Romania Corporate Income Tax (CIT)

This guide provides a detailed overview of Romania corporate income tax (CIT) regime, including rates, residency, taxable income calculation, filing procedures, deductions, and other relevant aspects.

Romania Corporate Income Tax Rates:

Romania Corporate Income Tax – General Information:

Tax Period, Returns, and Assessment:

Deductions and Carry-Forward of Losses:

Research and Development (R&D) Incentives:

Tax Exemptions for Reinvested Profit:

Withholding Tax (WHT):

Dividends Paid:

Interest and Royalties:

Anti-Avoidance Rules:

Controlled Foreign Company (CFC) Rules

Romania has implemented Controlled Foreign Company (CFC) rules to prevent companies from shifting profits to low-tax jurisdictions. A Romanian taxpayer who controls a foreign company may be subject to Romanian Corporate Income Tax on the undistributed income of that foreign company under certain conditions:

Transfer Pricing:

Transactions between related parties (both domestic and involving non-resident entities) are subject to transfer pricing rules. These rules ensure transactions are conducted at arm’s length, meaning the prices are comparable to what unrelated parties would charge in similar circumstances. Failure to comply with arm’s length principles can lead to adjustments to taxable income by the Romanian tax authorities.

International Aspects – Double Tax Treaties:

Romania has concluded double tax treaties (DTTs) with numerous countries. These treaties aim to eliminate double taxation and prevent tax evasion. When a DTT exists, the most favorable tax rate (between the domestic Romanian rate and the treaty rate) applies. To claim treaty benefits, the non-resident recipient of income may need to provide a tax residence certificate to the Romanian payer.

Conclusion about Romania Corporate Income Tax:

Understanding Romania corporate income tax regime is crucial for businesses operating in the country. This guide provides a comprehensive overview, but it’s always recommended to consult with a Romanian tax professional for specific advice and to stay updated on any changes to the tax laws.

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