Romania Micro Company With 1% Tax: The Complete Guide

If you’re looking for the best country in the EU to incorporate an online business and pay almost zero tax, then Romania might be the place you’re looking for. In Romania, you can register a micro company and pay only 1% or 3% corporate tax on your turnover, live well for less than half what you would pay in western Europe, and discover unspoiled natural beauty that is reminiscent of medieval times.

In this article, we’ll share everything you need to set up a company in Romania and explain how you can reduce taxes to almost zero. We’ll also share the pros and cons of living in Romania and give a few examples of the kind of people who would benefit from creating a micro-company in Romania.

This article is part of EuroNerd’s series on the best corporate and personal tax structures in Europe for location-independent business owners. We focus on countries with low taxes, low cost of living, and high quality of life. 

Understanding Romania

Romania has been inhabited since at least the Palaeolithic era and was settled by the Dacians in ancient times. It became a province of the Roman Empire in 106 AD and remained under Roman rule until the 5th century AD. In the Middle Ages, Romania was divided into several principalities, eventually becoming a part of the Ottoman Empire.

In 1859, Romania declared independence from the Ottoman Empire and fought a series of wars to become an autonomous principality. In 1877, Romania became an independent kingdom. During World War I, Romania joined the Allies against Austria-Hungary and Germany and suffered heavy losses. After World War II, Romania became a communist state within the Soviet Union.

In 1989, following revolutions across Eastern Europe, Romania overthrew its communist government and established a democratic republic. Today, Romania is a member of NATO and the European Union. The ride since then hasn’t exactly been smooth, and a lot of young people have left the country for greener pastures in Western Europe. However, this has also created opportunities for people to find cheap property, land, and living costs if they are able to work online.

What is a Romanian micro company?

There are still many great places in Europe to start a business without donating half your profits to the state. Romania may not be the first country people think of, but it has a lot to offer. It’s by no means as wealthy as some other European countries, but if your customers are in Western Europe or other parts of the world, it makes a lot of sense to consider starting a business there.

In Romania, you can start a micro company and pay very little in taxes. A Romanian micro company is a limited liability company that only pays 1% or 3% corporate tax on its turnover up to €1,000,000. Romanian micro-companies are taxed at 1% if it has one or more employees (which can be yourself) or 3% if it has no employees. This is the lowest corporate tax rate in the EU.

From a legal perspective, a micro company is the same as a standard limited company in Romania. It offers limited liability protection to its shareholders and can have one or more shareholders. The difference is in the tax treatment and the fact that a micro company is taxed based on its turnover rather than profits.

1% to 3% corporate tax

Romanian micro companies pay 1% tax on their turnover up to €1,000,000 if they have at least one employee (which can be yourself), or 3% with no employees. The standard income tax rate is 10% (with a few variations), but because dividend taxation is only 5%, if you take dividends instead of a large wage, your effective tax rate will be much lower (more on how income can be structured below).

This means if you’re running a small online business with yearly sales below €1m and have very few expenses, no physical goods, resales, etc., i.e. a lean, low-cost operation, then almost all profits will go straight into your pocket. All while operating professionally under the protection of your limited liability company.

Who is a Romanian micro company for?

A Romanian micro company is interesting for those who run a location-independent business with a high profit margin. This means a company where most income is actual profit and where the operational costs are low. For example, this could be a consultancy, IT contractor, or e-commerce with digital sales. Any type of business that can be operated remotely from a laptop is an ideal candidate for a Romanian micro company.

As a single (or joint) shareholder of a Romanian micro company, you can pay out dividends after paying the 1-3% corporate tax. The tax on dividends is only 5%, meaning your effective tax rate, company and personal level combined, will typically be less than 10% in total (see the examples on how income can be structured below).

If you have a physical brick-and-mortar business, then a micro company is not going to be the ideal structure. Such companies typically have a lot of expenses in the form of inventory, staff, premises, etc. and will not be able to benefit much from turnover-based taxation. Companies that grow beyond the 1 EUR million threshold pay 16% on profits rather than revenue, which is, of course, far lower than the average 25% EU corporate tax.

Turnover vs profit: Explain the difference one more time

It’s crucial to remember the difference between turnover and profit. Your accounting terminology may need a quick brush-up, so let’s go over the difference one more time. Turnover has many names (gross sales, gross income, revenue), and while the terminology varies from country to country, it’s all referring to the total sales value of your goods or services before any operational costs are deducted. What you have invoiced during the year, essentially.

