Romania IT Companies Taxes 2025. Romania has become one of the most attractive hubs for IT companies in Europe, not only due to its skilled workforce but also because of its favorable tax regime.
Here, we explore the tax incentives, obligations, and opportunities available to IT companies operating in Romania.
IT Corporate Taxes Overview 2025
Romania applies a corporate income tax rate of 16%, which is among the lowest in Europe. However, there are additional incentives for smaller IT firms and startups:
Micro-Enterprise IT Taxation
Companies with annual revenues of up to €500,000 can opt to pay tax on revenue rather than profit. The rates are:
- 1% of revenue if the company has at least one full-time employee.
- 3% of revenue if there are no employees.
This system significantly benefits IT startups, which often have high initial revenues but low profits due to substantial upfront investments.
R&D IT Taxes Deduction 2025
Companies investing in Research and Development (R&D) can benefit from an extra 50% deduction on eligible R&D expenses. Additionally, accelerated depreciation is allowed for equipment used in R&D activities, further reducing the taxable base.
Employee Tax Benefits for IT Professionals until 2025
A significant advantage for IT companies in Romania is the income tax exemption for software developers and other IT professionals. This exemption allows employees to save the 10% personal income tax, increasing their take-home pay and making Romania an attractive destination for tech talent.
Conditions for the Income Tax Exemption:
- The employee must hold a bachelor’s degree in a technical field or equivalent.
- They must work in roles directly related to software development (e.g., developer, QA engineer, software architect).
- The employer must generate at least €10,000 annual revenue per IT professional from software development services.
Despite the exemption, the following contributions still apply:
- Social Security Contribution: 25% of gross salary.
- Health Insurance Contribution: 10% of gross salary.
- Work Insurance Contribution: 2.25% (employer).
VAT Regulations for IT Companies 2025
Romania’s standard Value-Added Tax (VAT) rate is 19%. However, IT companies exporting services to clients outside Romania often qualify for VAT exemptions. This is particularly advantageous for companies working with international clients, allowing them to remain competitive in global markets.
For domestic transactions, the standard VAT rules apply unless specific exemptions are granted. IT companies should ensure proper compliance and maintain accurate documentation to avoid penalties.
Incentives for IT Startups and R&D Investments
Romania’s government actively supports innovation and entrepreneurship in the tech sector through various initiatives:
State Aid for R&D Projects
Companies engaging in R&D activities can apply for grants and subsidies. These programs often cover a significant portion of the project’s costs, including salaries, equipment, and operational expenses.
EU-Funded Programs
IT startups can access European Union funding through programs targeting innovation, digital transformation, and sustainability.
Tech Parks and Free Zones
IT companies located in tech parks or free zones may benefit from additional local tax reductions, such as lower property taxes and exemptions from certain local levies.
Key Considerations for IT Companies in 2025
Micro-Enterprise vs. Corporate Taxation:
IT startups often register as micro-enterprises to take advantage of lower tax rates on revenue. However, as the company grows and annual revenues exceed €500,000, the company must switch to the standard 16% corporate income tax system.
Compliance with Tax Exemptions:
While the income tax exemption for IT professionals is highly beneficial, companies must ensure compliance with all conditions to avoid penalties. Regular audits and accurate record-keeping are essential.
Double Tax Treaties:
Romania has signed numerous double tax treaties with other countries, reducing or eliminating double taxation on income earned abroad. IT companies with international clients should leverage these treaties to optimize their tax obligations.
IT Taxes Update: Important Change Starting 2025
Starting in 2025, the income tax exemption for IT professionals in Romania will be eliminated.
This means that IT employees will no longer benefit from the reduced tax rate they have enjoyed in previous years. Instead, their income will be subject to the same tax rates and deductions applied to employees in other industries.
This change could have a significant impact on take-home salaries for IT workers and might influence hiring practices, salary negotiations, and overall industry dynamics.
Companies in the IT sector may need to adjust their budgets and compensation packages to remain competitive in attracting top talent.
For employees, it’s important to understand how this change will affect your net income and plan your finances accordingly.
Employers should also prepare for potential shifts in workforce expectations and explore strategies to mitigate any negative effects, such as offering additional benefits or flexibility.
Stay tuned for further updates and detailed guidelines as they become available.