How to Tax Your Prop Firm Profits in Romania

Overview

Romania is one of the most tax-competitive EU member states for prop firm traders, offering a flat 10% income tax rate and the extraordinary micro-enterprise regime with corporate tax rates as low as 1% on gross revenue. For traders who structure properly through a SRL (Societate cu Răspundere Limitată — Limited Liability Company), Romania can deliver an effective tax rate of approximately 8–12% on extracted income — rivaling the UAE and making it the most tax-efficient option within the European Union.

The ANAF (Agenția Națională de Administrare Fiscală) — Romania's National Agency for Fiscal Administration — classifies prop firm payouts as venituri din activități independente (income from independent activities) for individuals or venituri din activități economice (income from economic activities) for companies. The classification determines whether the trader operates as a PFA (Persoană Fizică Autorizată — Authorized Natural Person) or through an SRL, with dramatically different tax outcomes.

Romania's micro-enterprise regime is the cornerstone of its tax competitiveness: SRLs with annual revenue below €500,000 and at least one employee pay just 1% corporate tax on gross revenue. Combined with Romania's 8% dividend tax and modest social contributions, this creates one of the lowest total tax burdens in the developed world.

How Prop Firm Income Is Classified

For Individuals (PFA)

ANAF classifies prop firm income as venituri din activități independente because:

• The trader operates independently, not as an employee
• Personal skill and expertise are the primary inputs
• The activity is systematic and profit-motivated
• The trader bears economic risk (challenge fees, resets)

For Companies (SRL)

If operating through an SRL, the income is classified as venituri din activități economice — corporate revenue subject to either the micro-enterprise regime or standard corporate tax.

Why Not Venituri din Investiții (Investment Income)

Romania's 10% flat tax on capital gains from securities does not apply because:

• The trader does not invest personal capital
• No financial instruments are held or disposed of
• Payouts are service compensation

Tax Structures: PFA vs. SRL

Option 1: PFA (Authorized Natural Person)

PFA taxation:

• Income tax: 10% flat on net income (after expenses)
• CAS (Contribuția de Asigurări Sociale — Pension): 25% on declared income, mandatory if annual net income exceeds 12 × minimum gross wage (~RON 43,200/year in 2025). Calculated on income capped at 24 × minimum wage
• CASS (Contribuția de Asigurări Sociale de Sănătate — Health): 10% on declared income, mandatory if annual net income exceeds 6 × minimum wage (~RON 21,600). Capped at 60 × minimum wage

PFA with Norma de Venit (Income Norm):

• Certain activities qualify for a fixed deemed income (norma de venit)
• Tax is 10% of the fixed norm regardless of actual income
• Prop trading is unlikely to have a specific norm, but the trader should verify with ANAF

PFA Example: Trader earning RON 200,000/year (~€40,000) with RON 30,000 expenses:

• Net income: RON 170,000
• Income tax (10%): RON 17,000
• CAS (25% on 24 × min wage cap ~RON 86,400): RON 21,600
• CASS (10% on 60 × min wage, but capped): RON 21,600
• Total: approximately RON 60,200
• Effective rate: 35.4%

Option 2: SRL Micro-Enterprise (The Optimal Structure)

The micro-enterprise regime requirements (2025/2026):

• Annual revenue below €500,000
• At least 1 employee (can be the owner-director on minimum wage)
• Not in excluded activities (consulting >20% of revenue has restrictions — verify current rules)
• Romanian-incorporated SRL

SRL Micro Example: Trader earning RON 500,000/year (~€100,000):

1. Micro-enterprise tax (1%): RON 5,000
2. Owner salary (minimum wage ~RON 3,700/month × 12 = RON 44,400):
   • Employee social contributions: approximately RON 15,500
   • Employer contributions: included in gross cost
3. After-tax profit: RON 500,000 - 5,000 - 44,400 - 15,500 = RON 435,100
4. Dividend distribution: RON 435,100
5. Dividend tax (8%): RON 34,808
6. CASS on dividends (10% if above threshold): RON 21,600 (capped)

• Total burden: approximately RON 82,408
• Effective rate: 16.5%

Compare this to the PFA rate of 35.4% on RON 200,000 — the SRL micro-enterprise is dramatically more efficient.

