Payroll taxes in Romania: An employer’s guide

When you hire in Romania, you — as the employer — are responsible for calculating, withholding, and submitting payroll taxes from your team members’ pay slips. For some taxes, you are also required to make employer contributions.

In this article, we’ll explain clearly which taxes you need to withhold, which taxes you need to contribute to, and how to remit and make payments. So let’s jump straight in.

What is payroll tax?

Payroll taxes are the contributions employees and businesses make to the government to fund public programs, such as retirement, healthcare, and unemployment insurance. They typically include income tax and social contributions, and are set at pre-determined rates.

These rates (and the rules governing them) vary by country, but it’s every employer’s responsibility to ensure they are compliant, and that they are withholding and submitting the correct amounts.

What is the difference between payroll taxes and corporate taxes?

Generally, payroll taxes are tied to your employees’ wages, while corporate taxes are based on your company’s profits. 

Which payroll taxes do you need to withhold from your employee in Romania?

In Romania, the taxes you’ll need to withhold are:

Income tax

Romanian residents are taxed at a flat rate of 10%. You must withhold taxes from their pay slip based on this rate.

When to pay: Payment (and the submission of the corresponding tax declarations) must be completed by the 25th day of the following month.

Social insurance contribution (CAS)

Employees contribute 25% of their gross income to the public pension system, which provides retirement benefits.

When to pay: At the same time as income tax (see previous section).

Health insurance contribution (CASS)

This program ensures access to medical services and healthcare coverage for Romanian citizens. Employees must contribute 10% of their gross salary.

When to pay: At the same time as income tax.

Note that you may also be required to withhold additional taxes for certain employees, such as child support payments, student loan repayments, or any other court-ordered garnishments.

Which payroll taxes does your business need to contribute to?

As well as withholding the contributions listed above, you are also required to make your own contributions, as follows:

Labor insurance contribution (CAM)

As an employer, you must contribute 2.25% of your employees’ total gross salaries to fund unemployment benefits, medical leave compensations, and other social security benefits.

When to pay: At the same time as employee contributions (see previous section).

Social Insurance Contribution for Special Working Conditions

If your employees work under special or arduous conditions, you must contribute an additional 4% to 8% to the pension system, depending on the specific working conditions.

When to pay: At the same time as employee contributions.

To quickly see a full breakdown of payroll taxes and employment costs for your Romanian hire(s) based on their salary, use our free Employee Cost Calculator tool.

How do you remit and pay payroll taxes in Romania?

You must first register with the Romanian tax authorities and obtain a tax ID number. Additionally, you should register each employee in the General Registry of Employees (Revisal). Then, for each pay period, you must:

1. Calculate the correct amounts for withholding. If you use Remote Payroll or Remote EOR, we will do this for you.

2. Submit the "D112" form, which consolidates all payroll-related taxes and contributions, to the National Agency for Fiscal Administration (ANAF) by the 25th of the following month.

3. Transfer the due amounts to the respective accounts of the state treasury by the same deadline.

How do you manage payroll taxes as an international employer?

When you hire a Romania-based team member from abroad, there are several ways you can manage their payroll and payroll taxes.

If you already have your own legal entity in Romania, you can:

• Handle it in-house. You can hire your own payroll tax specialists and manage everything internally. This can be costly, however.

• Use a local third party. You can hire a local firm to handle payroll, although this can be unreliable, costly, and pose data risks.

• Use a PEO. A professional employment organization (PEO) acts as an outsourced HR provider, and includes payroll.

• Use a global payroll provider. Global payroll providers — like Remote — have local specialists in multiple countries, ensuring that you are fully compliant with all tax requirements in each one. This is especially convenient if you have (or plan to have) employees in different countries, as you can manage all of them through one platform.

If you don’t have your own entity in Romania and you still want to hire there, you can:

• Set up your own entity. This can be extremely costly and time-consuming, but if you plan on establishing your business long-term in Romania, it might be a viable approach. To pay your employees, you would then need to choose one of the options above.

• Use an EOR. Employer of record (EOR) providers — like Remote — enable you to quickly and easily hire anywhere in the world, and also handle all the core HR functions (such as compliance and payroll). As well as being generally more cost-effective than opening your own entity, this option is highly scalable and, again, enables you to streamline all your global HR tasks in one place. How does an EOR work?

Global HR —

5 min

EOR, Payroll, or both: What does your business need?

Understand the difference between EOR and payroll services — and clarify which one your business needs to pay your international team members.

What about independent contractors?

In Romania, independent contractors are classified differently to employees. As a result, they (in most cases) are responsible for calculating, managing, and paying their own taxes.

However, it’s crucial to understand the difference between contractors and employees, as you may inadvertently create misclassification risk. This can result in severe fines and penalties for your business. Learn more about hiring contractors in Romania.

How can Remote help?

Knowing which payroll taxes you need to calculate, withhold, and contribute to requires local expertise, especially as these rules can — and do — change. And if you make a mistake or fail to comply, the financial consequences can be significant.

Whether you have your own entity in Romania or not, Remote ensures that you are withholding and contributing the correct amounts, and that you are fully compliant at all times with local tax and employment laws. We also provide 24/7 support for any guidance you may need.

To see how we can help — and to learn which approach is the most suitable for your business — speak to one of our friendly payroll experts today.

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