Dividend tax in Romania: the 16% rate, distributions and non-resident shareholders

Dividend tax in Romania: the 16% rate from 2026

Dividend tax in Romania is a withholding tax: the company calculates it, deducts it from the gross dividend and pays it to the state, and the shareholder receives the net amount. Law 141/2025, published in the Official Gazette no. 699 of 25 July 2025, raised the rate from 10% to 16% for dividends distributed from 1 January 2026.

That single rate covers most situations — resident individuals, resident companies where no exemption applies, and non-resident shareholders — with two categories of exception: reductions under a double tax treaty, and the exemption for qualifying EU parent companies. Both are described further down.

The rate has moved upwards in stages over recent years, which is worth stating plainly because a large share of English-language material about Romania still quotes an earlier figure. Any model built on an older rate understates the cost of extracting profit by a material margin.

The tax sits in the Fiscal Code — article 97 paragraph (7) for withholding from resident individuals, articles 43 and 223 to 224 for companies and non-residents — whose consolidated text is published by ANAF. The distribution itself sits in Law 31/1990 on companies, whose consolidated text is on legislatie.just.ro.

What the two layers cost together

A Romanian company taxed on profit reports taxable profit of RON 500,000 for 2026 and distributes everything it can.

Total tax on the RON 500,000 of profit is RON 147,200, an effective 29.4% before any health contribution on the individual shareholder’s side. Under the 10% dividend rate that applied to distributions before 2026, the same profit left RON 378,000 with the shareholder — the change costs RON 25,200 on this single distribution. The example assumes the legal reserve is already at the level the law requires and that no prior losses have to be covered; where either is outstanding, the distributable amount is smaller before any tax is computed.

Before a dividend can be distributed at all

The tax question comes second. The first question is whether there is a distributable profit and whether the corporate steps have been taken.

1. Financial statements — annual, or interim where the distribution happens during the year — showing an accounting profit.
2. Prior losses covered. Accumulated losses reduce what can be distributed; distributing over them is not a tax error, it is a company law breach.
3. Legal reserve allocated. Article 183 of Law 31/1990 requires at least 5% of the annual profit to be set aside each year until the legal reserve reaches 20% of the share capital.
4. A shareholders’ resolution. The general meeting decides the distribution and records it, including the amount per share and the payment terms.
5. Payment within the term. Article 67 of Law 31/1990 sets a maximum period for paying an approved dividend — six months from the approval of the annual financial statements, unless the shareholders agree a shorter one — with statutory penalty interest running afterwards.

Directors who skip these steps carry personal exposure that no tax structuring repairs. In practice, the most common failure is not the resolution but the reserve: a company that has never allocated to the legal reserve discovers it at the point of its first distribution.

Interim versus annual distribution

Interim distribution is the practical answer for owners who do not want to wait for the annual accounts, and it is legitimately used — article 67 of Law 31/1990 permits it quarterly, on the basis of interim financial statements, with regularisation against the approved annual accounts. The condition attached to it is the one people forget: it is provisional. If the annual financial statements show a lower profit than the interim accounts suggested, the difference has to be returned by the shareholders within 60 days of the approval of the annual accounts, with penalty interest afterwards.

Two operational points follow. Interim accounts have to be genuine accounts, prepared and, where required, subject to the applicable review — not a management report. And a company with seasonal results should distribute conservatively during the year, because a strong first half followed by a weak second half is the standard route to a repayment obligation.

The health contribution on dividends for individuals

For an individual shareholder resident in Romania, the 16% withholding is not necessarily the end of it. Dividend income enters the annual assessment of the health contribution (CASS), alongside other non-salary income.

The mechanism works on thresholds rather than on a flat percentage of the dividend: where total qualifying income for the year is at least equal to a threshold expressed as a multiple of the gross minimum wage, the contribution is calculated on a base derived from that threshold. Article 170 paragraph (2) of the Fiscal Code sets the test at “at least equal to”, so income landing exactly on a threshold is inside it. Historically the system has used several tiers, so that the contribution steps up as income crosses each one.

