Romania Micro Enterprise Threshold to be lowered to 500,000.

[orangekangaroo]

From 1 July 2022 onwards the limit of micro enterprises will be 500,000 euros instead of the 1,000,000 that is currently the limit. My worry is that they proposed even a limit of 100,000 euros.

https://www.romania-insider.com/smes-threshold-income-tax-romania-change

 

[Marzio]

Bad news for Romania, the micro company status is losing appeal.

 

[gab1]

Due to strong criticism, this measure has been 'postponed' with no new implementation date given‌ (link).

 

[orangekangaroo]

I got to love the community spirit‍ here on this forum. Thanks for the quick update I had not found yet.

I think it is good to keep continuity in rules with regards to business and it⁠ is great that the proposed threshold changes have been ditched. I want to build substance⁤ in Romania but with changes to thresholds and even lower thresholds being put forward I⁣ would have thrown that plan out of the window.

 

[i888]

For the moment the change is on hold, but if I'm not mistaken in that‌ Pnrr program there is something about changing the tax on micro.

Somebody pointed out that‍ crypto is taxed at 10% but micro could be as low as 1% on revenue⁠ and using micro to evade that 10% opens a door of future problems like actually⁤ paying 10%!

Hope that you do your due diligence!

 

[erad128]

The bill is expected to be endorsed by the end of the week.

• Romania’s Govt.‌ publishes fiscal changes bill
  
• proiecte-acte-normative - Acasa - MFP
  

The important bits, in English:

Goodbye Romania.

Lithuania has micro-enterprises up to 300k EUR turnover, no employment requirement, no︂ consulting/management restrictions.

Any other countries offer a similar micro-enterprise plans?

 

[gab1]

That's a 5% tax rate, what about tax on dividends (taking‍ profits)? Googled that it's 15%? Still doesn't pay off comparing to Romania? Am I missing⁠ something?

 

[marioIT]

I still have some papers from an accountant in Romania:
100k revenue:
- hiring yourself (gets‍ you into the 1% tax regime) at low legal salary
- paying social and health⁠ for it (capped)
- taking out everything else as dividends (5% tax)

after all you take home about 92k.
So about 8% tax rate ALL INCLUSIVE (social and⁤ healthcare included).
Rents is cheap, cost of living too...
I still prefer moving out of⁣ EU these days, but there are people that are starting out or can't move and⁢ IMHO for them is still a decent option to make clean money inside EU, even︀ at 500k.
Surely there could be business models where this kind of taxation doesn't work︁ (many expenses, low margins). In that case you can opt out and use the 16%︂ tax rate, but you need an accountant to know when it's worth to switch.

Sadly I heard they are pressured from EU for this regime and they will have to︃ reduce the turnover limit even more the following years.

 

[RealDude]

How much is it exactly for each point?

 

[erad128]

The part that ruins it for many people is the new 20% cap‌ on management/consulting cap. Businesses that can benefit from the Romanian micro-enterprise regime the most are‍ the management/consulting type, since they tend to have low expenses. But now that's incompatible with⁠ the micro-enterprise regime. Or I'm missing something? What do they mean by management/consulting? I imagine⁤ somebody offering their professional skills through a Romanian company fits into the "consulting" category at⁣ least.

You are right. Dividends are 15%. I thought it was possible to︁ use the EU parent-subsidiary trick to avoid that, but unfortunately the Lithuanian micro-enterprise regime is︂ only available for companies with individual shareholders, not corporate. In other words, there's no way︃ to avoid that extra 15%. The Lithuania micro-enterprise regime is not good at all.

 

[boomy]

Romania Micro company is max 500,000 euro
Lithuania Micro company is max 300,000 euro

Would it be possible to split your business activity into two entities? also would it be‌ possible to have more than one entity in each country? under the same name?

 

[erad128]

More bad news! According to the proposed bill, dividend income in Romania is now taxed 8%‌ 🙁

 

[marioIT]

yeah you're right, I've just read it. Dividends will be raised to 8%, that would‌ mean paying more than 10% all inclusive per year.
Supposing even only 100k of revenue,‍ it would means 10k in taxes...
10k is pretty much dubai/cyprus yearly fees territory.
Maybe still useful for broke EU sole traders wanting to escape their high tax Eu countries,⁠ before going fully offshore.

I'd still prefer cyprus and dubai than risking my life on⁤ every drive... Romanians drive like sh*t really. I've seen some crazy stuff there. Really there⁣ were places you could literally buy a valid driving license without driving experience smi(&%

These are⁢ just the fatalities, but if you would include the close calls it would be off︀ the charts!

 

[Mr Magoo]

where did you read this?

 

[marioIT]

https://www.romania-insider.com/ro-fiscal-changes-bill-published-jul-2022
https://mfinante.gov.ro/ro/acasa/tr...normative?mc_cid=fe60f64056&mc_eid=607bd7d763
also

 

[Mr Magoo]

seems like it will be effective qs of 2023 if approved

 

[AndyAresa]

it seems this arrangement would continue to work for e.g. those engaged in software development,‌ online marketing, content writing etc. as long as there is no management or consulting service.‍ and the overall overall burden of 10-12% for up to 500,000 Euro income looks ok.⁠ but of course one needs to factor in admin costs for accountants, living expenses. etc.⁤