How to set up as an independent contractor in Romania

If you're tired of the 9-to-5 grind, and you’re thinking of going it alone, there are few countries as well suited to self-employment as Romania.

With a famously low tax rate and the benefit of EU membership, this enchanting and mysterious country offers a lot for independent contractors. Whether you’re looking to set up shop in the forward-looking, storied capital of Bucharest, the charming medieval old town of Sighişoara, or the rugged wilderness of the Carpathian mountains, it’s an ideal place to merge work and lifestyle — and come out on top financially, too.

Before you can fully embark on your self-employment journey, though, you’ll need to know how to:

• Register your business in Romania

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

In this article, we’ll cover all these things, and help you navigate your tax responsibilities as a self-employed worker. We’ll also discuss some of the other risks and liabilities you should be aware of. So let’s begin.

First, it’s important to clarify how Romania defines independent contractors.

What is an independent contractor according to Romanian law?

Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently to employees, and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.

See also: Why businesses hire contractors vs. international employees

In the Labour Code of Romania, there is no specific section dedicated to independent contractors. However, based on several articles within the code, you are generally considered to be a contractor if you:

• Determine your own work schedule and working hours

• Perform work for other companies

• Set your own rates and scope of work

• Provide your own tools or equipment

• Are not integrated into the company and its operations (i.e. you don’t have an internal email address)

• Are able to delegate or subcontract work

• Work without direction or supervision

When you work with clients, it’s important to be correctly classified to avoid penalties and fines, and to ensure that you are paying the right taxes.

Business registration in Romania

Before you can begin working as an independent contractor in Romania, you’ll first need to choose a formal structure for your business. Some of the most popular models for sole owners include:

• Sole proprietorship (personă fizică autorizată, or PFA): A simple structure that is ideal for independent, individual contractors. You have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities.

• Individual enterprise (intreprindere individuala): Another simple structure that is almost identical to the sole proprietorship model. The primary difference is the number of employees you can hire.

If you want more legal protection, you anticipate generating a large amount of revenue, or you’re working with additional partners (natural or legal), you can also incorporate a formal company, or enter into a partnership. If you’re unsure which structure is most suitable for your business, it’s a good idea to speak with a registered solicitor or accountant.

If you do opt for the sole proprietor model, you will need to register at the National Trade Register Office (Oficiul Național al Registrului Comerțului, or ONRC). To do this, you must fill out the ONRC application form, and submit it at your nearest ONRC office. You will then receive a unique registration code (Codul Unic de Inregistrare, or CUI).

Note that, if you practice a so-called liberal profession (such as medicine, law, or architecture), you do not need to register with the ONRC. Instead, you will need to notify your profession’s relevant regulatory authority. You can see a full list of exempted professions here.

You will also need to apply for a tax ID and a social security number, if you don’t already possess them.

How do I get paid as an independent contractor in Romania?

As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick, but often come with hefty service fees. And if you have clients in other countries besides Romania, the payment collection process can be even more complicated. 

Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in Romanian lei (or other currencies, such as euros) — and with no hidden fees. Learn more about how our platform can help.

Independent contractor taxes in Romania

As an independent contractor, you’re responsible for filing and paying your own taxes.

The good news is that, as a sole proprietor, you pay personal income tax on your business profits (using your personal tax number). This means that you do not have to fill out a separate tax return, or pay additional corporate taxes.

Unlike most countries, Romania has a flat tax rate of 10%, regardless of income earned. You must file your annual tax return and settle your tax bill by May 25 each year.

If you earn over RON36,000 annually, you will also need to make social insurance contributions of 25% and health insurance contributions of 10%. These contributions are calculated based on a variety of income factors; you can see a full breakdown here.

VAT information for independent contractors in Romania

If you make (or expect to make) more than RON300,000 in a year, you must register for — and start charging your clients — VAT.

The standard VAT rate in Romania is 19%, although some goods and services are charged at the lower rates of 9%, 5%, and 0%. 

Liability considerations for independent contractors in Romania

As a sole proprietor, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates, for both Romanian and international clients.  

Accounting requirements for independent contractors in Romania

As a sole proprietor, you do not need to publish financial statements or accounts. However, you must still keep organized, accurate records of all your income and expenditure (including client invoices, purchase orders, bank statements, and receipts). This will also help you correctly file your taxes, give you a stronger picture of your financial situation, and generally make life easier if you are audited by the tax authorities.

You can either manage these records yourself using an accounting or bookkeeping tool, or hire a professional bookkeeper or accountant.

The dangers of contractor misclassification in Romania

As we’ve mentioned, independent contractors are classified differently to employees in Romania. Many of the protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

Download

How do I ask the company I’m working with to convert me to an employee in Romania?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Romanian law.

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approvals, and payments systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in Romanian lei (or other currencies), without any hidden fees.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Romanian laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Setting up as an independent contractor in Romania

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Romanian and foreign clients

• Enhance your invoice management and avoid manual processes

• Comply with local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.