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 salary exemptions for IT, construction and agriculture were abolished.
The 10% flat rate looks like Bulgaria's, but it behaves very differently. Dividends run at 16% against Bulgaria's 5%, VAT sits at 21%, and a 0.9% special tax on high-value property and vehicles works as a partial wealth tax. CASS health contributions reach dividend income too. 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. The trajectory: 5% to 2022, 8% in 2023, 10% in 2025, 16% in 2026. Dividends distributed on interim 2025 financials keep the 10% rate.
1% of revenue. The threshold drops from EUR 250,000 to EUR 100,000 from 1 January 2026, and the 3% band is abolished. Activity restrictions have been removed, though, so any activity now qualifies, subject to turnover, at least 1 employee and ownership tests.
The facts
- Total landed cost
- n/a. This is a regime, not a purchase.
- Route type
- Tax regime, not a visa
- Physical presence
- Romanian nationals domiciled in Romania are taxed on worldwide income, with an exception for foreign-source salary. Non-residents are taxed on Romanian-source income only.
- Family
- Individuals are taxed separately
- Permanent residency
- Not applicable
- Citizenship
- Not applicable
- Language test
- Not applicable
- Dual citizenship
- Permitted
- Requirements
- Romanian tax residency
- Dividend tax 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 now obsolete.
- The 0.9% special tax on residential property over RON 2,500,000 and vehicles over RON 375,000 is charged on the excess. It functions as a de facto partial wealth tax and matters directly to UHNW families. Country comparisons rarely mention it.
- The 0% income tax for software developers is gone. It was 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. 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 now extended to 2030. Further consolidation is likely, and the 10% flat rate remains a standing target for future packages.
- Romania fails every euro convergence criterion, per the ECB's 2026 Convergence Report of 24 June 2026. Inflation runs considerably above the reference level, the deficit sits above 3%, and long term rates are at 6.7% against a 5.1% reference. Romania has no ERM II participation and incomplete legal convergence. Euro adoption is realistically a question for the 2030s. 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.