The headline rates
Romania levies one of the EU's lower-headline personal tax burdens, codified in Title IV of Law 227/2015 (the Fiscal Code):
- Personal income tax — 10% flat on wages, self-employed income, rental income, and most other income categories.
- Dividend withholding tax — 8% on dividends distributed by Romanian companies, taxed at source. Increased from 5% in 2023.
- Social contributions — CAS (pension): 25% of gross wages. CASS (health): 10% of gross wages. Both withheld by the employer; both apply to certain non-wage income above thresholds.
The 10% flat rate is one of the simplest in the EU. The complexity sits in the social-contribution stack, where dividends, salaries, and self-employed income are treated differently.
Salary vs dividends — the owner-manager arithmetic
For an owner-manager of a microenterprise SRL (covered here), the practical question is how much to take as salary versus dividends. The two streams have different tax stacks:
- Salary — Employer pays gross. Employee CAS (25%) + CASS (10%) + PIT (10%) deducted at source. Net retention: ~57.5% of gross salary.
- Dividends — SRL pays the 1% (or 3%) microenterprise CIT on turnover, then distributes profit. Dividend tax of 8% withheld at source. Net retention: ~92% of distributed dividend.
The arithmetic strongly favours dividends — but Romanian law requires the 1% microenterprise rate to be paired with at least one full-time employment contract (the rule covered in our microenterprise piece). The minimum-wage employee is the qualifying condition; once met, the founder can take the rest of their compensation as dividends.
CAS and CASS on dividends
The most-misread rule in 2026: CAS (pension) and CASS (health) contributions are also payable on dividend income above income thresholds, even though dividends are not wages.
- CASS on dividends — owed at 10% if total non-wage income (dividends, rents, capital gains) exceeds 6 minimum gross wages annually (≈ €4,500 in 2026). Capped at 24 minimum wages (≈ €18,000).
- CAS on dividends — NOT owed on dividends. CAS applies only to wage income, self-employed activity, and certain professional contracts.
The practical effect: for an owner-manager taking dividends below ~€4,500/year, only the 8% dividend tax applies. Above that threshold, add 10% CASS to the dividend stream — bringing the effective rate to ~17% on the income above the threshold but capped at the 24-minimum-wage ceiling.
The minimum-salary trap and how to avoid it
Founders often elect a token minimum-wage salary for the qualifying employment contract that triggers the 1% CIT rate. The Romanian minimum wage in 2026 is approximately RON 3,700/month gross (≈ €750), and the all-in employer cost — gross salary plus employer contributions — is roughly €900–€950/month.
The cheapest qualifying employment is one full-time minimum-wage contract. The 1% saving on turnover almost always pays for itself.
The trap: some founders try to economise by part-time contracts or service contracts. Neither qualifies the SRL for the 1% rate — only the 3% rate applies, and the saving evaporates. The rule under Article 47 of the Fiscal Code is unambiguous: eight hours per day, five days per week, on a contract individual de muncă, with no exceptions.
Effective tax rate scenarios
Three realistic scenarios for an owner-manager at different turnover levels, all-in:
- €60,000 turnover, microenterprise SRL with one employee — 1% CIT (€600) + minimum-wage employment cost (€11,000) + 8% dividend tax on ~€48,000 distributed (€3,840) + CASS on dividends above threshold (~€1,800). All-in effective rate: ~28% of turnover.
- €90,000 turnover, microenterprise SRL with one employee — 1% CIT (€900) + employment cost (€11,000) + 8% dividend tax on ~€78,000 distributed (€6,240) + CASS on dividends (~€1,800). All-in effective rate: ~22% of turnover.
- €150,000 turnover (above threshold), standard 16% CIT, with employee — 16% CIT on ~€120,000 profit (€19,200) + employment cost (€11,000) + 8% dividend tax on ~€90,000 distributed (€7,200) + CASS on dividends capped (~€1,800). All-in effective rate: ~26% of turnover.
The standard-CIT scenario is genuinely close to the microenterprise scenario at this turnover band — the threshold transition is rarely the cliff founders fear. By the time it bites, margins have grown enough that 16% of profit is competitive with 1% of turnover.
CAS/CASS thresholds: the table that matters
The CASS-on-dividends mechanic is the most-misread line in the Romanian personal-tax stack. The thresholds are calibrated annually against the Romanian gross minimum wage, which sat at approximately RON 3,700 (≈ €750) per month in 2026. The mechanics:
- 6 gross minimum wages annually = roughly €4,500 — below this, no CASS is owed on dividends, capital gains, or other non-wage income. Below the threshold, the headline 8% dividend tax is the only personal tax applied.
- 12 gross minimum wages annually = roughly €9,000 — at this band, CASS at 10% applies to non-wage income above the 6-minimum-wage threshold but capped at this 12-wage ceiling. CASS owed at this level: (€9,000 − €4,500) × 10% = €450.
