About Microenterprises

According to the Tax Code approved by Law No. 22 of 2015, a microenterprise is a legal entity engaged in economic activities, with annual gross revenue in the previous fiscal year of:

  • no more than 500,000 EUR,
  • derived from activities other than banking, insurance, capital markets (except brokerage), gambling, or oil and gas extraction, and
  • revenue from consulting and management activities does not exceed 20% of total turnover.

The revenue threshold given in euros is converted to Romanian lei at the exchange rate set by the National Bank of Romania at the close of the business year for the respective company.

Following this assessment, it is also necessary to review the ownership structure, as neither the state nor local government may hold any ownership stake in a microenterprise’s share capital.

Regardless of the above criteria, a company is not considered a microenterprise if it is undergoing liquidation or bankruptcy proceedings registered with the Trade Registry or the court.

Microenterprise taxation is mandatory for newly established companies and for businesses that met the above requirements in the previous financial year.

Exceptions apply to newly established companies with a minimum share capital of 45,000 lei, which may choose between microenterprise and profit-based taxation. This choice is permanent, provided the company’s share capital does not fall below this threshold; otherwise, it must apply microenterprise taxation in the following fiscal year.

The business or financial year aligns with the calendar year. For newly established or dissolved companies, the fiscal year is defined as the period within the calendar year during which the legal entity existed.

The law applies two tax rates:

  • 1% of turnover for companies with one or more employees, and
  • 3% of turnover for companies without any employees.

An employee is defined as a person employed full-time under an individual employment contract. This requirement is also met if the company has multiple part-time employees whose combined hours amount to one full-time position or if it has a management or director contract that provides an income equivalent to the national gross minimum wage.

Changes in the number of employees will affect the applicable tax rate.

Additionally, if turnover exceeds 500,000 EUR, or if revenue from consulting and management activities exceeds 20% of total turnover, the tax on revenue is replaced by profit tax.

In light of the above, it may be worth considering which business structure to choose, as in many cases, a microenterprise may now be more advantageous than operating as an authorized individual or sole proprietor.