Romania

Click to download PDF:  As per 1 January 2014, 20152016, 2017

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate Flat tax rate: 10 %.
Tax period Calendar year
Tax residency / Domicile according to domestic law Domicile in Romania.
“Centre of vital interests” in Romania.
Present for more than 183 days during any consecutive 12 months period in Romania.
Tax registration At arrival within 30 days from the date the assignment started and a Questionnaire must be submitted within 30 days after 183 days effectively spend in Romania
At departure, a similar Questionnaire must be submitted no later than 30 days before the departure.
Employment income definition Remuneration in cash and other taxable benefits (e.g. cost of living allowance, home leave allowance, bonus).
Examples of tax exemption Employment income obtained from non-Romanian employers in respect of work performed outside of Romania.
Per-diem (within certain limits), business related travel, relocation and housing cost.
Not more than EUR 400 employer contribution to qualifying private pension fund.
Not more than EUR 400 for medical services provided in the form of a subscription.
Employment income derived by individuals whose object of activity includes creation of computer programs (i.e. the quality of the Employer should be observed).
Employment income obtained by individuals performing Research & Development activity.
Specific expatriate concession Taxed on worldwide income starting with the first day when the expatriate is considered tax resident.
Income of board members Treated as employment income (executive as well as non-executive).
Tax returns Local employment agreement: the employer is liable for the monthly tax compliance, depending on the other sources of income an annual Individual Income Tax return may need to be filed.
Foreign employment agreement, monthly individual tax compliance, depending on the other sources of income an annual Individual Income Tax return may need to be filed.
Tax payments If monthly in general before the 25th of the following month.
TAX TREATIES
Employment income / income from board members Art 15/16 Model OECD Tax Convention
INTERNATIONAL SOCIAL SECURITY
Cross border employments EU Regulation No 883/2004 and EU regulation No. 1408 / 71, as well as totalization agreements with Albania, Russian Federation, FYROM, Algeria, Moldova, Canada, Israel, Turkey, South Korea, North Korea and Libya.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable.
Social Security Cost as % from gross salary and absolute amounts Due by the employee: social security contribution/pension 25%, health insurance contribution 10%.
Due by the employer: insurance contribution for work 2.25%.
IMMIGRATION
Work permit EU and  EEA nationals do not need a work permit to work in Romania, if certain conditions are met a notification may need to be filed.
Non-EU and EEA nationals need to obtain a work permit before obtaining a residency permit.
Visa EU and EEA nationals do not need a visa to enter into Romania although their duration of stay may be subject to restrictions.
Non-EU and EEA nationals may need a visa, which needs to be obtained before their arrival in Romania and should correspond to the purpose of their visit and can be obtained in general from the Romanian diplomatic mission in their country of residency and/or nationality.
Residency permits / registration certificate EU and EEA nationals need to apply for a registration certificate within 30 days before staying in Romania for more than 3 months.

Non EU and EEA nationals in general should apply for a residency permit before staying more than 90 days within 180 days preceding their entry/exit on Romanian territory.

Driving license EU nationals at renewal would need to obtain a driving license in the country where they are resident and can use their current driving license as long as it remains valid.
Non-EU nationals who stay for more than 90 days should obtain a Romanian driving license.
STOCK OPTION PLAN Tax treatment depends upon the conditions of the Stock Option Plan.
ARTICLE 15 OF THE OECD MODEL
183 days Any fraction of day in which the individual is present in Romania is counted as a day of presence for the calculation of the 183 days. In computation of the 183 days are included the arrival day, departure day and any other day in which is present in Romania.
Notion of employer In general, as per the Romanian legislation, the employer is considered a natural or legal person who ca employ labor force based, on an individual employment contract. The legal person may conclude individual employment contracts, as an employer, from the moment of acquiring legal personality.
Existence of a permanent establishment  See criteria from the tax treaty.According to the Romanian tax legislation, a permanent establishment of a non-resident entity is a place where a non-resident carries on fully or partially its activity, whether directly, or through a dependent agent.
Edwin Warmerdam
Partner, Head of Tax Advisory Services – Bucharest, Romania
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