Income tax for micro-enterprises starting January 1, 2024

 Through Law 296/2023, the Government made significant changes to this taxation regime, as follows:

 

If in 2023 there was only one tax rate, namely 1%, from 2024 there will be two tax rates, respectively:

 ∘ 1% for micro-enterprises that achieve revenues that do not exceed 60,000 euros inclusive and that do not carry out the activities mentioned below;

∘ 3% for micro-enterprises that:

 ▪ achieve incomes over 60,000 euros and up to 500,000 euros; or

▪ carries out main or secondary activities, corresponding to CAEN codes:

 • 5821 – Computer game editing activities,

• 5829 – Editing activities of other software products,

• 6201 – Custom software creation activities (customer-oriented software),

• 6209 - Other information technology service activities, 5510 - Hotels and other similar accommodation facilities,

• 5520 – Accommodation facilities for holidays and short periods,

• 5530 – Caravan parks, campsites and camps,

• 5590 – Other accommodation services,

• 5610 – Restaurants,

• 5621 – Food activities (catering) for events,

• 5629 – Other food services n.e.c.,

• 5630 – Bars and other activities serving drinks,

• 6910 – Legal activities – only for companies with legal personality that are not fiscally transparent entities, established by lawyers according to the law,

• 8621 – General medical assistance activities,

• 8622 – Specialized medical assistance activities, 8623 – Dental assistance activities,

• 8690 – Other activities related to human health.

 ∘ The fiscal limits in euros mentioned above are checked based on the cumulative recorded income since the beginning of the fiscal year. The exchange rate for determining the euro equivalent is the one valid at the end of the previous financial year.

 ∘ In order to meet the conditions regarding the level of income provided for in the Fiscal Code, art. 47 para. (1) lit. c) and f), in art. 51 para. (1), (41) and (42) and to art. 52 para. (1) the same elements that constitute the taxable base provided for in art. 53.

  Other changes regarding this tax regime are the following:

 ∘ If, during the fiscal year, the revenues made by a micro-enterprise exceed the ceiling of 60,000 euros or the micro-enterprise starts to carry out one or more of the activities specified above, then, starting from the quarter in which such situations are recorded, applicable is the tax rate of 3%;

 ∘ If, during the fiscal year, a micro-enterprise no longer carries out one or more of the activities presented above and the revenues do not exceed the level of 60,000 euros, starting from the quarter in which such situations are recorded, the applicable tax rate is 1%;

 ∘ In the event that Romanian legal entities carrying out activities corresponding to the CAEN codes presented above also obtain income from other activities, apart from those corresponding to these CAEN codes, the 3% tax rate is also applied to the income from these other activities;

 ∘ Micro-enterprises that become profit tax payers as a result of not fulfilling the conditions provided for in art. 47 or as a result of the exercise of the option, communicates to the competent fiscal bodies the exit from the taxation system on the incomes of micro-enterprises, by March 31 of the following fiscal year inclusive.

Call me for company creation or tax issues or text me + 32 478 331 799

Romania's Top 10 Advantages for Investment

 With its advantageous position in Europe, Romania has emerged as a favored destination for investors looking to put their money into the country. This location allows for convenient entry into multiple markets, including the EU, CIS, and Middle East, making it an attractive option. Furthermore, Romania boasts a robust environment for potential investments, making it a promising choice for interested parties.

Ranked 55th globally on the Ease of Doing Business index, Romania boasts a favorable business climate. Moreover, it provides investment perks, including tax exemptions and financial aid, to entice "investitori in Romania". The nation's substantial investments in infrastructure further bolster its appeal as a prime logistical center, making it an advantageous destination for international investors seeking expansion and advancement in a secure and democratic environment.

Contact us and we will help you turn your aspirations into actuality. You may contact us via +32 478 331 799 and request for Freddy Jacobs. Alternatively, you can also connect with us on Linkedin.

A Brief Look at Investment Opportunities in Romania

The investment environment in Romania is impacted by a variety of crucial factors that contribute to its appeal to foreign investors. One significant element is the allowance for non-residents to purchase and sell apartments, although non-EU citizens are restricted to buying land through Romanian companies. This creates a relatively unrestricted real estate market with a consistent rise in residential property values. Moreover, Romania's advantageous position in Europe, membership in the EU, and close proximity to major markets like Central Asia and the Near East all add to its attractiveness. Additionally, the country presents numerous opportunities in sectors such as IT, automotive, and energy, with the support of a skilled and cost-effective workforce.

Possible Investment Areas and Prospects in Romania:

With its affordable costs and vast pool of skilled individuals specializing in IT and telecommunications, Romania has become a prominent center for IT innovation and digital solutions.

The country of Romania is in a favorable position for investing in renewable and traditional forms of energy, as it holds the top rank among EU countries for energy independence.

Real Estate: While there are restrictions on selling land to non-European Union citizens, the growing real estate market in Bucharest presents attractive investment opportunities.

Government Policies and Economic Indicators in Romania:

The Romanian government guarantees fair treatment for all investors, regardless of whether they are domestic or foreign, and without any bias towards their capital origins. This, combined with a manageable public debt and a promising rate of growth, solidifies Romania as a stable and appealing destination for potential investments.

The government's commitment to creating a conducive environment for investment is evident in its careful implementation of financial strategies and focus on digitization.

The skilled workforce and abundant natural resources in Romania make it a highly desirable location for foreign investment. This combination of factors strengthens its potential as an appealing destination for investment from abroad.