- 24 gross minimum wages annually = roughly €18,000 — the CASS ceiling. Once non-wage income exceeds this annual cap, no further CASS is owed regardless of how much additional dividend income flows. Maximum annual CASS on the dividend stream: €1,800.
Important nuance: the CASS calculation is based on total non-wage income (dividends + rental income + capital gains + certain professional contracts), not just dividends. Founders with rental income from a Romanian apartment in addition to SRL dividends need to aggregate the streams when projecting CASS. CAS (the 25% pension contribution) is not owed on dividends at any income level — it applies only to wage and self-employed income.
Worked examples for an owner-manager of a microenterprise SRL (full mechanics in our microenterprise piece):
€3,000 annual dividend
Below the 6-minimum-wage threshold. 8% dividend tax = €240. No CASS. Net = €2,760. Effective personal tax rate on dividends: 8.0%.
€10,000 annual dividend
Above the 6-minimum-wage threshold but within the 12-wage ceiling band. 8% dividend tax = €800. 10% CASS on (€10,000 − €4,500) = €550. Net = €8,650. Effective personal tax rate on dividends: 13.5%.
€25,000 annual dividend
Above the 24-minimum-wage CASS ceiling. 8% dividend tax = €2,000. CASS capped at the 24-wage ceiling = €1,800. Net = €21,200. Effective personal tax rate on dividends: 15.2%.
€80,000 annual dividend
Well above the CASS ceiling. 8% dividend tax = €6,400. CASS still capped at €1,800. Net = €71,800. Effective personal tax rate on dividends: 10.25% — the dilution of the cap reasserts the headline rate as dividend volumes scale.
The CASS line is real but capped. Founders distributing €25K+ annually pay the cap and stop worrying about the mechanic.
Treaty interaction with major jurisdictions
Romania's double-tax treaty network spans approximately 90 jurisdictions, broadly modelled on the OECD Model Convention. For non-Romanian-resident shareholders of a Romanian SRL, treaty interaction is the question that determines whether the 8% Romanian dividend withholding tax is the final tax or merely a credit against home-jurisdiction tax. Country-by-country picture for the most common founder scenarios in our discovery calls:
Germany
The Germany-Romania double-tax treaty (in force since 2003) caps withholding on outbound dividends at 5% for corporate shareholders holding ≥10% of the SRL, and at 15% for portfolio holders. Lower rates prevail over the domestic 8%, so a German parent company holding ≥10% receives Romanian dividends with 5% withholding rather than the full 8%. Personal-shareholder relocators who become Romanian tax-resident escape the treaty question entirely — they pay only the 8% domestic rate plus any CASS. Founders maintaining German tax residency while operating a Romanian SRL face § 8 AStG CFC attribution if the SRL accumulates undistributed low-tax profits, and the headline benefit of the regime is meaningfully eroded — covered in detail in our Germany exit-taxation playbook.
United States
The US-Romania treaty (in force since 1976, modernised 2024) caps Romanian withholding at 10% for portfolio holders. US tax-resident founders holding a Romanian SRL face the full federal income tax on distributed dividends as ordinary income, with the Romanian 10% (or 8% domestic) creditable under § 901. Subpart F and GILTI rules (Sections 951A and 952 of the Internal Revenue Code) attribute Romanian-source income to US founders even where undistributed. The US founder operating through a Romanian SRL while remaining US tax-resident typically gets little tax-arbitrage benefit; relocations that convert the founder to non-US-tax-resident status (full expatriation under § 877A) are the structurally clean route. We coordinate with US tax counsel for these cases.
United Arab Emirates
The UAE-Romania treaty (in force since 1996) provides for 3% Romanian withholding on dividends paid to UAE-resident shareholders. For UAE-resident founders operating a Romanian SRL, the all-in stack is: 1% microenterprise CIT + 3% Romanian withholding on distributions. The UAE applies 0% personal income tax on dividend income for individuals, so the 3% Romanian withholding is the final tax. Total all-in personal effective rate on Romanian-source dividends for UAE-resident founders: ~3.97% — among the lowest combined burdens available within an EU-incorporated structure.
United Kingdom
The UK-Romania treaty caps Romanian withholding at 5% for corporate shareholders holding ≥25% and at 15% for portfolio holders. Post-Brexit, the EU Parent–Subsidiary Directive (2011/96/EU) no longer applies to UK-Romania flows, so the treaty rate is the operative ceiling. UK-resident shareholders of a Romanian SRL face UK income tax on distributed dividends at the marginal rate (8.75%, 33.75%, or 39.35% depending on band), with the Romanian withholding creditable. The UK Statutory Residence Test is the gating question for UK-tax-resident founders considering Romanian relocation.