In contrast, profit is what’s left after you’ve deducted all operational costs from your turnover. This includes things like staff salaries, rent, web hosting, inventory, marketing, etc. So if your turnover is 1 million and your operational costs are 500k, your profit is 500k. In most countries, corporate taxes are based on profits, not turnover, but in Romania, it’s the other way around for micro-companies.

Romanian micro company in detail

A Romanian micro company or microenterprise is a limited liability company or Societate cu Raspundere Limitata (SRL) in Romanian. Limited liability means that your personal liability is limited to the amount of money you’ve personally put into the company, which is usually equal to the initial share capital of around €1. Moreover, a company is considered a micro company if its maximum turnover did not exceed a turnover of 1 million euros at the end of the previous tax year.

In place of corporate income tax, Romanian micro-companies are subject to a turnover tax rate. The turnover-based tax rate for micro company is 1% for companies with one or more employees or 3% for companies with no employees. All newly created businesses are obligated to follow the micro-company tax code for their first financial year, unless given an exemption.

Since it’s not possible to reduce taxes by deducting expenses, there’s usually no discussion with the tax man over justifying expenses. Remember, companies are taxed on the amount they invoiced customers during the year. For example, if your business has achieved a 75% net income during their last quarter, it means for every 1 euro earned from sales, there was €0.75 leftover as gross revenue after all expenses were paid.

Together with your accountant, you’ll need to submit one tax return each quarter, declaring your earnings by the 25th of the month following the quarter, but that’s about it.

Suppose your company has revenues above €1m, many expenses and runs a low-profit margin, but overall is a good business. In that case, it can choose to pay the regular corporate income tax of 16%, which is based on profit instead of turnover, as long as it has a subscribed share capital of at least RON 45,000 and at least two employees.

Romania dividend tax

When a Romanian company distributes dividends to its shareholders, it must pay a 5% withholding tax. The withholding tax is paid separately from the 1% micro company tax. The company can pay dividends 4 times a year. I’ll explain the advantages of taking dividends over a high salary below.

If the company distributes dividends to a holding company that owns 10% or more of the shares, there is usually no withholding tax due to the EU Parent-Subsidiary Directive.

Holding companies in the EU and holding companies in countries outside the EU with a DTA may be eligible for a reduced or zero withholding tax under certain conditions. For example, the Romanian micro company could be combined with a Cyprus parent company, opening some interesting options if appropriately structured.

Structuring income in micro-companies

So what is the most optimal way to transfer money legally from your company to yourself? As you probably already know, you cannot just withdraw money from your business whenever you like or spend it on personal matters as this is illegal. So, there are two ways to go about it:

1. Pay yourself a high salary
2. Pay yourself via dividends

Option 1 is not ideal. Employment income in Romania is taxed at only 10%, which is extremely low by European standards. What most people don’t realize is that mandatory social contribution is much higher. The combined employer/employee rate is about 37.25%, made up of social insurance contribution of 25%, health insurance contribution of 10%, and labor insurance contribution of 2.25%. So, if you take the salary path, you’ll be facing a large tax bill.

Option 2 is better as taxes on dividends are only 5%, paid for by the company. Since a business owner is legally speaking a worker for the company, it’s necessary to pay out at salary. However, it can be the legal minimum wage of around €515 (2,550 lei) per month (2022 number). With the minimum wage, social contributions are extremely low.

Here is a roughly calculated example for one tax year for a small consulting company with sales worth €300,000. Remember, expenses are irrelevant calculating taxes for micro-companies. But we still have to pay for website hosting, accounting, freelancers, etc.

• Company turnover: €300,000
• Expenses incl. director’s salary: €30,000
• Profit: €270,000
• Corporate tax: 1% x €300,000 = €3,000

Now let’s go through the social contribution and income taxes:

• Director’s salary (minimum wage): €515 x 12 months = €6,180
• Pension fund contribution 25%: €1,545
• Health fund contribution 10%: €618
• Labor insurance contribution 2.25% (company paid): €139.05
• Taxable base for income tax calculation: €6,1800 – €1,545 – €618 = €4,017
• Income tax 10%: €401.7
• Net salary: €3,615.3

Result:

• Effective tax rate on income (salary): 41.5%
• Remaining assets: €270,000 – €139.05 – €3,000 = €266,860.95

A few personal deductions for employment income aren’t included here, depending on the individual’s monthly gross revenue and the number of dependent persons.

