by Vlad Cuc
The legislation pertaining Romanian micro companies has changed again few years ago, this time bringing excellent conditions for entrepreneurs. Our team of lawyers in Romania can assist local and foreign businessmen with in-depth legal advice regarding the registration of a Romanian micro business and can also advise on the set of the documents that have to be prepared during the incorporation of this type of company.
Romanian micro companies benefit from advantageous taxes, applicable for companies with turnover below EUR 1 million, as follows: a corporate tax rate of 3% or even 1% in certain conditions and 5% dividend tax. The setup of a micro company might prove to be a very good idea for those investors looking to start their Romanian business at a smaller scale, at least at the beginning of their business activity.
The previous conditions which had been related to the number of employees have been abolished and now any Romanian SRL company can be registered as a micro company through the same procedure. Basically the current conditions apply to the micro company and its taxation is of 3% on its income (when the company is registered without any employees), or 1% tax rate if the company has at least one employee. Our law firm in Romania can assist with more details on other tax regulations addressed to this business structure.
The corporate tax for Romanian Micro Companies is obligatory, thus those micro companies (per the conditions above) paying profit tax will have to pay 3% income tax, beginning with the next fiscal year. A newly-established Romanian legal entity is obliged to pay micro-company tax starting with the first fiscal year, if the conditions presented above are met at the moment of its registration with the Trade Register.
The Romanian micro companies will no longer apply this level of taxation starting with the fiscal year following the one during which they no longer fulfil one of the conditions foreseen and detailed above. The companies activating in sectors such as banking, insurance, capital market (with the exceptions of companies which activate as intermediaries in these areas), gambling, betting, casinos, cannot register as micro company, as per the Romanian law.
The new Fiscal Code, which entered into force in Romania starting with 1st of January 2021, has brought several modifications that are of interest for parties that carry out a business activity as a micro-company or those who want to register a micro-company. The new Tax Code has abolished several tax measures that could be seen as discriminatory for micro-companies, compared to the companies which are liable to the standard corporate tax (on matters related to paying taxes and social contributions, investments or dividends).
Registering your company as a Romanian micro company could simply mean less taxes for small investors in Romania. These types of Romanian companies will pay 3% taxable income instead of the regular 16% profit tax. Romanian legal entities that have opted for this system of taxation until February 1, 2013 retain this tax regime for 2013. Our team of Romanian lawyers can present more information on the characteristics of a micro company in Romania, and investors are invited to contact our Romanian attorneys for an extended presentation.