Israel
The Israel-Romania treaty (in force since 1998) caps withholding at 15% for portfolio holders and 5% for substantial corporate holdings. Israel applies Israeli CFC rules (חברה נשלטת זרה) where the Israeli founder retains tax residency, but the substantial-relocation route removes the founder from Israeli tax residency and the SRL operates outside Israeli reach. Romania has become an increasingly common second-passport target for Israeli founders post-2024.
The pattern across the major jurisdictions: treaty interaction is rarely the determining factor but often the difference between a clean structure and an audit headache. We confirm the specific treaty position for the founder's home jurisdiction during the discovery call, working from the most current treaty text (the EU and bilateral treaties have been actively renegotiated since 2020).
Treaty interaction for non-residents
Romania has a double-tax treaty network of approximately 90 jurisdictions, broadly modelled on the OECD Model Convention. For a non-resident shareholder of a Romanian SRL, treaty interaction is the question that determines whether the 8% Romanian dividend tax is the final tax or merely a credit against home-jurisdiction tax.
The general rule: most treaties reduce or eliminate Romanian withholding tax on outbound dividends, with a typical treaty rate of 5% for shareholders holding ≥25% and 10–15% for portfolio holders. The actual treaty rate prevails over the domestic 8% where it is lower; the higher of the two prevails where the treaty rate is higher.
For founders relocating to Romania who become Romanian tax-resident, treaty questions disappear and only the 8% domestic rate (plus any CASS) applies. For founders forming a Romanian SRL while remaining tax-resident in Germany, the UK, or the US, the home jurisdiction's CFC and dividend-taxation rules drive the effective rate. Specialist counsel on the home side is essential — the exit-taxation playbook covers the German angle in detail.
Frequently asked questions
Are dividends taxed twice — at the company and at the shareholder?
Yes, formally. The microenterprise SRL pays 1% (or 3%) CIT on turnover, then distributes profit, then 8% dividend tax is withheld at distribution. The all-in stack on €100 of revenue is roughly €0.92 of CIT + €7.93 of dividend tax = €8.85 total, or about 8.85% effective. This is dramatically below the equivalent stack in Germany (~50%), the UK (~32%), or the Netherlands (~37%).
Do I owe CAS or CASS contributions on dividend income?
CAS (pension) — no, dividends are not wage income. CASS (health) — yes, but only above 6 minimum gross wages of total non-wage income annually (≈ €4,500), capped at 24 minimum wages (≈ €18,000). The 10% CASS adds to the 8% dividend tax for income within that band, bringing the effective rate to ~17% on dividends above the threshold but only up to the cap.
Is the 10% personal income tax progressive or flat?
Flat. Romania abolished its progressive personal income tax structure in 2005 and has held the 10% flat rate since 2018. There is no upper bracket; income above any threshold is still taxed at 10%. Self-employed income has additional CAS/CASS rules but the headline PIT rate remains flat.
How does the all-in Romanian rate compare to Germany or the UK?
For owner-managers earning €60–€150K, the Romanian all-in effective rate runs 22–28% of turnover (microenterprise) or 26–32% (above the €100K threshold). The German equivalent — GmbH at ~30% all-in CIT, plus 25% Kapitalertragsteuer on dividends, plus solidarity surcharge — typically runs 45–55%. The UK Ltd at corporation tax + dividend tax runs 30–40%. Romania is one of the lowest all-in rates in the EU for owner-managers.
What if I am tax-resident in another country while owning the Romanian SRL?
Romania withholds 8% dividend tax at source. Your home jurisdiction's tax rules then determine whether that withholding is a final tax, a credit, or generates additional liability. Most double-tax treaties reduce the Romanian rate to 5% for ≥25% holders. Home-jurisdiction CFC rules may attribute Romanian profits to the resident shareholder regardless of distribution. Specialist home-jurisdiction counsel is essential.
Can I receive my entire compensation as dividends and skip salary?
In theory, but you forfeit the 1% microenterprise rate. The rate requires at least one full-time employment contract under Article 47 of the Fiscal Code. The cheapest qualifying employment is your own minimum-wage contract — the cost (~€11,000/year) is dwarfed by the saving on turnover above ~€20,000. Below that turnover, the 3% rate without an employee is sometimes the right answer.
Talk to us
The salary-versus-dividends question, the CAS/CASS thresholds, and treaty interaction with your home jurisdiction are usually solved in the first half of a discovery call. We model your specific turnover band, factor in the employee requirement for the 1% microenterprise rate, and project the all-in effective tax rate on your owner-manager compensation. Book a 30-minute call — written model, no commitment.
Related guides
- The 1% microenterprise tax — the corporate-tax half of the picture
- Romanian SRL formation: the complete 2026 guide — how the SRL is set up to optimise the tax stack
- Exit taxation from Germany to Romania — why German relocators particularly benefit from this stack
- Romanian SRL vs UK Ltd, GmbH, Dutch BV — comparing the four all-in rates
- Cost breakdown: what you actually pay to form — the formation cost in context of the tax saving