Romania operates a uniform taxation rate of 16% applicable to individual tax, profit tax and capital gains tax.
If operating a company, profit and profit from capital gains taxation is charged at 16% on the basis of you operating a permanent establishment.
The residual profits are taxed further depending on the circumstances.
Individuals resident in Romania will pay a further 16% on any profits distributed as dividends.
Foreign nationals may expect a withholding tax on any distribution e.g. dividends, though this is usually offset by a double taxation treaty. Dividends paid to E.U. companies are exempt from withholding tax in Romania but not to individual shareholders (subject to relevant taxation treaties).
If your resident country charges tax rates significantly higher than the 16% Romanian rate, you might consider establishing an 'on shore' holding company with full transparency in your taxation planning. A number of tax treaties exempt further taxation on dividends when repatriated.
Special rules apply to the disposal of shares in a company as opposed to the assets.
Special rules apply to the ability to offset loan interest for tax deduction depending on the ratio of loan capital to share capital. In any event, foreign currency denominated loans are subject to a maximum interest offset of 7%.
Foreign nationals may not own land in Romania until 2012 (some exceptions apply) and are forced to operate via a Private Limited Company (S.R.L.). The profit tax on disposal is taxed at 16% and subsequent distributions are further taxed in your resident country.
Most foreign nationals fund their companies by providing minimal share capital and the major part in loans. The result is that gains on the revaluation of the foreign denominated loans attract taxation. Losses on the revaluation tend not to be allowable for taxation offset due to the 'thin capitalization' rules.
