also fulfilling employment obligations. Every microenterprise must employ at least one full-time employee paid at least the minimum gross wage. This policy underscores the regime’s dual goals of simplifying taxation and encouraging employment.
Financial Considerations and Salary Calculations
Microenterprises must carefully manage their salary obligations, which include not only the gross salary but also associated taxes and contributions. Employers are responsible for a total of approximately 40% in taxes and contributions on top of the gross salary, currently valued at EUR 815, which covers social security, health insurance, and other mandatory deductions. This financial responsibility is an essential consideration in budgeting and operational planning for microenterprises.
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