Corporate Tax in Romania 2026 and Transferring Profits to Israel: 1% Micro, 16% Corporate Tax, Dividends, the Tax Treaty and Reporting in Israel

An Israeli company or Israeli entrepreneur operating in Romania through a local company usually asks three questions: how much tax the company will pay in Romania, how much will be withheld when the profit goes out to Israel, and what will happen in Israel after that. This guide answers all three under the law in force in November 2026, after two tax packages Romania passed in 2025 and further amendments in 2026. On setting up the company itself, minimum capital and ONRC registration, see our guide to setting up an SRL in Romania.

1How much corporate tax does a company in Romania pay in 2026?

According to PwC, as of November 2026, the standard corporate tax rate in Romania is 16% of taxable profit. A small company meeting the conditions of the micro-enterprise regime pays 1% of income instead, regardless of profit. Which regime applies is re-examined every year. The minimum turnover tax (IMCA), which applies only to companies with turnover above 50 million euros, is abolished according to PwC from tax year 2027.

2Who is eligible for the 1% micro-enterprise regime, and what changed in 2026?

According to PwC, as of November 2026, a company is eligible for the 1% micro-enterprise regime only if its income in the previous year did not exceed the equivalent of 100,000 euros and it meets a series of conditions. From 1 January 2026 the threshold fell from 250,000 euros to 100,000 euros, and the 3% rate that existed for some activities was abolished, leaving a single rate of 1%.

• Employee: at least one employee, or a director paid under a management contract (contract de mandat).
• Shareholders: anyone holding more than 25% of the capital or voting rights may use the micro-enterprise regime in only one company.
• Financial statements: the company must file its annual financial statements on time, and must not be in liquidation.
• Ineligible sectors: banking, insurance, gambling, and oil and gas exploration and production.
• Exceeding the threshold: from the quarter in which income crossed the threshold, the company moves to corporate tax of 16%.

3When does the micro regime pay off and when does corporate tax?

The micro regime pays off when profitability is high and expenses are low, because the tax is calculated on income. Corporate tax pays off when there are high expenses, financing costs or losses, because it is calculated only on profit.

4How much tax is withheld from a dividend paid to Israel?

Under Romanian law, a dividend distributed from 1 January 2026 is subject to 16% withholding tax, including for a non-resident shareholder (Law 141/2025). For an Israeli-resident shareholder, the tax treaty between Israel and Romania limits the tax in Romania to 15%, provided the paying company receives a certificate of Israeli tax residence before payment.

A dividend based on interim financial statements for 2025 remains at the 10% rate under the transitional provisions. The 0% benefit under the EU Parent-Subsidiary Directive does not apply to an Israeli company, because Israel is not an EU member. Details of the treaty itself can be found in our guide to the Israel-Romania tax treaty. In addition, Law 239/2025 prohibits distributing a dividend before covering accumulated losses and restricts repayment of shareholder loans when equity is eroded; see company structure for an Israeli developer in Romania.

5What happens in Israel when the dividend arrives?

According to PwC, as of November 2026, an Israeli-resident individual pays 25% on a dividend from a Romanian company, or 30% as a substantial shareholder, and receives a credit for the tax withheld in Romania. An Israeli resident is taxed on worldwide income, so the dividend is reported in Israel and taxed there, with a credit for the tax withheld in Romania up to the amount of Israeli tax on the same income.

• Individual: 25% on a dividend, and 30% for a substantial shareholder holding 10% or more of the means of control (PwC, checked in June 2026).
• Israeli surtax: 3% on taxable income above ILS 721,560 in 2026, plus a further 2% on capital income (including dividends) above the same amount.
• Israeli company: a dividend from a foreign company is usually taxed at 23%. In certain circumstances it is possible to elect taxation at the corporate tax rate and receive a credit also for the corporate tax paid in Romania (indirect credit).
• Credit: for an individual, the credit in principle relates to the tax withheld from the dividend, not to the corporate tax paid by the Romanian company.

6How much is left for an Israeli owner after all taxes?

Based on the rates as of November 2026 (PwC), out of a profit of 100 in a Romanian company subject to corporate tax, roughly 58.8 is left for an Israeli individual holding 10% or more, 62.6 for an individual holding less than 10% and 64.68 for an Israeli company. The table illustrates, approximately, a profit of 100 units in a Romanian company subject to corporate tax, distributed in full as a dividend. It does not include Israeli surtax, exchange differences or adjustments, and is for illustration only.

In an Israeli company, when the money is distributed onward to the individual shareholders, a further dividend tax will apply in Israel. In a micro-enterprise the picture is different, because the tax in Romania is calculated on income rather than profit, and this is where the controlled foreign company question also comes in.

7Could the Romanian company be treated as a controlled foreign company in Israel?

Yes, in certain conditions. Under section 75B of the Israeli Income Tax Ordinance, a foreign resident body of persons controlled by Israeli residents, most of whose income or profits in the year are passive (interest, dividends, rent, royalties, capital gains) and whose effective tax on the passive income did not exceed 15%, may be treated as a controlled foreign company (CFC). A controlling shareholder holding 10% or more of the means of control will then be taxed on their share of undistributed profits, as if they had been distributed.

