Romania is the new leader in European tax planning

A 1% tax on turnover makes Romania a leader in the tax sphere even compared to Cyprus, Malta, and Luxembourg. Romania has established a special tax regime for "micro-enterprises": now companies with an annual income of up to 1 million euros apply a reduced tax rate.

The peculiarity of taxation of small businesses is the payment of tax on total gross income instead of the standard income tax.
In this case, the taxpayer has no obligation to notify the local tax service or obtain permission from it to apply this regime. The rate from 1% to 3% may vary depending on the number of employees.

Small businesses in Romania have the same legal status as standard limited liability companies, but with a different tax regime.

At the same time, the standard income tax rate in Romania is also quite low and amounts to 16% (for comparison: Cyprus - 12.5%, Luxembourg - 24.94%, Malta - up to 35%).

The Romanian company may also be of interest because of:

• "non-offshore" European image of the jurisdiction;
• easy opening of an account with a local bank;
• ease of compliance, both in opening and payments;
• absence of currency control. Operations in USD and EUR are possible;
• fast company registration (about two weeks);
• cost-effective budget for the establishment of a real presence in the country;
• large number of tax agreements.

In addition, due to the lack of practice of using the nominal service, the country has not yet been affected by the introduction of the Fifth EU Directive, under which EU countries universally introduce registers of beneficiaries.

According to Marina Zaverukha, lawyer at GSL Law & Consulting, "this tax regime for small businesses is currently the most attractive in Europe and may be of interest, for example, for companies engaged in services or software development (with low expenditures).