Romania Tax Guide: 1% of Turnover, and the Conditions Agencies Skip

Romania sits 62nd out of 217 in our world ranking, with a FiScore of 6.7 out of 10. A European Union member, 10% income tax, and a regime for small structures with no equivalent in the single market.

It is that regime that brings freelances in, not the general rate. It is also the regime most heavily marketed in English, usually with its two conditions left out.

The rates

Ten per cent on income, with no brackets and no progressivity. That alone is among the gentlest scales in the Union.

Watch the dividend rate. It was raised to 16% on 1 January 2026. Many pages still quote the old figure, and the difference is not small when you are modelling a company distribution.

The real subject: the 1% micro-company

Here is what separates Romania from Bulgaria or Hungary.

A company meeting the micro-enterprise conditions is taxed at 1% of its turnover, not on its profit.

One per cent of turnover. On EUR 80,000 invoiced, the corporate tax is EUR 800.

Two points that decide whether this works for you, and they are the two the incorporation agencies tend to skip.

It is turnover that is taxed, not profit. A low-margin activity loses under this regime; a high-margin service business gains enormously. Run your own numbers rather than the headline.

And the obligation to employ at least one person is real, on a Romanian contract, with the payroll costs that go with it. That is a recurring cost, and it is what turns a paper company into a real one. If an agency describes the regime without mentioning it, that tells you what kind of agency it is.

The regime has been tightened several times in recent years, with the ceiling lowered. It remains one of the most generous in Europe for a freelance invoicing services.

What Romania adds beyond the rate

It is in the European Union. Free movement, freedom to provide services across the single market, directives applicable. That is what Andorra, Switzerland and Montenegro cannot offer.

Costs are very low. Bucharest and Cluj cost a fraction of Paris or London, including for accounting and legal services.

There is a real technology industry, especially in Cluj and Timisoara, with a pool of engineers and fluent English.

If you are not an EU citizen

A British or American reader does not simply arrive. You need a residence permit, and forming a company is a common route, but it is a route with conditions rather than a formality.

Note the interaction with the micro-company regime: you need a Romanian employment contract in the company anyway. For many arrivals that employee ends up being themselves, which is workable but is a matter for a local accountant rather than a template.

The drawbacks

VAT at 21% is far from gentle, and it has gone up.

The micro regime moves often. Ceiling lowered, conditions added: building a ten-year plan on it would be unwise.

The administration is slow and corruption remains a subject, regularly flagged by European indicators.

Substance matters here as everywhere. A Romanian company run from London is a British company as far as HMRC is concerned.

So, who is Romania for?

• A freelance invoicing services under EUR 100,000: the best regime in the Union, and not close to being matched.
• An entrepreneur wanting to stay in the single market: yes, with Bulgaria as the alternative to compare.
• A low-margin, high-turnover activity: no. 1% of turnover would cost you more than 16% of profit.
• Someone chasing a Mediterranean lifestyle: not the subject here.

The full table of Romanian rates is on our Romania page, and the comparison tool puts it next to anywhere else. Before deciding anything, read how to actually leave.

Sources

The Romanian tax administration, PwC Tax Summaries and firms established in Bucharest, verified in August 2026. An error reported to us gets fixed.

This page informs, it does not advise. Before deciding anything, talk to a professional who will look at your situation, as our terms of use set out.