Romania · Tax regime
Romanian 10% Flat Tax and 2025-26 Fiscal Consolidation
The 10% flat personal income tax survived the Bolojan government's fiscal consolidation — it was the political red line. Much else did not: dividend tax tripled from 5% to 16% in three years, VAT rose to 21%, and the IT/construction/agriculture salary exemptions were abolished.
The 10% flat rate looks like Bulgaria's but behaves very differently. Dividends are 16% against Bulgaria's 5%, VAT is 21%, there is a 0.9% special tax on high-value property and vehicles that functions as a partial wealth tax, and CASS health contributions reach dividend income. Bulgaria is the materially better tax jurisdiction of the two and it is not close.
Qualifying routes
10% — survived consolidation
16% from 1 January 2026 under Law 141/2025, published 25 July 2025. Trajectory: 5% to 2022, 8% in 2023, 10% in 2025, 16% in 2026. Dividends distributed on interim 2025 financials keep 10%.
1% of revenue; threshold cut from EUR 250,000 to EUR 100,000 from 1 January 2026 and the 3% band abolished, but activity restrictions removed so any activity now qualifies subject to turnover, at least 1 employee and ownership tests
The facts
- Total landed cost
- n/a — a regime, not a purchase
- Physical presence
- Romanian nationals domiciled in Romania are taxed on worldwide income, with an exception for foreign-source salary; non-residents on Romanian-source income only
- Family
- individuals taxed separately
- Permanent residency
- n/a
- Citizenship
- n/a
- Language test
- n/a
- Dual citizenship
- Permitted
- Requirements
- Romanian tax residency
- DIVIDENDS TRIPLED in three years, from 5% to 16% effective 1 January 2026. Any planning built on Romania's old 5% or 8% dividend rate is obsolete.
- THE 0.9% SPECIAL TAX on residential property over RON 2,500,000 and vehicles over RON 375,000 (charged on the excess) is a de facto partial wealth tax and directly relevant to UHNW families. It is rarely mentioned in country comparisons.
- The 0% income tax for software developers is GONE — abolished from January 2025, along with the construction and agriculture exemptions. This was Romania's single best-known tax feature.
- VAT rose from 19% to 21% on 1 August 2025 and the reduced 5% and 9% rates were consolidated into a single 11%.
- Romania has been under an Excessive Deficit Procedure since 2020 with the correction deadline extended to 2030. Further consolidation is likely and the 10% flat rate is a standing target for future packages.
- Romania fails every euro convergence criterion per the ECB's 2026 Convergence Report of 24 June 2026 — inflation considerably above reference, deficit above 3%, long-term rates at 6.7% against a 5.1% reference, no ERM II participation and incomplete legal convergence. Euro adoption is realistically a 2030s question. Do not model convergence.
- CASS health contributions at 10% reach dividend income for threshold purposes, triggered at combined income of RON 24,300 in 2026.