Two figures move here, sometimes in the same year: the multiples used for the tiers, and the gross minimum wage they are applied to. This guide deliberately does not state a number, because a number stated in September is not reliably the number that applies to a distribution made the following March. Before planning a distribution, confirm the tiers and the wage in force for the year concerned with reference to the current Fiscal Code and the ANAF guidance.

The contribution is reported by the individual through the annual single return, not withheld by the company, which is why shareholders are frequently surprised by it a year after the money arrived.

Dividends to non-resident shareholders

The domestic rate of 16% applies to a dividend paid to a non-resident shareholder, unless something reduces it.

Double tax treaties. Romania has an extensive treaty network, and dividend articles commonly provide reduced rates, often differentiated between substantial corporate holdings and other shareholders. To apply a treaty rate, the paying company needs a tax residency certificate issued by the shareholder’s tax administration, valid for the year of payment, in original or in a legalised copy with authorised translation, held before payment or within the deadline the Fiscal Code allows. Without the certificate, the company withholds at the domestic rate — and correcting it afterwards means a refund procedure rather than a simple adjustment.

The EU parent-subsidiary exemption. The Fiscal Code exempts dividends paid to a company resident in another EU member state that holds a qualifying participation in the Romanian payer — as a rule at least 10% of the share capital, held for an uninterrupted period of at least one year at the date of payment. The conditions are cumulative, and the holding period is measured to the payment date, so a parent that acquired its stake eleven months earlier does not qualify yet. Documentation of the parent’s residence, legal form and holding period is assembled before payment, not after.

Reporting. Tax withheld from non-residents is reported in an annual informative return, as a rule by the last day of February for the previous year. The wider treatment of payments to non-residents — royalties, interest, services — is covered under taxation of non-residents.

Rates, deadlines and returns at a glance

Where a deadline in this table falls on a non-working day it moves to the next working day, as with the rest of the Romanian tax calendar.

Specific situations

Foreign founder of a Romanian SRL. The company withholds at the domestic rate unless a treaty or the EU exemption applies, and the certificate has to be in hand before payment. Founders who set the company up remotely often discover the certificate requirement only when the first distribution is already approved. The formation side is covered in the guide to setting up an SRL as a non-resident.

Micro-company owners. The 1% company-level tax and the 16% dividend tax stack. The comparison that matters is what reaches the shareholder, not the headline company rate; the arithmetic is in the guide to micro-company tax versus corporate income tax.

Shareholder loans used instead of dividends. Drawing money as a loan rather than a dividend defers nothing reliably. Balances that are never repaid, or that carry no interest, attract reclassification, and the reassessment carries interest and penalties on top of the tax that should have been withheld.

Dividends declared in one year and paid in another. The 25 January rule exists precisely for this case, and it catches companies that approve a distribution in December for cash-flow reasons and pay it in the spring.

The errors we see most often

• Quoting an outdated rate. The dividend tax is 16% from 2026.
• Distributing without covering prior losses or without allocating the legal reserve.
• Interim distributions that exceed the annual result, with no plan for the repayment the law then requires.
• Withholding at a treaty rate without holding the residency certificate, which converts a legitimate reduction into an assessment.
• Assuming the EU exemption applies from the moment of acquisition, when the one-year holding period runs to the payment date.
• Forgetting the 25 January deadline for dividends approved but unpaid at the end of the year.
• Ignoring the health contribution when planning an individual shareholder’s net position.

How we help

We handle the distribution as a sequence rather than a single entry: checking that the profit is distributable, preparing the interim or annual accounts that support it, drafting the shareholders’ resolution, calculating and reporting the withholding, and collecting the residency certificates where a treaty rate or the EU exemption is in play. For foreign shareholders we set the documentation out in advance, so the reduced rate is applied at source instead of being reclaimed later. That work sits under tax advisory, with the cross-border side under taxation of non-residents.