Tax Incentives for Expatriates and Digital Nomads in Romania
Romania offers a range of tax incentives to attract and retain expatriates and digital nomads. These incentives aim to make Romania a more attractive destination for skilled professionals and remote workers, contributing to the country's economic growth and development.
Eligibility Criteria
To qualify for tax breaks as an expatriate or digital nomad in Romania, individuals must meet specific criteria:
- Expatriates: Expatriates must be non-Romanian citizens who have relocated to Romania for employment purposes. They must have a valid work permit and reside in Romania for at least 183 days per year.
- Digital Nomads: Digital nomads must be self-employed individuals who work remotely for clients outside of Romania. They must have a stable income and reside in Romania for at least 183 days per year.
Types of Tax Breaks
Expatriates and digital nomads in Romania can benefit from the following tax breaks:
- Flat Tax Rate: Expatriates and digital nomads can opt for a flat tax rate of 10% on their worldwide income, regardless of its source. This rate is significantly lower than the standard income tax rate of 16%.
- Tax Exemption on Foreign-Sourced Income: Expatriates and digital nomads are exempt from paying Romanian income tax on income earned from sources outside of Romania. This exemption applies to both employment income and business income.
- Social Security Contributions Exemption: Expatriates and digital nomads are exempt from paying social security contributions on their Romanian income. This exemption can result in significant savings, as social security contributions typically amount to around 25% of gross income.
Application Process
To claim these tax breaks, expatriates and digital nomads must apply to the Romanian tax authorities. The application process involves submitting the following documents:
- Proof of residency in Romania (e.g., a lease agreement or utility bills)
- Proof of employment or self-employment income
- A completed tax return
The application deadline is April 30th of the year following the tax year for which the tax breaks are being claimed.
Legal Framework
The tax incentives for expatriates and digital nomads in Romania are established by the following laws and regulations:
- Law No. 227/2015 on the Fiscal Code
- Government Emergency Ordinance No. 114/2018 on the Flat Tax Scheme
- Government Decision No. 1125/2018 on the Implementation of the Flat Tax Scheme
These policies aim to attract and retain skilled professionals and remote workers, fostering economic growth and innovation in Romania.
Conclusion
Romania offers a range of tax incentives to expatriates and digital nomads, making it an attractive destination for skilled professionals and remote workers. By meeting the eligibility criteria and following the application process, individuals can benefit from advantageous tax treatment and enjoy the lifestyle opportunities offered by Romania.
If delving into the depths of Romanian tax rules and regulations isn't your style, and you'd rather have experts take the reins, then Heavnn is here to help.
Let us simplify your tax planning journey. Access Heavnn's blend of professional expertise and cutting-edge technology by clicking the button below.