Benefits of Investing in Romania

Investing in Romania offers a multitude of benefits that not only foster the growth of the investor, but also promote the overall economic development of the nation. These advantages include:

1. Tax Incentives and Path to Citizenship: Small business owners can benefit from favorable tax rates and the chance to acquire Romanian citizenship within a period of four to eight years. By obtaining permanent residency permits, there is no requirement for yearly extensions, and relatives can also apply for long-term residency permits.

2. The Impact of Foreign Investments on Economic Development and Employment: In Romania, the role of foreign investments is crucial in promoting economic growth. As a result, this contributes to the generation of employment opportunities, ultimately reducing unemployment rates and stimulating the growth of local economies.

3. Technological Advancements and their Impact on the Market:

The use of cutting-edge technology and innovative techniques has increased productivity in the Romanian market.

The potential for Romanian companies to broaden their presence in international markets can lead to an increase in profits and a greater share of the market.

Improvements in infrastructure, such as transportation systems and utilities, play a crucial role in strengthening the efficiency and service delivery of the country.

4. The Environment of a Competitive Market:

The increase in foreign entities results in increased competition in the market, resulting in better quality products, lower prices, and improved services for consumers.

Employees in the area receive advanced training and knowledge by taking advantage of educational and training opportunities provided by international investors.

The attractiveness of Romania as an investment destination is strengthened by a variety of factors, which offer distinct benefits to global investors and also support the nation's social and economic advancement.

Challenges and Considerations for Investors in Romania

Investors should be aware of multiple challenges and factors that need to be taken into account when deciding to invest in Romania.

A few instances of these include:

The interdependence between the economy and government of Romania is evident, as the government holds a significant role in the economy through its ownership of state enterprises. This can greatly affect the dynamics of the market. In addition, the management instability within these enterprises since 2014 has posed challenges in efficient planning and investment.

Government regulations and bureaucracy are common challenges that investors often encounter. These include burdensome paperwork, an unpredictable legislative system, and corruption, all of which can impede business operations. Moreover, the continuous modifications to laws without consultation from the private sector only contribute to the lack of clarity and stability.

In Romania, businesses encounter obstacles related to both infrastructure and workforce. The insufficient infrastructure can lead to higher expenses and impede efficiency, while the shortage of labor, particularly in the northern and western parts of the country, poses challenges in terms of recruitment and retention. Moreover, environmental issues, including inadequate waste management practices and difficulties with air pollution and preservation of natural habitats, further complicate potential investment opportunities.

For individuals who are considering investment opportunities in Romania, it is essential to conduct thorough due diligence and acquire a thorough understanding of the local environment.

Steps for Investing in Romania

For foreign investors who are interested in setting up their business in Romania, it is essential to understand the steps required to establish a presence. The following is a simplified guide:

1. Obtaining a Residency Permit:

Non-permanent residents have the chance to acquire a one-year residence permit by investing in a Romanian company. This investment provides them with the opportunity to engage in long-term business endeavors.

2. Priorities for Investing in Romania:

The Immigration General Inspectorate has a proclivity towards prioritizing investments in the fields of real estate and technology, uncovering promising and profitable opportunities for global investors.

3. Prolongation of Residence Permit:

The Agency for Foreign Investments in Romania evaluates the impact of the investment in order to renew the residence permit and sustain the ongoing business activities.

Section 4: Exclusions

Citizens of the United States, Canada, Japan, and Switzerland are given special considerations when it comes to certain requirements such as minimum investment, job creation quotas, and proof of financial stability. This makes the process of entering the country smoother for these individuals.

5. Documentation:

Crucial documents include proof of company ownership or stock ownership, evidence of legal residence, documentation of financial security, verification of social health insurance, a medical report, and a receipt for the fee for the residence permit.

This comprehensive guide streamlines the process of investing in Romania and highlights the government's positive stance towards foreign investments, thereby creating numerous global business prospects.

Commonly Asked Questions

What Are the Factors that Make Romania a Worthwhile Investment?

The presence of a proficient workforce, ample natural resources, strategic geographical location for effective transportation, and its status as a prominent market in Central and Eastern Europe, all contribute to Romania being a convincing option for investment. This combination of factors has made Romania a progressively appealing destination for potential investors.

Who are the main foreign investors in Romania?

Romania has been a recipient of significant foreign investment, with Germany leading the way. Following closely behind is Austria with a 10.7% share, while France, Italy, the United States, and the Netherlands hold stakes of 9.7%, 7.8%, 6.7%, and 5.3%, respectively. These countries have recognized the opportunities and possibilities in Romania, prompting them to make substantial investments across various sectors of its economy.

What is the Most Profitable Industry in Romania?

Romania has gained recognition for its extremely lucrative IT and software sector. The main factor contributing to this achievement is the country's educational system, which places a high emphasis on technical skills. In fact, Romania holds the 6th position worldwide for the largest number of certified IT professionals per capita. The profitability of this industry serves as evidence of Romania's abundant technical talent and favorable business environment.

Aspects Examined by Investors in Assessing a Nation for Investment

Investors often analyze the economic and fiscal foundations of a country when considering it for potential investments. Key aspects that are regularly evaluated include the Gross Domestic Product (GDP), inflation rates, and the Consumer Price Index (CPI). These indicators provide valuable insights into the country's economic stability and credibility, aiding investors in making informed decisions.

Reach out to us to turn your aspirations into actuality - our team is here to support you. Reach out to Freddy Jacobs at +32 478 331 799, or connect with us on Linkedin.

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