🇷🇴 Tax residency in Romania

You're probably wondering if you're accidentally becoming a Romanian tax resident. Most nomads worry about the 183-day rule. Spend more than half the year here, and boom, you're on the hook for Romanian taxes. It's straightforward enough. But Romania, like many countries, has a trick up its sleeve: the "centre of vital interests" test.

This isn't just about where you sleep. It's about where your life is actually centered. Think about it. If you're spending 150 days in Romania, but your spouse, kids, and your main house are here, you've likely crossed the line. Even if you haven't hit that 183-day mark. That's the real trap for people who think they can just hop around and dodge residency. Romania looks at your personal and economic ties. Do you own property here? Is your family living here? Is this where you earn most of your income, even if it's remote? These factors can pull you into Romanian tax residency faster than you might think.

Specifically, owning real estate in Romania is a big red flag. If you buy an apartment or a house, that's a strong signal you're putting down roots. Having your dependent family members living in Romania also counts heavily. It signifies a personal connection that goes beyond just a temporary stay. And if you set up a registered business in Romania, even if you're not actively managing it day-to-day, that's another strong economic tie. These aren't minor details; they're key indicators Romania's tax authorities will scrutinize.

Once you're deemed a tax resident, Romania taxes you on your worldwide income. That means income earned in other countries is also subject to Romanian tax. The good news is that Romania has a remarkably low flat tax rate. It's 10% on most income, including salaries and business profits. This is significantly lower than many Western European countries. For example, if you earn €50,000 annually, your Romanian tax liability would be €5,000. If you earn €100,000, it's €10,000. This flat rate is applied after certain deductions, but for many digital nomads, it's a very attractive proposition compared to the progressive tax brackets elsewhere.

There isn't a specific "special regime" for digital nomads in Romania in the way some countries are rolling out digital nomad visas with tax breaks. However, Romania does have a special tax regime for new residents who were not previously tax residents there. This regime offers a flat tax rate of 10% on income derived from employment and self-employment for the first three years of residency. It's not a complete exemption, but it simplifies things and keeps the rate low. You need to apply for this regime, and it's generally available to individuals who establish tax residency in Romania. It shelters your worldwide income under that same 10% rate, but it doesn't offer any specific carve-outs for certain types of income beyond what the standard 10% rate already provides.

For US, UK, and German citizens, double taxation treaties are important. Romania has treaties with all these countries. If you're a US citizen earning income from US sources, the treaty prevents you from being taxed twice on the same income. Generally, the treaty aims to tax income where you are resident, but it has tie-breaker rules if you're considered resident in both countries. For example, if you're a US citizen considered a Romanian tax resident, the US will likely still tax you on your worldwide income, but you can claim foreign tax credits for taxes paid in Romania. The same principle applies to UK and German citizens. The treaty dictates which country has the primary taxing right, and mechanisms exist to avoid double taxation, usually through foreign tax credits.

Hiring a local accountant in Romania is often worth the cost when you're dealing with more than just salary income. If you have multiple income streams, own property, or are setting up a business, an accountant can save you money by ensuring you claim all eligible deductions and avoid costly mistakes. They can also help you navigate the complexities of the tax system, especially if you're applying for special regimes or dealing with treaty provisions. For a basic remote salary, it might be overkill, but once your financial situation gets more complex, the fee pays for itself quickly.

Triggering Romanian tax residency is more nuanced than just counting days.

This information is for educational purposes only and does not constitute legal or tax advice.