Tax rate

10 % – standard rate;

From 2023 onward, personal allowances consist of both a base personal deduction and an additional personal deduction, provided up to the limit of the monthly taxable salary.

The base personal deduction is granted to employees with a gross monthly income up to RON 2,000 above the minimum gross salary (max RON 5,300, app. EUR 1,060). The base personal deduction fluctuates from 0% to 45%, depending on both the salary level and the number of persons under employee's care.

Additional personal deductions are available monthly, in 2024, as follows: (i) 15% of the minimum gross salary per economy (RON 3,300, i.e., EUR 660 per month) - for employees under 26 years old, earning a maximum salary of RON 5,300; (ii) RON 100 for each child up to 18 years old enrolled in an educational system, granted to one of the parents.

In addition to the above, the facility whereby the amount of RON 200/month is not included in the computation base for income tax and mandatory social contributions, in the case of employees who meet the conditions set out in Emergency Ordinance no. 115/2023, is also to be maintained during 2024.

Certain types of salary benefits are non-taxable up to a monthly threshold of 33% on the base salary: cost of food provided by employers, voluntary pension contributions (capped at EUR 400/year), voluntary medical insurance or subscription (capped at EUR 400/year).

In addition to the above, starting January 1, 2024, the exemption of up to RON 400, which was previously non-taxable for employees working remotely, will be removed. Moreover, the non-taxable limit for sports and fitness subscriptions paid for by the employer for its own employees will be reduced, as of 1 January 2024, to EUR 100 per year for each person, provided that this value falls within the monthly limit of a maximum of 33% of the base salary (the value of subscriptions paid for by employees can be deducted from the salary tax base up to 100 euros annually).

Adding to the previous point, amounts paid by an employer or directly by employees for the placement of employees' children in early education units, in keeping with the law, within the limit established by the employer but not exceeding RON 1,500/month for each child, are to be included in the monthly limit of a maximum of 33% of the base salary (applicable as of 1 January 2024).

Certain types of salary income are exempt: salary income of software developers, constructions workers, agricultural workers and employees in R&D; allowances etc.

As of November 2023, several amendments have come into effect:

• Employees working in the information technology (IT) will receive an income tax exemption limited to a monthly salary or salary-assimilated amount of RON 10,000. However, any portion of the gross monthly salary or salary-equivalent income exceeding RON 10,000 will not qualify for this tax exemption. Moreover, this tax incentive will be accessible only until December 31, 2028.
• The income tax exemption for salary income in IT, construction, agriculture, and food industries are restricted to the primary workplace under a single employment agreement or specific authorized work arrangements.
• Employees in the agriculture, construction, food, and IT sectors will benefit from a reduced pension contribution (CAS) rate aligned with the Pillar II Pension contribution set by Law 41/2004, rising to 4.75% starting January 1, 2024. Employees maintain the option to contribute to Pillar II.
• The 10% health insurance contribution obligation is reinstated for construction, agriculture, and food industry employees, regardless of income levels.

Starting in January 2024, employees earning salary income in the fields of computer software development, construction, agriculture and the food industry may choose to opt out of the payment of contributions to privately managed pension funds starting with income earned during the month following submission of an application to this end, with the rules regarding the option/withdrawal from  contribution payments being established by the employer in the form of internal regulations or other internal documents.

Moreover, starting in January 2024, the 10% health insurance contribution will apply to the nominal value of meal vouchers and holiday vouchers provided by employers to their employees. Additionally, tourist or treatment services offered by employers to their employees and their families cannot qualify for exemptions from income tax and social contributions if these employees also receive holiday vouchers.

Special tax rates

8% for dividend income
1% or 3% for income from the transfer of immovable property
Tax rates of 3% - 40% for gambling income, depending on income thresholds

Tax liability

Tax assessment period

Calendar year

Income categories

Income from:

1. Employment
2. Self-employment (no personal allowance)
3. Transfer of rights to use assets
4. Pensions in excess of RON 2,000 (approx. EUR 400).
5. Agriculture, forestry and fish farming
6. Prizes and income obtained from gambling activities
7. Investments
8. Real estate transactions
9. Intellectual property
10. Other (including income earned from the transfer of cryptocurrencies)

Accounting

Generally, cash-based accounting as provided in Accounting Act. Freelancers may also opt to apply the double-entry bookkeeping system.

Loss set-offs

Within individual income categories.

Loss carryback

Not possible

Loss carryforward

Losses from self-employment, transfer of rights to use assets, agricultural activities, forestry and fish farming can be carried forward and set off for 7 years.
There is no limit to the amounts that may be carried forward and set off.

Operating expenses

Expenses incurred to procure, secure or maintain business income.

Tax allowable expenses

Operating expenses, interest

Lump sum option

Lump sum deduction of 40% of income from intellectual property rights (including income from creating monumental art works).

For certain types of self-employment commercial activities (e.g. supply of certain IT services), the tax may be computed based on an annual lump sum income, as provided by law.

Motor vehicles

Depreciation over 4–6 years.

Acquisition cost: no ceiling.

Expenses (including non-deductible VAT) incurred for vehicles that have a maximum weight of 3,500 kg and no more than nine seats, that are used exclusively for business purposes or for certain types of activities (e.g. emergency services, cab services, driving schools etc.) are fully deductible for income tax purposes. Other- wise, these expenses are only 50 % deductible for income tax purposes.

Social insurance

Deductible for salary income.

Withholding tax

Generally 10% income tax (exception: 8% for dividends).