After one year, the fictive balance sheet after taxes holds roughly €266,861. Let’s say we pay out €200,000 of those in dividends, which leaves enough operational capital within the company.

You can pay out dividends 4 times throughout the tax year without waiting until the end of the year (which is the norm in many countries). Instead of getting paid 12 times a year, you pay yourself 4 times a year. For simplicity’s sake, however, let’s say we do distribute dividends once per year.

Because you receive more than 12 months worth of the minimum monthly wage, 6,180 euros or 30,600 lei in 2022, there’s a rule in Romania that says you must pay 10% health insurance on that amount. The maximum monthly contribution is limited to 10% of the 12 months, so the overall maximum contribution is 618 euros or 3,060 lei.

The company pays a dividends tax of 5%. You pay the health fund contribution.

• Dividends tax 5%: €200,000 x 5% = €10,000
• Health fund contribution: €6,180 x 10% = €618
• Net dividends in hand: €189,382

The combined company and personal effective tax rate for dividends is, therefore, only around 5.5%.

Optimize further with a holding company

If the director doesn’t need the money for personal things (€171,000 is a high number in Romania anyway), it might make sense to transfer the funds to a holding company. After the 1% mandatory contribution, the company can do so without the 5% withholding tax, in most cases, as long as it owns 10% or more of the shares. The holding company itself be used as an investment vehicle for real estate, stocks, etc.

Another interesting option is to place the holding company in another EU member state that doesn’t tax dividend distribution to individual shareholders. Because of the parent-subsidiary directive, which applies throughout the EU, companies distribute dividends to their parent companies withholding tax, in most cases. Suppose you’re not planning on staying in Romania permanently. In that case, a holding company could be used as a piggy bank until you move to another country with no dividends or capital gains taxes. As you can read, this option requires more planning and might not be worth the trouble to save those few percentages.

Cost to set up a company in Romania

There are a few costs to take into account when setting up a company in Romania. The total cost of incorporating an SRL can range from the equivalent in Romanian lei from €500 to €1,000. Setting up a firm in Romania is considerably more expensive than in the UK and US, with far more competition among service providers. You also need a Romanian bank account, and you’ll need a designated accountant, which is mandatory.

The entire process usually takes around 2 weeks to 1 month.

Again, I recommend searching for a formation agent in Romanian rather than English to get the real, local prices.

Here are the approximate one-time fees to open an SRL:

• Initial consultation with a lawyer (optional): €50
• Lawyer/agent fee for registering the company: €200 to €700
• Notary public & translation fees: €100 to €200
• Registration fee: €35
• Corporate bank account: Varies

You also need to deposit a minimum of €1 for the initial share capital. Technically, there’s no minimum (since 2021). A good formation agent or lawyer will help set you up with a Romanian bank account. But you should be able to use Wise (TransferWise) for your company. Taxes can be paid in cash, if necessary.

Some charge a fee of around €250 for this service, while others do it for free.

Here are the estimated ongoing costs:

• Virtual office in Bucharest (optional): €140 per year
• Accountancy and VAT fees: €50 to €150 per month
• Payroll service: €10 per employee per month
• Yearly accounts: €600 per year
• Banking fees: Varies

Because you are a foreigner, some lawyers who have an English-language website will charge more. You can easily locate a trustworthy service without getting cheated by searching in Romanian through Google Translate – most of them speak English.

How to open a Romanian micro company

Starting a new business in Romania is much like starting a company in another European country. However, things are more difficult than elsewhere as government websites are generally not translated into English, and they look bad too.

It looks straightforward at first, but you should not do it on your own since there are a lot of forms to complete (in Romanian, of of course) and you don’t want to make any mistakes. I highly recommend working with a processional.

The whole process can be found on the official government website right here.

Below is a general step-by-step guide to setting up your Romanian limited company.

1. Decide what type of company you want

For most business owners, the perfect option is to start a limited liability company. With a limited company, your company is its own legal entity, separate from you as an individual. A Romanian limited company is called a SRL or Societate cu Răspundere Limitată.

2. Find a trustworthy consultant

Choose someone you would trust with your business. Use common sense. Don’t let your desire to save cost on legal fees lead you into choosing one that is not authorized, or a self-proclaimed lawyer.

