How to pay 1% taxes for a micro-enterprise in Romania
The micro-enterprise tax is computed as follows:
- 1% for micro-enterprises with at least one employee*
- 3% for micro-enterprises with no employees
* A reduced rate of 1% is applicable for the newly set up Romanian companies having at least one employee and being incorporated for a minimum period of 48 months and whose shareholders/associates did not hold participation titles in other legal entities. This reduced tax rate is only applied to the first 24 months since the registration date of the legal entity.
Condition regarding of the company
The micro-enterprise is a Romanian legal entity that cumulatively fulfills the following conditions, as of December 31 of the previous fiscal year:
- it made revenues that did not exceed the equivalent in lei of 1,000,000 euros. The exchange rate for determining the equivalent in euros is the one valid at the end of the financial year in which the revenues were registered;
- its share capital is owned by persons other than the state and the administrative-territorial units;
- it is not in dissolution, followed by liquidation, registered in the trade register or in the courts.
Condition for new establish companies
A newly established company cannot opt for a different tax regime than the micro-enterprise if on the date of registration with the Trade Register the above condition regarding the share capital is met.
Condition regarding of employee
The condition regarding the employee is considered fulfilled if the employment is performed within 60 days including from the date of registration of the respective legal person.
Employee means the person employed with an individual full-time employment contract.
Equivalent situations:
a) the micro-enterprise may have persons employed with an individual part-time contract if the part-time fractions provided for in them, summed up, represent the equivalent of a whole norm;
b) have concluded administration or mandate contracts, according to the law, if their remuneration is at least at the level of the minimum gross basic salary in the country guaranteed in the payment.
Changing the number of employees during the year
If during the fiscal year, the number of employees changes, the tax rates are applied accordingly, starting with the quarter in which the change was made. For micro-enterprises that have an employee and apply the tax rate of 1%, whose employment relationship ceases, the condition regarding the number of employees is considered fulfilled if a new employee is hired during the same quarter.
Microenterprises that do not have any employees, in the situation in which they employ an employee, in order to change the tax rates, must do so with an individual employment contract for an indefinite period or for a fixed period for a period of at least 12 months.
When can you change your tax regime and what alternatives do you have?
If, during a fiscal year, the micro-enterprise makes revenues in excess of 1,000,000 euros, it owes income tax, starting with the quarter in which this limit was exceeded.
The principle works and vice versa: the tax payers who fulfill the condition of classification as a micro-enterprise must also change their tax regime.
Declaration and payment of tax
The calculation and payment of the tax on the income of micro-enterprises is carried out quarterly, until the 25th of the month following the quarter for which the tax is calculated.
The related statement 100 is filed quarterly until the same date.
CONCLUSION
In conclusion, a Romanian legal company that cumulatively fulfills the following conditions is subject to the 1% tax payment:
- it made revenues that did not exceed the equivalent in lei of 1,000,000 euros. The exchange rate for determining the euro equivalent is the one valid at the close of the financial year in which the income was recorded;
- its share capital is owned by persons other than the state and the administrative-territorial units;
- it is not in dissolution, followed by liquidation, registered in the trade register or in the courts, according to the law.
- has at least one employee with full-time employement contract for an indefinite period.
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