Option 3: SRL Standard Corporate Tax

For SRLs exceeding the micro-enterprise thresholds:

Still competitive compared to most EU jurisdictions.

Structure Comparison

Social Contributions (CAS and CASS)

For PFA

For SRL Owner-Employee

As a minimum-wage employee of the SRL:

• Standard employee social contributions apply on the salary
• Dividends are subject to CASS at 10% if total dividend income exceeds 6 × minimum wage (capped at 60 × minimum wage)
• No CAS on dividends

What Social Contributions Provide

• CAS: State pension (pensie)
• CASS: Access to public healthcare system
• No unemployment insurance for self-employed or company owners

TVA (Taxa pe Valoarea Adăugată — VAT)

Standard Rates

• Standard rate: 19%
• Reduced rates: 9% (food, medicine, hotels), 5% (certain housing)
• Financial services: Generally exempt from TVA

Impact on Prop Traders

• Services to foreign entities (outside Romania): not subject to Romanian TVA (reverse charge / export of services)
• Registration threshold: RON 300,000 annual turnover (~€60,000) for domestic taxable supplies
• Most prop traders with foreign-only income: no TVA registration required
• SRL micro-enterprises with low domestic turnover: can benefit from the small enterprise exemption

Deductible Expenses

For PFA (Actual Expense Method)

Full deduction of business expenses:

Fully Deductible

• Challenge and reset fees — payments to prop firms
• Trading platform subscriptions — TradingView, MetaTrader, trading journals
• VPS hosting — virtual private servers
• Accounting fees — contabil (accountant) fees
• Professional education — trading courses, seminars
• Bank charges — international transfer fees
• CAS/CASS contributions — social contributions

Proportionally Deductible

• Internet — business-use proportion
• Home office — proportion of rent, utilities (dedicated workspace)
• Computer equipment — depreciated or expensed if under RON 2,500
• Mobile phone — 50% deductible for mixed-use

For SRL Micro-Enterprise

No expense deductions — the 1% tax is calculated on gross revenue, not net profit. Expenses reduce profit available for dividends but do not reduce the micro-enterprise tax itself.

Filing Requirements and Deadlines

Essential Registrations

• CUI/CIF — tax identification number
• PFA registration — at ONRC (Oficiul Național al Registrului Comerțului)
• SRL registration — at ONRC (notarized articles of association required)
• SPV (Spațiul Privat Virtual) — ANAF electronic portal

Key Deadlines

Tax Year

Romania uses the calendar year (January 1 – December 31).

Declarația Unică (Unified Declaration — D212)

PFAs file the Declarația Unică covering:

• Estimated income for the current year
• Actual income for the previous year
• CAS and CASS declarations
• Due by March 25 each year

Record Keeping

Romanian tax law requires records for 5 years (10 years for certain documents). Prop traders should maintain:

• All payout confirmations from prop firms
• Bank statements
• Exchange rate records (BNR — Banca Națională a României rates)
• Expense invoices (facturi)
• Social contribution payment records
• Business registration documents
• Tax return filing confirmations
• SRL accounting records (if applicable)

Common Mistakes to Avoid

1. Using PFA Instead of SRL Micro

The PFA structure results in 35–45% effective rates. The SRL micro at 1% + 8% dividends is dramatically more efficient for income above approximately RON 100,000.

2. Not Meeting the Employee Requirement

The 1% micro-enterprise rate requires at least 1 employee. Without an employee, the rate increases to 3%. The owner can be the employee on minimum wage.

3. Exceeding the €500,000 Threshold

Exceeding the micro-enterprise revenue threshold forces transition to standard 16% corporate tax. Monitor revenue throughout the year.

4. Not Paying CASS on Dividends

Dividend income above the threshold is subject to 10% CASS. Not paying triggers penalties.

5. Assuming Capital Gains Treatment

The 10% capital gains rate on securities does not apply to prop firm payouts.

