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Dividend Tax in Romania

Updated on Sunday 17th April 2016

dividend_tax_in_romania.jpgWhen you own a Romanian company that shares the profit in dividends, you should ask an accountant about the Romanian regulations in this field. Even though the procedure is not complicated, there may incur tricky rules which can be solved only by an experienced accountant. This is why we propose you to take benefits from our Accountants’ background in Romanian laws and regulations

As the main purpose of a company is to realize benefits, the profit obtained may be shared between partners or shareholders as dividends. In Romania, the dividends are subject to taxation by the recipient and by the concrete conditions of ownership of shares.

In Romania, the dividend tax is determined by applying a tax rate of 16% on gross dividend distributed or paid.

In Romania it is applied the main rule that provides that when a Romanian company distributes or pays dividends paid to a Romanian legal entity, the company that distributes or pays the dividends is obligated to withhold, declare and pay the dividends withheld tax to the state budget until the 25th of the month following the month in which the distribution or payment has been done.

Any Romanian entrepreneur must be aware that if dividends were not paid by the end of the year in case it has been approved the annual financial statements, the tax on dividends must be paid until January 25 next year.

As an exception to the general rule, in case of dividends paid by a company to another Romanian legal persons it is not withhold the tax on dividends if the dividend recipient holds at the dividend payment date, at least 10% of the units of the other legal entities on a period of two years until the date of payment.

The same legal provisions are applied to dividend tax exemption for the dividends paid by a Romanian legal person to:

- Voluntary pension funds or privately managed.

- Government bodies exercising the rights and obligations of a shareholder of the State in Romanian legal entity.

However, the tax rate on dividends applies to the dividend distributed the open investment funds.

The Romanian Law provides that since the year 2009 the legal persons that reinvest dividends in order to preserve and increase the number of jobs and for the business’ development are exempted from the dividend tax payment.

In Romania, there are also exempted from dividend tax the dividends reinvested in the capital of another Romanian legal entity in order to develop the company’s activity and to create new jobs.

It is important to note that in Romania the legal person that receives the dividends does not have to pay taxes on dividends if that legal person already pays the Corporate Tax. However, the legal persons that pay taxes on the income realized by a Romanian microenterprise and receives dividends as a result of participation in the capital of a Romanian legal person must pay the dividend tax.

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