Accounting Rules
Tax Year
The fiscal year begins on 1 January and ends on 31 December, although taxpayers can opt for a fiscal year corresponding to a financial accounting year. Romanian subsidiaries of foreign companies, which have a modified financial accounting year, can modify the date set for the completion of their financial statements only if the parent company adjusts its reporting date or is subject to reorganization procedures.
Accounting Standards
Romanian accounting standards follow the Fourth and Seventh EC directives and the IFRS.
Several laws are governing accounting principles and standards in Romania:
– The Ministry of Economy and Finance: Order No. 907/2005; Order No. 1752/2005; Order No. 1121/2006; Order No. 2001/2006, Order No. 3055/2009, Orders No .1286/2012 and No. 881/2012 on the Application of the IFRS
– National Ethics Code for the accounting profession
– Regulation No. 1606/2002 by the European Parliament Assembly of 19 June 2002 on the Application of International Accounting Standards
– The National Bank of Romania: Order 27/2010 on the Application of the IFRS
All domestic companies whose securities trade in a regulated market are required to use IFRS standards as adopted by the EU in their consolidated financial statements.
In case of listings by foreign companies, IFRS Standards are required in the consolidated financial statements, but if the standards of the foreign company’s home jurisdiction are deemed by the EU to be equivalent to IFRS Standards, the company may use its home standards.
IFRS Standards as adopted by the EU are required for all credit institutions (National Bank of Romania Order no. 27/2010) and all insurance companies (CSA Bulletin no. 202/2012), including those whose securities do not trade in public markets.
Accounting Regulation Bodies
The Body of Expert and Licensed Accountants of Romania
Accounting Reports
Bookkeeping records are divided into credit and debt; the latter being broken up into long-term and short-term debts.
The results give emphasis to the overall production and classify expenses by type.
SMEs have to prepare a simplified balance sheet, income statement and notes explaining the details of the financial report.
Companies which have exceeded the criteria included in law no. 1752/2005 over two consecutive years or more must prepare a comprehensive annual financial report (balance chart, income statement, account statements, changes in shareholders, explanatory notes to accompany the financial report).
Publication Requirements
Romanian businesses are asked, as well as foreign companies with corporate names registered in Romania, to organise and conduct their own accounts including the preparation of annual and periodic financial reports. The Romanian Ministry of Public Finance Law No. 1752/2005 stipulates that all companies prepare simplified financial statements (simplified balance sheet, income statement and notes explaining the details of the financial report) and that only companies which have exceeded the following criteria over two consecutive years or more must prepare a comprehensive annual financial report (balance chart, income statement, account statements, changes in shareholders, explanatory notes to accompany the financial report):
– Total balance: EUR 3,650,000
– Net annual sales figures: EUR 7,300,000
– Average number of employees during the accounting year: 50
The parent company is exempt from consolidating financial reports if, on the date of the financial statement, the entities that must be consolidated do not exceed two of the three following criteria:
– Total balance : EUR 17,250,000
– Sales figures : EUR 35,040,000
– Average number of employees during the accounting year: 250
Professional Accountancy Bodies
CECCAR, The Body of Expert and Licensed Accountants of Romania
CAFR, Chamber of Financial Auditors of Romania
Certification and Auditing
Audits must be conducted by financial auditors, who are legal persons or entities authorised by the Romanian Chamber of Financial Auditors. They must be conducted under the Standards of Auditing adopted by the Romanian Chamber of Financial Auditors, which are similar to international auditing standards. A few cases of exemption from audit requirements are subject to the audit carried out by financial censors:
– the annual financial reports prepared by businesses under the OMF law 1752/2005
– the annual financial reports prepared by insurance and reinsurance brokers who on the balance sheets do not exceed the limit of two of the criteria mentioned in the OMF law 1752/2005 (total balance: EUR 3,650,000; net annual sales figures: EUR 7,300,000; the average number of employees during the accounting year: 50).
You can contact an external auditor: KPMG, Deloitte, Ernst & Young and PricewaterhouseCoopers. Accounting News
Association of Bucharest Accountants (in Romanian)
European Accounting Journal
IAS Plus
Tax Rates
Nature of the Tax
Value Added Tax (VAT) – Taxa pe valoarea adaugata (local name)
Tax Rate
19%
Reduced Tax Rate
9% of orthopaedic products, medicines suitable for both human and animal use, food, books, newspapers, hotel rooms, etc.
5% of the supply of buildings, magazines, school books, admission to museums, zoos, cinemas, exhibitions and other similar cultural events, etc.