6. Ignoring the Consulting Revenue Restriction

Micro-enterprises deriving more than 20% of revenue from consulting/management services to related parties may face restrictions. Verify current rules.

Tax Planning Strategies

SRL Micro-Enterprise + Minimum Wage

The optimal structure for most prop traders earning RON 100,000–2,500,000:

• 1% micro-enterprise tax
• Owner employed at minimum wage (minimal social contributions)
• Remaining profit distributed as dividends (8% tax + 10% CASS capped)
• Total effective rate: 12–17%

Retain Profits in SRL

Profits retained in the SRL are taxed at only 1% (micro) or 16% (standard). Dividend tax is deferred until distribution.

Consider Bucharest vs. Other Cities

Tax rates are uniform nationwide, but accounting costs and cost of living vary. Smaller cities offer lower costs.

Professional Advice (Contabil)

Engage a Romanian contabil (accountant). Monthly fees: RON 500–1,500 for SRL, fully deductible. Essential for SRL administration and compliance.

Digital Nomad Visa

Romania offers a Digital Nomad Visa for non-EU citizens, providing legal residency for remote workers. Combined with SRL establishment, this provides an EU-based low-tax structure.

Official Resources

• ANAF↗ — National Agency for Fiscal Administration
• SPV (Spațiul Privat Virtual)↗ — electronic tax portal
• ONRC↗ — National Trade Register Office
• BNR (Banca Națională a României)↗ — central bank (exchange rates)

This guide provides general tax information for educational purposes. It does not constitute tax advice. Romania's micro-enterprise regime has specific eligibility criteria that change periodically. Consult a qualified Romanian consultant fiscal (tax consultant) or contabil before making any decisions based on this information.

The Romanian Micro-Enterprise Success Story

Romania's micro-enterprise regime didn't emerge by accident. It was the product of two decades of policy experimentation that transformed Romania from one of Eastern Europe's most bureaucratic tax environments into the EU's most competitive jurisdiction for small businesses. Understanding this evolution helps traders appreciate both the opportunities and the risks of relying on a regime that has undergone frequent modification.

In the early 2000s, Romania introduced its first micro-enterprise regime with a 1.5% rate on gross revenue. The policy was designed to encourage formalization of the extensive grey economy inherited from the communist era. It worked: between 2001 and 2010, the number of registered SRLs more than tripled. The government then experimented with rates — raising it to 3% in 2018 for companies without employees, then lowering it back to 1% for companies with at least one employee in 2023.

For prop traders, the current 1% micro-enterprise regime is the golden ticket. But the regime has changed 7 times in the past 15 years, and there's no guarantee it will remain at 1% indefinitely. The European Commission has periodically questioned whether such low rates constitute state aid, and Romania's fiscal deficits may eventually force rate increases.

Setting Up an SRL: Step-by-Step for Prop Traders

The process of establishing a Romanian SRL typically takes 3–7 business days:

1. Reserve company name at the Trade Registry (Registrul Comerțului) — online via portal.onrc.ro
2. Prepare articles of incorporation (Act constitutiv) — can be done with a notary or, for single-shareholder SRLs, without one
3. Minimum share capital: RON 1 (approximately €0.20) — symbolic only
4. Register at Trade Registry: Submit documents, receive CUI (Cod Unic de Identificare — tax ID) and J number (registration number)
5. Register for micro-enterprise regime with ANAF
6. Hire at least one employee — typically the owner-director on minimum wage (~RON 3,700/month gross)
7. Open a business bank account at a Romanian bank (Banca Transilvania, BRD, ING Romania)

Total setup cost: approximately €500–1,500 including legal fees, notary, and registration.

The Employee Requirement Deep Dive

The 1% micro-enterprise rate requires at least one employee. Most prop traders hire themselves as the administrator (director) of the SRL on minimum wage:

The RON 45,400/year (€9,100) employer cost is the fixed overhead for maintaining the 1% rate. For any trader earning more than approximately RON 250,000/year (~€50,000), this cost is trivially small compared to the tax savings.

