Small Business Tax Rates in Romania
11% Micro-Enterprise Rate & Eligibility
- The preferential 1% rate — applied to revenue, not profit — is only available to companies with an annual turnover under €100,000 and at least one full-time employee.
- The previous two-tier system (1% with an employee / 3% without one) was eliminated on January 1, 2026 under OUG 89/2025; there is now a single flat 1% rate, and having at least one employee is mandatory for everyone. The same amendment also cut the turnover threshold from €250,000 to €100,000.
- This must be verified based on current regulations and individual circumstances.
216% Corporate Profit Tax
- For companies exceeding the €100,000 turnover threshold, the 16% rate applies from the same fiscal quarter.
3Other Taxes
- Value Added Tax (VAT) for companies exceeding the designated threshold.
- Employer's social security contributions if employing staff.
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VAT — Since August 2025
- The standard VAT rate rose from 19% to 21% (effective August 1, 2025, under Law 141/2025); the former reduced rates (5% and 9%) were also unified into a single 11% rate.
- The mandatory VAT registration threshold rose to RON 395,000 effective September 1, 2025 (roughly €78,000–80,000 at today's market exchange rate).
Dividend Withholding Tax — Since January 2026
- Effective January 1, 2026, the withholding tax rate on dividends paid to individual shareholders (both resident and non-resident) rose from 10% to 16% (under the same Law 141/2025).
- Romanian-resident shareholders also owe a 10% health-insurance contribution (CASS) on top of the 16% tax, but only once total annual non-salary income (dividends + interest + other) reaches 6× the gross minimum wage; non-resident shareholders are not subject to CASS.
🇮🇷 Iran-Specific: The Reduced Dividend Rate Under the Iran-Romania Tax Treaty
The Iran-Romania double taxation treaty (signed 2001, ratified by Law 279/2002 — the same treaty already covered on the Work section for salary income) caps dividend withholding tax at 10% under its own Article 10, below Romania's new 16% domestic rate. In practice, an Iranian tax resident receiving dividends from their Romanian company can claim the reduced 10% treaty rate instead of 16% by submitting a Certificate of Tax Residency from Iranian authorities to Romania's tax agency (ANAF). Note: this is a distinct legal tax entitlement, separate from the practical difficulty of actually transferring the money (covered on the "Currency Exchange" page) — being legally entitled to the lower rate doesn't make the physical transfer any easier.
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Frequently Asked Questions
Can I pay 1% tax with 0 employees?
No, under current laws, having at least one full-time employee is mandatory to qualify for the 1% micro-enterprise rate.
What happens if revenue exceeds €100k?
Your company will automatically exit the micro-enterprise regime and become subject to the 16% tax on net corporate profit.
What's the current dividend tax rate?
Generally 16% since January 1, 2026 (previously 10%); however, Iranian tax residents can use the 10% treaty rate instead, with a Certificate of Tax Residency, under the bilateral tax treaty.
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This guide is part of the "Business & Investment" collection.
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