A Romanian company with genuine business activity, employees and customers will usually not meet the passive income test. A company that holds rented properties and pays the 1% micro tax is exactly the case that needs to be checked with an Israeli tax adviser. See also buying through an SRL or in your own name.

8When might a Romanian company be treated as resident in Israel?

When control and management of its business are actually exercised from Israel. Under the definition of “Israeli resident” in the Ordinance, a body of persons whose control and management are exercised from Israel is an Israeli resident. If the sole director sits in Israel and makes all the decisions there, such a claim may arise, and then the profit may also be subject to Israeli corporate tax, subject to the tie-breaker rules in the treaty.

Romania has a parallel test: a foreign entity whose place of effective management is in Romania is treated as resident in Romania, for example when at least half of the directors are Romanian residents or when strategic decisions are made there.

9Salary or dividend: how does an Israeli director draw money?

There is no single answer: a salary is a deductible expense that reduces the 16% corporate tax but carries high social contributions, while a dividend is paid out of after-tax profit, with 15% withholding under the treaty and further tax in Israel. A salary paid to an employee in Romania is taxed there at 10% income tax, and in addition the employee pays 25% pension contributions (CAS) and 10% health insurance (CASS), and the employer pays 2.25% (PwC, checked in September 2026). The gross minimum wage is 4,325 lei a month from 1 July 2026.

• Salary: a deductible expense for corporate tax, but the cost of social contributions is relatively high. In the micro-enterprise regime, a minimum salary for an employee or director is also an eligibility condition.
• Dividend: distributed from profit after tax, with 15% withholding under the treaty and additional tax in Israel.
• A director working from Israel: where the director's salary is taxed, in Romania or in Israel, depends on the treaty articles on employment and directors' fees and on where the work is actually performed. This is a question for individual planning.
• Social security: there is a separate social security agreement between Israel and Romania, which determines to which country contributions are paid in cases of work in both countries.

10When is an Israeli company operating in Romania treated as having a permanent establishment?

When it has in Romania a fixed place of business through which its activity is carried on, or a dependent agent authorised to sign contracts in its name. In such a case Romania taxes the profit attributed to the permanent establishment at 16%, and Israel gives a credit for that tax.

• A building site or installation project: under the Romanian Fiscal Code, a permanent establishment if it lasts more than six months. The treaty with Israel may have a different test, and its wording should be checked.
• Preparatory and auxiliary activity: storage, display, purchasing and collecting information do not usually create a permanent establishment.
• Registration of contracts: a Romanian company contracting with a non-resident for construction, assembly, supervision, consulting or technical assistance work in Romania must register the contract with ANAF.
• The Israeli side of a project: see taxation of an Israeli investor in a project company abroad.

11What is the VAT rate in Romania and when must you register?

According to PwC, as of November 2026, the standard VAT rate in Romania is 21%, in force from 1 August 2025 (instead of 19%), and registration is mandatory above an annual turnover of 395,000 lei. On the same date the two reduced rates, 5% and 9%, were replaced by a single reduced rate of 11% for a closed list of goods and services, such as food, medicines, books, accommodation and restaurants.

• Small business threshold: 395,000 lei of annual turnover, from 1 September 2025 (previously 300,000 lei). Above it VAT registration is mandatory.
• Services from a foreign supplier: a service a Romanian company receives from a supplier with no establishment in Romania is usually taxed under the reverse charge by the Romanian company.
• Invoices: the e-Factura system applies to business-to-business transactions and to transactions with consumers; from 2026 the deadline for uploading an invoice is five working days.
• New apartments: the 9% transitional route for housing ended on 30 September 2026. See Romania's 2026 tax changes.

12What needs to be reported, and when?

1. In Romania, every quarter: declaration and payment of corporate tax or micro tax by the 25th of the month following the quarter.
2. In Romania, financial statements: within 150 days of the end of the financial year; for 2025 the deadline was 2 June 2026. From 2026, a company that has not filed within five months of the deadline may be declared inactive for tax purposes.
3. In Romania, annual corporate tax return: by 25 June of the following year, for a calendar tax year.
4. In Romania, withholding tax on non-residents: an annual return by 31 January.
5. Before every distribution: a certificate of Israeli tax residence for the Romanian company, to apply the treaty rate.
6. In Israel: reporting in the annual return of the dividend and of the holding in a foreign resident body of persons (Form 150), and reporting of related-party transactions such as shareholder loans (Form 1385). Details in our Israel Tax Authority reporting hub.

This guide is general information as of November 2026 and is not tax advice; Romanian tax law changed several times in 2025-2026, and every case requires individual review.

More on doing business in Romania: Setting up a company in Romania · An Israeli company operating in Romania · Commercial disputes and litigation in Romania · Comparison of 8 countries · All guides for companies and businesses

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