Unfortunately, you can’t rely on Google searches. There are many scams and anonymous websites with limited information about the people providing the service. Do a proper background check to ensure that the person you contact is legitimate. You can’t go wrong with the big houses but they will, of course, charge more.

If you have any prior experience with lawyers, you will know most of them will try to sell you stuff you don’t need, or overprice the legal services they do provide. You can find cheap lawyers, but I would suggest going with a mid-priced one with many years of experience.

Shop around and don’t go with the first person you find. Send out bulk emails to cast a wide net and sort out the bad ones. Go forward with the ones you like and set up a video call to see them in action and get a feel for who you’re dealing with.

3. Choose an company name

To start a business in Romania, you need to choose your company’s name and reserve it on the National Trade Register.

In many other countries, companies operating in different sectors can share the same name, usually without issues. In Romania, the name must be unique no matter what. Finding a unique company name can be tough, but it’s worth the time and effort to find an original one that is available.

You can check of availability with either local Trade Registry office in your municipality or online at https://portal.onrc.ro/.

Once reserved, there are three ways that this reservation can be completed: paper filing in person; by mail; or through legal consultant.

You need to apply with 3 names in order of preference and produce produce three logos for the company.

4. Find a company address

All Romanian companies must have a registered address in Romania. When you’re not sure where to register your company headquarters, you may want to use a virtual office at your agent’s office in Bucharest rather than your personal address.

A virtual address is perfect if you want to keep your home address out of range from prying eyes, as it is publicly available in the trade registry, or if you think the address location adds value to your brand.

Some landlords are against having a business as a tenant, so they might not rent to you if you want to run your company from your home.

5. Prepare and submit your company registration files

You can find an extensive list of all the documents you need for your SRL incorporation on the Trade Registry website.

You need to pay a registration fee. This can be done in cash or by bank transfer. For non-residents, payments can be done in euros or US dollars.

You can submit the files in paper form at the local registry office or do it online.

It should not take more than 7 days for registration to be completed.

6. Open a bank account

After registering your company, you’ll need to open a Romanian bank account in order for it to operate and interact with the tax authorities.

Romanian banks can be old fashioned, so it’s a good idea to have your formation agent or lawyer introduce you.

You’ll also need to have money for a minimum deposit, which differs depending on the bank. 

How to become a Romanian tax resident

To be considered a tax resident of Romania, an individual must fulfill one of three criteria: they reside in the country for more than 183 days during any 12 months ending on December 31; have their center of vital interests within its borders, or spend at least six months from January 1 until October 15.

All EU countries have more or less similar rules these days, and you must know what they are if you want to navigate the increasingly complex tax landscape.

If you are an EU citizen and have resided in Romania for at least 6 months during one calendar year, the Romanian government will consider you a tax resident. This means that all of your worldwide income is subject to taxes as soon as they become aware of it-not just when money enters their country’s borders.

It’s essential to check the rules of the country you are departing from to avoid being taxed by both countries. Double taxation can be a nightmare, and you want to avoid it at all costs. I would advise working with a professional on this to ensure a clean exit from your current obligations.

EU citizens

Romania’s open-door policy means that EU citizens have the right to live and work in Romania indefinitely. After three months of residency, registration is mandatory after which certain documents must be provided such as proof of health cover and proof of financial stability (bank statement, pay slips etc.) .

The requirements for financial stability or self sufficiency have not been updated in close to a decade. You need to have €30 as a single person, €50 for two persons, and €73-107 for a three to five person household.

Permanent residence can also be achieved with 5 years of uninterrupted residency if certain conditions are met – naturalization may even occur after this time period. The validity of permanent residence card is 10 years from the date of issue.

Benefits of being a Romanian tax resident

We’ve discussed when and why incorporating in Romania may make sense for your business. If you decide to become a Romanian tax resident as an individual, there are several advantages to this–and of course, a few disadvantages also.

1. No inheritance tax

Romania has no inheritance tax if the proper procedure for claiming an inheritance has been followed within two years of a benefactor’s death. Otherwise, a meager 1% will be paid on all inherited assets with property values.

2. Low capital gains tax

In Romania, taxpayers are taxed on capital gains at a flat rate of 10%. The taxable amount is calculated based on the difference between the sale price and acquisition. Generally, broker/transaction fees can be deducted from tax liability in connection with acquisition or sale.

