Romanian Taxation System
Taxation System in Romania
1.1 Personal income taxes
• The flat income tax rate is 16%.
• The fiscal year is the calendar year.
• A resident is a person who:
1- Is domiciled in Romania, or
2- Has his / her center of vital interests in Romania, or
3- Is present in Romania for more than 183 days in any 12 consecutive months interval ending in the concerned calendar year.
• Romanian citizens domiciled in Romania are taxed on their worldwide income (except for salaries received from abroad for work performed abroad).
• Previously resident Romanian domiciled citizens, who then become residents of a state which has not signed a Double Tax Treaty with Romania, continue to be taxable in Romania on their worldwide income for the calendar year in which the change of residence occurs, as well as for the next three calendar years.
• Romanian citizens not domiciled in Romania and foreign individuals that become tax resident in Romania are taxed during the first year of their stay only on income sourced in Romania.
• All tax resident individuals become taxable on their worldwide income starting with the year following that in which they started their tax residency (while respecting the provisions of the Double Tax Treaties, where applicable) – this is a change from previous years when there was a 3 year transition period. • Dividend income, income from prizes and some other specific sources of income are subject to a final 16% withholding tax at source.
• Capital gains from transfers of securities are taxed at a 16% rate.
• Income from the transfer of immovable property is taxed based on the holding period and value, and is subject to 1% - 3% tax.
• Interest income earned from deposits in Romania is subject to 16% withholding tax.
Types of income and corresponding tax rates For Residents:
• Salary is defined as income in cash and / or in kind...