Business Tax in Romania 2026: How to Pay as Little as 1%

Looking for a low-tax base inside the European Union? Business tax in Romania can drop as low as 1% on turnover, thanks to the country’s micro-enterprise regime. That’s a striking number for an onshore EU jurisdiction, and it’s why Romania keeps attracting entrepreneurs, freelancers, and remote-first businesses.

This guide breaks down how the system actually works in 2026: who qualifies, what changed this year, and how to set up your company the right way.

Why Entrepreneurs Choose Romania

Romania offers a rare combination for founders. You get full EU membership, some of Europe’s fastest internet, and a skilled, English-speaking workforce, all alongside genuinely low taxation for small and mid-sized businesses.

Romania joined the Schengen Area’s air and sea borders in 2025. This means residents and business owners here now enjoy much smoother travel across the wider Schengen zone, not just visa-free access to Romania itself.

Personal income tax sits at a flat 10%, one of the lowest rates in the EU. Combine that with the micro-enterprise regime, and you get a genuinely competitive setup for founders who want to stay onshore and compliant.

The Micro-Enterprise Regime: Romania’s 1% Tax Rate

Here’s the headline benefit. Romanian companies that qualify as “micro-enterprises” pay tax on turnover, not profit, at a flat rate of just 1%.

To qualify in 2026, your company must:

• Generate annual revenue under €100,000 (this threshold dropped from €250,000 at the start of 2026, so check it carefully before you plan around it)
• Employ at least one full-time staff member
• Avoid restricted sectors, including banking, insurance, capital markets, and gambling

Cross the €100,000 threshold, and your company automatically shifts to the standard corporate income tax regime — a flat 16% on net profits. That’s still moderate by European standards, but it’s a real jump from 1%.

On top of your company’s tax bill, plan for a dividend tax when you take profits out personally. Current rates sit around 8%, so factor this into your overall tax planning rather than looking at the 1% figure in isolation.

Setting Up Your Company: The Romanian SRL

Most entrepreneurs form a Societate cu Răspundere Limitată (SRL) — Romania’s equivalent of a limited liability company. It’s the standard vehicle for the micro-enterprise regime, and non-residents can set one up.

Here’s the general process:

1. Choose and reserve your company name with the National Trade Register.
2. Prepare your incorporation documents, including your Articles of Association.
3. Register your company and obtain your tax identification number through the relevant authorities.
4. Open a Romanian business bank account, providing proof of your registered address and company documents.
5. Register your staff and set up payroll once you hire your required employee.

New SRLs formed from 2026 onward need a minimum share capital of around €100 (RON 500). That’s a low barrier to entry. But watch this closely as your business grows: if your annual turnover passes roughly €80,000 (RON 400,000), you’ll need to raise your share capital to RON 5,000 within the following financial year. Miss that deadline, and a court can order your company’s dissolution, so don’t treat it as optional.

Expect the full setup process to take a few days to a few weeks, depending on how quickly you gather documents and secure appointments.

What About VAT?

VAT trips up a lot of foreign founders, so plan for it early. Romania’s standard VAT rate sits at 19%, with reduced rates of 9% and 5% for certain goods and services.

Below a turnover of around €60,000 (RON 300,000), many small businesses can opt for VAT exemption entirely, simplifying your accounting significantly. Above that threshold, or once you start invoicing certain EU clients, VAT registration becomes mandatory.

If you invoice other EU businesses, the reverse-charge mechanism often lets you issue invoices without adding VAT, provided you hold an intra-community VAT number. This is common for freelancers and agencies serving international B2B clients.

VAT rules shift based on your client base, product type, and turnover, so get tailored guidance before you finalize your invoicing setup.

Limits and Restrictions to Know

The 1% regime sounds simple, but it comes with real guardrails:

• No more than 20% of your annual turnover can come from management or consulting income. Heavy consulting or service work for a single client can push you out of eligibility.
• Certain sectors — banking, reinsurance, capital markets, gambling, and oil and gas — can’t use the micro-enterprise regime at all.
• You must maintain at least one full-time employee to access the lowest 1% rate.

The regime works best for businesses with real products or services, healthy margins, and a genuine intention to build a team in Romania, not just a mailbox company.

Can You Get Residency Through Your Romanian Business?

Yes. Setting up and investing in a Romanian company can also open the door to residency, not just a favorable tax rate.

Non-EU nationals typically need to invest a meaningful amount into their company, often cited around €150,000, alongside creating local jobs, before applying for a business residency permit. Requirements depend on your specific business plan and investment structure, so get your case assessed individually rather than relying on a single fixed number.

Keep in mind: residency and tax residency are two different things. Spend enough time in Romania to become a tax resident, and Romania will tax your worldwide income, not just your Romanian company’s profits. Controlled foreign company (CFC) rules can also bring foreign companies you own into Romania’s tax net if you become a tax resident. Romania is not a personal tax haven for offshore structures — it’s a legitimate, moderately-taxed EU jurisdiction, and it’s best treated that way.

Is Romania Right for Your Business?

Romania suits founders who want:

• A real, compliant EU company structure, not an offshore shell
• Low turnover-based taxation while revenue stays under the micro-enterprise threshold
• Access to a skilled, affordable, English-speaking workforce
• A credible base for eventual residency or long-term relocation

It’s less suited to businesses planning rapid growth well past €100,000 in annual revenue, since you’ll shift to the standard 16% corporate rate at that point. Heavy consulting-only businesses should also plan carefully around the 20% consulting-income cap.

Frequently Asked Questions

What is the lowest business tax rate in Romania? Qualifying micro-enterprises pay 1% tax on turnover, provided they employ at least one full-time staff member and stay under the €100,000 annual revenue threshold.

Do I need to live in Romania to open a company there? No. Non-residents can incorporate a Romanian SRL, though you’ll need to handle registration, banking, and tax formalities, ideally with local legal support.

What happens if my company earns more than €100,000 a year? You’ll move to the standard corporate income tax regime, a flat 16% on net profits, from the point you cross the threshold.

Is VAT registration mandatory for small businesses in Romania? Not always. Businesses under roughly €60,000 in turnover can often opt for VAT exemption, though this depends on your activity and client base.

Can a Romanian company help me get residency? Yes, through the business residency route, which generally requires a qualifying investment and local job creation. Requirements vary by case.

Get Personalized Guidance on Your Romanian Company

Tax rules shift often, and eligibility depends heavily on your specific business plan, revenue, and structure. A free eligibility check can confirm whether the micro-enterprise regime and business residency route fit your situation, before you commit time or capital.

Ready to explore setting up in Romania? Check Your Eligibility today and get a response within 24 hours.