3. Low and fair crypto taxes

Romania taxes cryptocurrency gains at a flat 10% as well. According to experts on the topic, only crypto-to-fiat transactions are taxed and not crypto-to-crypto. Income tax is only triggered when the funds are sent from the platform back to a person’s bank account. Interestingly, according to Statista, 12% of Romanians own cryptocurrencies.

4. No wealth tax

There’s no wealth tax in Romania. This will be a significant factor for those who bring their families with them. For those who want to pass on large inheritances or those who come from wealthy families, no wealth surtaxes means that they can live with their money without fear that the government will take the fruits of their labors in excess taxes.

5. 1-3% tax on real estate profits

There is a 1-3% tax on real estate profits in Romania. If you are planning to move there, the markets are reasonably priced right now, and your return could be significant and worth considering.

If you plan to come to Romania to purchase a property and live there, over the long term, you could end up paying a lower amount in taxes than if you were living in the country where the property is currently located.

6. No gift tax

Romania does not charge a tax for gifts. This means that you can gift family members without having a portion of it taken as tax.

Best cities in Romania

The largest cities in Romania are Bucharest, Cluj-Napoca, Timisoara, Lasi, and Constanta. All of these are unique in their own way. Whatever you choose to do, make sure you do your research before making any decisions.

Bucharest

I personally don’t like Bucharest, but that’s just a preference. It’s a huge city, polluted, but the worst part is that the traffic is an absolute nightmare. Another major dislike I have is that the city’s historic charm was destroyed during the Communist period and has never been restored as other European capitals have managed to do. The upside is that there’s always something culturally going on and plenty of networking opportunities with other expats.

Cluj-Napoca

Cluj-Napoca is the second-largest city in Romania and the central city in Transylvania. The population is only around 300,000, which is a significant advantage if you prefer more relaxed city life. It’s a university town which brings a lot of partying to the city though. It’s right next to the Apuseni Mountains and offers easy access to hiking and other outdoor activities.

Timisoara

Timisoara is a beautiful city in western Romania that was actually built by the Habsburg Monarchy. It’s on the border of Serbia and Hungary and feels more like a Central European city than an eastern European one. Because of the Habsburgs, it’s heavily Austrian-influenced and nicknamed the “Little Vienna.” It’s a relatively quiet town, and it could be ideal if you bring family with you. Real estate is still cheap, but a lot of renovation and construction is taking place, so I suspect it won’t stay that way for long. 

Iasi

Iasi is a mixed bag for me, and not somewhere I would personally live. It’s the fourth largest city in Romania, but it doesn’t have the same kind of charm as Bucharest or Timisoara. It’s right next to Moldova, and there’s still a lot of the Soviet Union left in the city. The traffic is horrible, and the city planning is horrendous. It’s still worth considering if you’re looking for an opportunity to get in on the ground floor of the country. My apologies to all Iasians who may strongly disagree with me.

Transylvania

Transylvania is, of course, not a city but a region. It’s is the perfect place for those who are looking for something different in life. This part of the country has an old-world charm that can’t be found anywhere in western Europe anymore. It’s picture-perfect and looks like it does in the movies. If you’re looking to get away from the city and want absolute peace and quiet, Transylvania is the place for you.

Basics of starting a business in Romania

With a growing and tech-friendly economy, Romania is an ideal place for entrepreneurs to start their company. Residents are able to open companies in the country no matter where they live, so long as they meet certain requirements like following local laws that may regulate your new venture.

Starting a business in Romania as a foreigner is not as easy as in Estonia, the UK, or US, but things have improved significantly in the past few years. You still have to go through some red tape, but it is not as complicated and time consuming as before.

Part of the EU

With great benefits such low corporate and personal taxes, few restrictions on foreign ownership, and access to the European Union’s single market, Romania has become very popular among digital nomads and expats from all over looking for opportunities of growth.

Romania has been part of the EU since 2007, which comes with many benefits. If you are an EU resident, you will be able to benefit from free movement of goods and services, the right to settle anywhere in the EU, access to grants and subsidies for business start-ups, and enjoy a single market area which means that you can buy/sell goods or services without restriction across borders.

The EU membership status is significant for Romanian companies as the EU’s definition of “tax havens” exclusively targets non-EU countries. This means there’s no legal stigma attached to selling goods and services from a Romania-based entity.