Exemptions include specific banking and financial operations, insurance and reinsurance, medical services, education, specific hiring, concession leasing or letting of immovable property, the sale of ‘old’ buildings, intra-community supplies of goods and export of goods.
Other Consumption Taxes
For more information on VAT rates according to the type of product, see the comparative table of VAT rates throughout the EU.
The following products are subject to harmonised excise duties: alcohol and alcoholic beverages, manufactured tobacco products, energy products (e.g. unleaded gasoline, diesel, gas, coal), and electricity. An excise tax is levied on luxury goods. Learn more about Service Providers in Romania on Globaltrade.net, the Directory for International Trade Service Providers.
Corporate Taxes
Company Tax
16%
Tax Rate for Foreign Companies
Foreign businesses that have a permanent establishment are subject to the same income taxes as a Romanian company. Representative offices of foreign businesses are subject to a fixed tax of EUR 4,400 for each fiscal year.
Capital Gains Taxation
Capital gains derived by resident and non-resident entities from the sale of shares and real property are included in overall profits and taxed at the general corporate tax rate of 16%. However, certain capital gains may be exempt. Capital gains from the sale/transfer of shares, as well as income arising from the evaluation or revaluation of shares held in a Romanian or foreign legal entity located in a country that has concluded a tax treaty with Romania, are exempt from tax if the recipient holds at least 10% of the share capital of the entity whose shares are sold/transferred or evaluated/re-evaluated for an uninterrupted period of at least one year.
Main Allowable Deductions and Tax Credits
As a general rule, expenses are deductible only if incurred for business purposes. Some of the deductible expenses specifically mentioned by the Romanian Fiscal Code include:
– marketing and advertising expenses
– R&D expenses that are not recognised as intangible assets for accounting purposes
– expenses incurred for environmental protection and resource conservation
– losses incurred when writing off client receivables (under certain conditions)
travel and accommodation expenses related to business; this also includes transportation of personnel to and from the workplace
– expenses incurred from professional training and development of employees
– expenses related to benefits granted to employees as equity instruments settled with cash, at the moment of the effective granting, if the benefits are subject to personal income tax (PIT)
– fines, interest, penalties, and other increased payments due under commercial contracts.
According to accounting rules, start-up expenses may be capitalised and depreciated over a maximum period of five years. However, according to the fiscal rules, start-up expenses should not be depreciated for tax purposes.
Companies are allowed to carry forward fiscal losses declared in the annual profit tax returns for a period of up to five years (for losses incurred prior to 2009) or seven years (for losses incurred after 2009), based on the FIFO method. No related adjustment for inflation is allowed. Carryback of losses is not available in Romania.
Other Corporate Taxes
Other taxes include:
– a building tax, which differentiates between residential buildings (tax rate between 0.08% and 0.2%, applicable to the taxable value as per the specific table provided by the law for individuals and the value resulting from the evaluation report for legal entities) and non-residential buildings (between 0.2% and 1.3%). The increased tax rate for building tax due by legal entities is 5%
– a land tax, established at a fixed amount per square metre, depending on the rank of the area where the land is located and the area or category of land use, in accordance with the classification made by the local council. Similar to the building tax, the land tax is paid annually in two equal instalments, by 31 March and 30 September. A 10% reduction is granted for full advance payment of this tax by 31 March
– stamp duties apply for judicial claims, issue of licences and certificates, and documentary transactions that require authentication
– payroll taxes: employers must contribute to mandatory employer’s social security contributions and withhold, on a monthly basis, the mandatory employee’s social security contributions and the income tax (16%) from the employee’s gross salary and wire the amounts to the Romanian tax authorities.
For certain activities (e.g. dangerous hazardous substances, activities that generate polluting emissions, etc.), companies have the obligation to declare and to pay (as the case may be) related contributions and taxes to the Environmental Fund.
Starting from 2017, economic operators in the tourism, hotel, restaurants, bars, and catering sector pay a specific tax, regardless of the size of the turnover and the level of profits. The tax is calculated according to the area of the business, the place where other variables take place.
Other Domestic Resources
Consult the Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison for Corporate Taxation

