Romania - Fiscal changes coming soon - Need Plan B

[theotheo]

Hello all

Romanian government is currently trying to enforce a fiscal reform that will remove Romania as good destination for freelancers and they want it operating in September 2023
For a microcompany (LLC)
The Dividend Tax 8% goes to 10%
The threshold for 1%CIT tax will be limited to 60K EUR, anything above will be taxed as 3% (with limit of 500k eur for staying a micro)
If your profit is over 30%, you ll be taxed 16%

In total, the tax burden goes to 9% into 29% nearly (without social contributions counted)

I am currently living and will be tax resident of Romania and I am looking for your advice for a solution to stop the bleeding
- I can leave to another country or I can stay
- I need to stay in EU
- I can delay payments from my client

Thank you

 

[Marzio]

theotheo said:
If your profit is over 30%, you ll be taxed 16%
Click to expand...

This basically removes Romania from the list of attractive jurisdictions because consultants and IT freelancers have very little costs.

The only alternative that comes to mind is Poland with 9% CIT for a turnover up to €2 mln

 

[theotheo]

Well Poland has also Dividend tax ?

 

[Marzio]

Do you work in IT by chance?

 

[theotheo]

yes !

 

[Marzio]

Then you could potentially pay 5% total tax by leveraging Polish IP Box

 

[theotheo]

Unfortunately im not in developing or coding but thanks

 

[Mr Gus]

theotheo said:
Hello all

Romanian government is currently trying to enforce a fiscal reform that will remove Romania as good destination for freelancers and they want it operating in September 2023
For a microcompany (LLC)
The Dividend Tax 8% goes to 10%
The threshold for 1%CIT tax will be limited to 60K EUR, anything above will be taxed as 3% (with limit of 500k eur for staying a micro)
If your profit is over 30%, you ll be taxed 16%

In total, the tax burden goes to 9% into 29% nearly (without social contributions counted)

I am currently living and will be tax resident of Romania and I am looking for your advice for a solution to stop the bleeding
- I can leave to another country or I can stay
- I need to stay in EU
- I can delay payments from my client

Thank you
Click to expand...

Bulgaria is 7.5% income tax with some social security taxes.

 

[Marzio]

Uhm, then second best option would be freelancer in Bulgaria, total tax rate is 7.5% but i'm not sure if there's turnover limit.

 

[theotheo]

7.5 is from 10%PIT x 25% deduction expanse

But I think there are some social contributions or other taxes .

What about Cyprus or Malta ?

 

[Mr Gus]

theotheo said:
7.5 is from 10%PIT x 25% deduction expanse

But I think there are some social contributions or other taxes .

What about Cyprus or Malta ?
Click to expand...

Yes there are socials but they are capped.

Malta is 5% effective but requires at least 2 companies. Cyprus is 12.5% + 2.25%.

But do you really want to live in Malta or Cyprus? Bulgaria is probably your best option and comes closest to Romania.

 

[12345]

ehh thats how it looks like in these crappy jurisdictions, you settle there, meet people and find out about everything, law etc. or even learn language and then you need to move out... really annoying. Their shitty governments cannot be trusted at all.

 

[Konstanz]

All low tax initiatives are going away. UAE and now Romania

 

[theotheo]

Cyprus looks promising but somehow I red that it cost thousand a year of fees
From the document i can read, Bulgaria Social contributions capped at 6k EUR annually + 1K accouunting annually and then 7.5% PIT which let me take out 88%; is there other fees to consider ? (The language looks awful to learn)

 

[Mr Magoo]

yes, the net in the EU is closing. You can run but you cant hide. It is just a matter of time before all EU countries have similar tax laws. I left Romania a year ago when the first set of reforms was implemented. No surprise that they do another round of that now. Bulgaria may work for now but dont be surprised that within a year they also implement new stricter tax rules. Better move out of the EU IMO.

 

[Mr Gus]

You can consider Italy as well, 5% in the south of Italy for freelancers.

 

[theotheo]

I am stuck in EU and few countries because my field involves GDPR agreement

Bulgaria seems to be the next choice, any recommendations for self registering services company ?

Italy : Isn't it 90% reduction + big big social contribution and swearing to live 2 year in that place ?

 

[Marshal]

I agree that Bulgaria in your case makes a good place. Additionally living expenses are one of the lowest among EU countries. Even in Sofia you can find a nice fully furnished 2 bedroom apartment for less than 600 EUR per month.

 

[JohnLocke]

Marzio said:
This basically removes Romania from the list of attractive jurisdictions because consultants and IT freelancers have very little costs.

The only alternative that comes to mind is Poland with 9% CIT for a turnover up to €2 mln
Click to expand...

I totally agree, it is like some people predicted for the near future. Corona was just a tool to lift taxes also in countries with low or no taxes 🙁

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[Expatas]

Yeah.....Bulgaria is a good place to be.....