Skilled young workforce

If you are looking to employ locals, the country is attractive due to the cheap and skilled workforce which includes multilingual young people who can speak or understand English. There is a growing startup scene in most major cities, and even people running medium-to-large businesses are friendly and open to networking.

The people here are both resourceful and intelligent, which has resulted in them becoming one of Europe’s most proficient countries when it comes to providing services related to virtual assistants or other functions such as web developing, programming, or web design. You can also find accountants, lawyers, marketers and other specialists.

Fast internet speed

Romania is one of the fastest countries in Europe for internet. The average Romanian has access to speeds that are as fast as Switzerland, Denmark, Andorra or other top European nations. It costs around €10 euros a month with 1Gbit speed and €12 for 15Gb of mobile data.

5 Reasons to start a micro-company in Romania

1. Potentially the lowest corporate tax in Europe

Romania’s main strength is its taxation system, one of the European Union’s least burdensome. A Romanian micro company only pays 3% tax on annual turnovers lower than €1.000.000. And if you hire a Romanian resident into your company, the tax rate is reduced to just 1%.

2. Cheap operating costs

One of the main advantages of living and working in Romania is its operating costs are among the lowest in Western Europe. Compared to the cost of living in countries like the UK, France, or Germany, Romania is a cheap destination: cheap labor costs, low rental rates, and low utility costs.

The average employee monthly salary in Romania is around €400. Rent in the capital of Bucharest might be higher than some Eastern European cities, but it’s still way below most Western European capitals.

Food, office supplies, legal costs, office spaces, accommodation, and transportation are cheaper than elsewhere in the region. In Romania, you get a lot of value for your money.

3. Limited liability

Foreign owners and shareholders of Romanian companies will have only limited liability on the company’s activity. The company owner is usually not held personally liable for any debt or other financial obligations incurred by his business.

Once you form a Romanian limited liability company, your personal assets are protected from any claims made by creditors. In other words, apart from the company’s viability, your personal wealth is safe.

4. EU approved tax haven

The ever-increasing KYC and AML rules have made banks more cautious about international transactions, and companies face more scrutiny on who they work with. By setting up in the EU, companies can take advantage of the Single Market yet still maintain a high level of security and confidentiality.

By operating from Romania, you get to enjoy low taxes while still being in the EU. It is a jurisdiction with low corporate taxes, low personal income tax rate, low capital gains tax, no inheritance or gift tax, plus other advantages.

5. Access to EU banking

Romanian companies have access to online banks like Transferwise and Revolut and payment processors like PayPal and Stripe. This makes it easier for them to work with international clients and accept payments from retail customers. Native Romanian banks generally also offer SEPA payments and euro bank accounts.

6. Low taxes on dividends

The tax rate in Romania for dividends is 5% for both resident and non-resident individuals. Dividend income paid to corporate shareholders is tax-free if the recipient company has held at least 10% of shares continuously for one year.

7. You can set up a company as a non-resident

Foreigners owning a Romanian company don’t need to be present in Romania. Romanian law allows anyone, without having to be present in the country, to establish a company. You need to appoint a local representative, but you can be living outside of Romania.

Should you move to Romania?

Romania a great destination not just for its low cost of living and reasonable tax burden, but also the quality lifestyle it offers. It’s becoming an increasingly popular choice as more expats move in to take advantage of this wonderful country with amazing people who are (for the most part!) very welcoming.

Many people have been making their way east, away from Western Europe and into Romania in search of low-cost living with friendly locals eager to cater towards foreigners needs such as home language tutoring or cultural activities like wine tasting tours which may seem extinct back at home due to inflated prices on these goods.

Before we move on, let’s talk a little about the positive as well as the negative sides of living in Romania, aside from taxes.

Pros of Romania

Romania is a great option for people looking to get away from the hustle and bustle of western European cities. With its low cost-of living, natural beauty, friendly people it’s no wonder why so many foreigners are moving here.

Living in Romania is inexpensive. You can live here on a fairly low budget by Western standards, which is great if your income is earned from customers outside the country. In other words, if you can generate the same amount of income as you would in Western Europe, while living on Romanian standards, you will live more than comfortably.