  Romania Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 14.0 17.6 10.6 9.0
Time Taken For Administrative Formalities (Hours) 161.0 238.0 175.0 218.0
Total Share of Taxes (% of Profit) 38.4 33.8 44.0 48.9

Source: Doing Business – Latest available data.

Individual Taxes
Tax Rate

Individual income tax Flat rate of 16%

Allowable Deductions and Tax Credits
For the primary workplace, the following amounts are currently to be deducted from the gross salary income when calculating the taxable income:
– individual mandatory social contributions due according to the provisions of the law and in line with the provisions of the European Union (EU) legislation or any social security agreement to which Romania is a party
– personal deductions calculated in accordance with the relevant legislation
– contributions to voluntary pension funds classified as such by the Financial Surveillance Authority, made to authorised entities established in member states of the EU or EEA, up to the RON equivalent of EUR 400/year/employee
– voluntary health insurance premiums and subscriptions to private healthcare facilities, according to the relevant legislation, borne by employees, up to the RON equivalent of EUR 400 annually
– trade union membership fees
For the salary income obtained in other cases, taxable income is assessed as the difference between the gross salary income and the individual mandatory social contributions, due according to the law, in line with the provisions of the EU or other social security agreements to which Romania is a party.
Individual taxpayers may direct up to 2% of their annual income tax for charitable purposes.
Special Expatriate Tax Regime
Romania has no special tax regulations for expatriates. However, where a foreign national resides in Romania for part of a year, they will only be considered subject to Romanian individual income tax for that portion of the year, paying according to a monthly tax bracket.
A taxpayer is defined as any individual who physically spends more than 183 days in Romania, over any 12-month period or who has developed a fixed base on Romanian soil. The taxpayer will only be subject to Romanian individual income tax for income coming from Romanian sources.
Double Taxation Treaties
Countries with Whom a Double Taxation Treaty Have Been Signed
National Fiscal Administration Agency
Withholding Taxes
Dividends: 5%, Interest: 16%, Royalties: 16%
These rates could be reduced according to specific fiscal agreements provisions.
Bilateral Agreement
Spain and Romania are bound by a double taxation treaty, signed on June 17th, 1980 in order to avoid double taxation.
Withholding tax rates where the tax treaty is: 10%/15% for dividends, 10% for interest and 10% for royalties.
Download the treaty in Spanish.
Sources of Fiscal Information
Tax Authorities
Romanian Ministry of Public Finances
National Agency for Fiscal Administration
Other Domestic Resources
Paying Taxes in Romania
Intellectual Property
National Organisations
The Official de Stat pentru Inventii si Marci (Office for Inventions and Trademarks) is the government agency that is responsible for the registration and protection of patents, trademarks and industrial designs. The Romanian Office for Copyright (ORDA) is the government agency that is responsible for the registration and protection of copyrights.
Regional Organisations
For the protection of patents: the European Patent Office
To control trademarks, designs and models: The Office for Harmonisation in the Internal Market International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention for the Protection of Intellectual Property
Membership to the TRIPS agreement – Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed
Patent

Patent Law No. 64/1991

validity period of  20 years Patent Cooperation Treaty (PCT)
Trademark

Law No. 84/1998 on trademarks and geographical indications

Validity period of 10 years

 

Trademark Law Treaty
Protocol Relating to the Madrid AgreementConcerning the International Registration of Marks
Design

Law on Design No. 49/1992 (Design Law)

5 years renewable
Copyright

Law No. 8 of March 14, 1996, on Copyright and Neighboring Rights (amended in 2006)

50 years Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models

Law on Design No. 49/1992 (Design Law)

Legal Framework
Independence of Justice
The judiciary is not completely independent in Romania. It is heavily influenced by the executive branch institutions of power.
Equal Treatment of Nationals and Foreigners
Foreign nationals cannot expect an impartial trial by the judicial system.
The Language of Justice
The judicial language used in the country is Romanian.
Recourse to an Interpreter
It is possible to be assisted by an interpreter.
Sources of the Law and Legal Similarities The main source of law in the country is the Constitution of 1991 (revised 2003). The judicial system is based on the French Civil Code (Code Napoleon). Because Romania belongs to the European Union, national law conforms to the requirements of Community legislation.
Checking National Laws Online
Drept Online (links to Romanian laws)
Lexadin (links to Romanian laws)
Learn more about Lawyers and Legal in Romania on Globaltrade.net, the Directory for International Trade Service Providers.
Standards
National Standards Organisations
ASRO, Standards Association of Romania
Integration in the International Standards Network
The Romanian Institute for Standardisation (Asociaţia de Standardizare din România – ASRO) is the organisation that is responsible for issuing certificates of standardisation.
Its goal is to harmonise Romanian standards with the standards of the European Union. ASRO is a full member of European Committee for Standardisation (CEN), of European Committee for Electrotechnical Standardisation (CENELEC), International Organisation for Standardisation (ISO) and the International Electrotechnical Commission (IEC); and an observer member of the European Telecommunications Standards Institute (ETSI).
Classification of Standards
Romania upholds national standards (SR), European standards (CE) and international standards (ISO).
Online Consultation of Standards
There is no on-line catalogue available. For more information consult the ASRO website.
Certification Organisations
RENAR Romanian Accreditation Association
Certification International Auditing and certification company
Business Practices
General Information U.S. Department of Trade, Guide to Doing Business in Romania
Commisceo Global, Guide to doing business in Romania
Opening Hours and Days
Offices are open on Monday through Friday from 9 a.m. to 6 p.m.
Banks are open on Monday through Friday from 9 a.m. to 1 p.m.
Stores are open on Monday through Friday from 9 a.m. to 6 p.m.
During the summer, some businesses will reduce staff, opening hours and/or are closed during the month of August.

Public Holidays

New Year’s Day 1 January
Saint Sylvester’s Day 2 January
Orthodox Easter the last Monday in April
May Day 1 May
Assumption 15 August
Christmas 25 December

Holiday Compensation
No

Periods When Companies Usually Close

New Year’s Day and the following workday 1 and 2 January
Orthodox Easter April/May – 3 days (Sunday and Easter Monday are vacation days; Tuesday is a part of the religious celebration, but it is not a national holiday)
Labor Day 1 May
National Day 1 December
Christmas 25 and 26 December

Source: https://en.portal.santandertrade.com/establish-overseas/romania/business-environment