In Romania, individuals have the opportunity to establish PFA-type businesses and individual enterprises, both of which are subject to specific taxation systems. If you are considering starting such a venture, we highly recommend taking advantage of the services provided by our team of knowledgeable Romanian accountants. Our dedicated specialists possess comprehensive expertise regarding the intricacies of the self-employed tax system in Romania. This enables them to assist you not only with understanding the requirements but also with the registration process with relevant state institutions.
By consulting with our accounting professionals, you can ensure that your obligations regarding self-employed tax in Romania are managed effectively and efficiently.
Which tax system applies to sole traders in Romania?
The charging system for sole traders is different from the one imposed on Romanian companies. Here’s what it means:
- PFA (Authorized Individual) taxation is done in a real system or at the income rate;
- The 10% net income tax is applied. This income results from the difference between gross income and deductible expenses;
- Also, 10% is applied in case of income tax, at a predetermined amount;
- To be able to apply the tax mentioned above, the income record will be kept;
- The income norm is applied according to the CAEN code.
CAEN stands for “Clasificarea Activitatilor din Economia Naționala” (Classification of Economic Activities in Romania). It is a system used to classify and categorize economic activities in Romania. The CAEN code is a numerical code assigned to each specific economic activity. This code is used for various administrative purposes, including business registration, statistical analysis, taxation, and other regulatory purposes. It helps classify businesses and activities into specific sectors and sub-sectors, making it easier for authorities and organizations to identify and categorize economic activities.
We remind you that our accountants in Romania can offer you specialized help if you want to set up a sole trader. We can take care of the formalities related to the registration for the payment of taxes.
Other contributions for PFA in Romania
Pension and health contributions are other things to consider for a PFA. The taxes are calculated according to the total annual income if it exceeds the minimum annual salary for one year. Here are the contributions to be paid:
- Sole proprietors in Romania are required to pay social contributions, which amount to 25% of their income. However, the base on which these contributions are calculated depends on the level of income. If the income of a sole proprietor exceeds 12 times the minimum income threshold, which is currently set at RON 432,000, they are obligated to pay social security contributions;
- Health – 10% of the minimum threshold of RON 216,000. The same tax applies to those with incomes below this threshold, with the mention that it will be calculated for half of the minimum threshold.
You can find out more about the self-employed tax in Romania if you talk to our accountants in Romania.
Payment of fees for a sole trader in Romania
The Single Declaration offered by ANAF is the necessary document for the calculation of the taxes to be paid. A sole trader must complete this statement for the previous year and must submit it by May 25 of the current year.
Our accountants in Romania recommend paying taxes annually, to avoid penalties or payments for several years. But to have a clear record of the taxes you have to pay; we advise you to collaborate with our accounting experts. You can discuss more about self-employed tax in Romania with us.
What kind of income is taxable for a sole trader?
Individuals who register income from intellectual property rights, self-employment, or association with legal entities must pay health and pension contributions. It is also valid for those with incomes obtained from investments or the transfer of the use of goods. Registration in the social health insurance system can be done with the help of our Romanian accountants. We have experience in self-employed tax in Romania matters.
How can our accountants help a sole trader in Romania?
Our accountants in Romania can provide valuable assistance to sole traders in several ways, for instance:
- Bookkeeping and record-keeping: Our accountants can help sole traders maintain accurate and organized financial records. They can handle tasks such as recording income and expenses, reconciling bank statements, and maintaining a general ledger. This ensures that the business’ financial transactions are properly documented, making tax compliance and financial reporting more streamlined;
- Financial statements preparation: The experts at our accounting law firm can prepare financial statements, including income statements, balance sheets, and cash flow statements, for the Romanian sole trader’s business. These statements provide a clear overview of the business’s financial performance, which is crucial for making informed decisions and meeting reporting requirements;
- Tax compliance: Our specialists can assist sole traders in meeting their tax compliance obligations. They can prepare and file tax returns, ensuring that all necessary forms and documentation are submitted accurately and on time. They can also guide the applicable tax laws, deductions, credits, and exemptions, helping sole traders optimize their tax position and minimize tax liabilities;
- Business consulting: Our accountants with a strong understanding of the business environment in Romania can offer valuable consulting services to sole traders. They can provide advice on business planning, budgeting, financial forecasting, and growth strategies. Our Romanian consultants can also offer guidance on legal and regulatory requirements related to the business’s operations.
Our accountants play a vital role in helping sole traders manage their financial affairs, ensuring compliance with regulations, providing financial insights, and enabling informed decision-making. We are a team with experience in the field of taxation and we can offer advice for self-employed tax for individuals in Romania. Our clients can rely on professionalism, efficiency, and transparency when working with us. As legislation is constantly changing, it is important to have an accountant with you to keep you up to date with legislative developments. This way you have the guarantee that sole trader in Romania aligns with the tax rules in this country.
Tax benefits for sole traders in Romania
In Romania, sole traders, also known as sole proprietors or individual entrepreneurs, are subject to certain tax benefits. Here are some of the common tax incentives available for sole traders in Romania:
- Microenterprise tax regime: A tax option for sole traders is the Microenterprise Tax Regime. This regime applies to businesses with an annual turnover of up to a specific threshold of RON 24,659. Under this regime, sole traders are subject to a flat tax rate of 1% on their turnover;
- VAT exemption: Sole traders with an annual turnover below a certain threshold (currently RON 300,000) are exempt from charging and collecting Value Added Tax (VAT) on their products or services;
- Deductible expenses: Sole traders can deduct business-related expenses, such as rent, utilities, office supplies, and professional services, from their taxable income. These deductions can help reduce the overall tax liability.
It is important to note that tax laws and regulations can change, so it is advisable to consult with our tax advisor in Romania for up-to-date information.
We invite you to contact our accounting firm in Romania and find out all the details about the self-employed tax for persons in Romania.