House prices are still incredible good value for money, and renting in Romania is very affordable. Renting a three-bedroom apartment in the city center of Bucharest, with good amenities and parking will cost you €450-700 for example. A small two bedroom apartment in the suburbs is easily obtainable at around €250 per month.

However, I wouldn’t recommend living in Bucharest unless you absolutely have to. There are beautiful smaller cities offer much better deals in terms of living cost and quality of life. Smaller cities have gorgeous old town areas with very romanische feel to them, beautiful architecture and cheap cost of living. Just make sure the internet connection is good.

If you want to buy a house, there are some fantastic deals to be had for under €100,000. The same type of house in Denmark, the Netherlands, or the UK could easily set you back close to one million, if not more.

The weather is also wonderful in Romania with long hot summers (or warm depending on the region) and a short cold winter. It’s a great time to be getting outside and enjoying nature’s beauty all year round. The countryside, the beaches, mountains and rivers are all wonderful for spending time outdoors.

Romania’s public transport system isn’t as developed as some other EU countries but Romanians are resourceful and creative people thus most people own their own transportation. Taxis are also very convenient when they get you from point A to B without the need to worry about maps or public transport routes.

Cons of Romania

It would be unfair to depict Romania as the perfect country. In fact, it’s far from it. And there’s a reason why a lot of young Romanians are actually leaving for Western Europe. Although Romania has made major improvements in recent years and is rapidly developing, there are still some fundamental issues that can give you a headaches as an expat or local.

Romania is a poor country. A large percentage of the population lives in shabby conditions, the roads are full of potholes riddling every road and infrastructure is generally in dire need of improvement.

Crime still plays an important role here as corruption is a major issue. Corruption seems to permeate every layer of society. According to Transparency International, 45% percentage of Romanians think corruption is increasing and 20% percentage of public service users paid a bribe in the previous 12 months. It’s even common to bribe doctors and nurses in public hospitals to get treatment (see below).

The country has a high rate of brain drain, which means that many people who are highly skilled and educated leave the country to find better jobs elsewhere. Romania has a negative population growth which means that every year, there are more and more young people who leave the country for better prospects.

The traffic in Romania is nuts. Romania has the second highest fatality rate among European countries, with 80% more traffic-related fatalities than average. With 91 killed per million population (2014), Romania is one of the most dangerous places to be walking or driving in Europe today. So be advised always to check both ways when you are cross the road.

The public healthcare system in Romania, while slowly improving, is not safe to rely on. It can be downright dangerous to be admitted to a public hospital in Romania. The system has been documented by having fatal problems with hygiene and cleanliness but also that there have been cases of medical negligence. Life-threatening bacteria infections are a common problem at hospitals and clinics due to poor sanitation practices.

You should use the private healthcare system to be on the safe side. A private health insurance wont blow your budget and is a good investment. If you have a lifelong illness, I would not recommend moving to Romania and look into countries like Cyprus or Portugal instead.

Should you open a company in Romania?

The answer isn’t yes or no, but rather “it depends.” If you’re running a purely online business with few expenses, Romania may make sense.

Romania is a “sort of” legal tax haven approved by the EU, but only for operations below 1 million euros. This is great if you want to keep things at that level, but some businesses will want to grow beyond that number.

If you want to scale beyond €1m, more suitable jurisdictions are out there, such as Cyprus, Ireland, or Andorra. But if your long-term goal is to operate a one-man business without the headaches of sick employees, staff meetings, and office politics, Romania can be a great place to do it.

On the other hand, Romania is not as international as Cyprus, Malta, or even Bulgaria, but it’s still part of the EU and set to adopt the euro soon. It would be unfair to say that corruption and poverty are not present in Romania, but it is declining.

To summarize: Romania’s tax benefits are hard to beat; however, on the personal level, it may make sense to pay more taxes in another nation and access better public healthcare, transportation infrastructure, and schooling.

Final thoughts

If you want to live in a country with the lowest tax structure and move your business there, consider moving to Romania.

In this article, we’ve covered some of the pros and cons of living in Romania and why it can be an excellent place for running a small business.

Through reading this article, I hope that you have learned about what Romania micro-companies are, who should consider them, and why they are an excellent option for those running for an online business where they don’t need them to spend a lot of money.

I also hope you learned some of the pros and cons of living in Romania with tips on making the most out of your time there.

Read more:

• Running a business in Romania: KPMG’s Investment in Romania in 2021
• Living in Romania: My Romania Experience