Dividend Extraction Strategy

After paying 1% micro-enterprise tax, the remaining profit can be distributed as dividends:

• Dividend tax: 8% (increased from 5% in 2023)
• CASS on dividends: 10% if total dividend income exceeds 12 × minimum wage (~RON 44,400/year) — capped at 60 × minimum wage

Optimal extraction strategy for a trader earning RON 1,000,000/year (~€200,000):

1. Micro-enterprise tax (1%): RON 10,000
2. Salary costs (owner + contributions): RON 45,400
3. After-tax corporate profit: RON 944,600
4. Dividend distribution: RON 944,600
5. Dividend tax (8%): RON 75,568
6. CASS on dividends (10% capped at 60 × min wage): RON 22,200
7. Total tax burden: RON 153,168
8. Effective rate: 15.3%

Compare this to operating as a PFA at the same income level: effective rate would be approximately 35–40%.

Living and Trading in Romania: Practical Considerations

Cost of Living

Romania offers one of the lowest costs of living in the EU, making it attractive for traders who want to maximize after-tax income:

Romania has some of the fastest and cheapest internet in Europe — averaging 200+ Mbps for under €10/month — which is ideal for prop traders who need reliable connectivity.

Tax Residency Requirements

To become a Romanian tax resident:

• Spend 183+ days in Romania in any 12-month period
• Establish a domiciliu (permanent home) in Romania
• Have your center of vital interests in Romania

EU/EEA citizens can relocate freely. Non-EU citizens need a residence permit, which can be obtained through company ownership (digital nomad visa or business visa).

Romania's Digital Nomad Visa

Since 2022, Romania offers a digital nomad visa for non-EU citizens earning at least €3,700/month from foreign sources. The visa allows 1-year residence with the possibility of renewal. Prop traders with consistent monthly earnings above this threshold are ideal candidates.

Accounting and Compliance

Monthly Obligations

SRL micro-enterprises must file monthly:

• Declarația 100: Tax payment declaration (due 25th of the following month)
• Declarația 112: Social contributions declaration (due 25th)
• IVA declaration (if VAT-registered — most micro-enterprises are not)

Annual Obligations

• Annual financial statements: Due by May 30 for the previous fiscal year
• Declarația 205/207: Information return on withheld taxes
• Dividend distribution resolution: Formal shareholder decision document

Accountant (Contabil)

Engage a Romanian contabil autorizat (authorized accountant) or expert contabil (chartered accountant). Monthly fees: RON 500–1,500 (~€100–300), which covers all monthly declarations and bookkeeping. Annual financial statement preparation: additional RON 1,000–2,000.

Common Mistakes to Avoid in Romania

1. Operating as PFA Instead of SRL

The most expensive mistake. PFA income above the social contribution thresholds faces 25% CAS + 10% CASS + 10% income tax = 45% effective rate. SRL micro at 1% + 8% dividend = ~9% before CASS.

2. Forgetting the Employee Requirement

If the SRL has no employees for any quarter, it's reclassified from 1% to 3% micro-enterprise tax for that quarter. Always maintain at least one employment contract.

3. Exceeding the €500,000 Threshold

If the SRL exceeds €500,000 in annual revenue, it exits the micro-enterprise regime and becomes subject to standard 16% corporate tax. Plan income distribution accordingly.

4. Not Considering CASS on Dividends

The 10% CASS on dividends (when total dividend income exceeds 12 × minimum wage) is often overlooked, adding significant cost.

5. Inadequate Transfer Pricing Documentation

If the trader is both the owner and the sole service provider of the SRL, ANAF may scrutinize the arrangement. Maintain proper service agreements and arm's-length documentation.

Official Resources

• ANAF↗ — National Agency for Fiscal Administration
• Registrul Comerțului↗ — Trade Registry
• BNR (Banca Națională a României)↗ — National Bank (exchange rates)
• Casa Națională de Pensii↗ — National Pension House

This guide provides general tax information for educational purposes. It does not constitute tax advice. Romania's micro-enterprise regime, SRL requirements, and social contribution rules change frequently. Consult a qualified Romanian expert contabil before making any decisions based on this information.