Every income-generating activity also has tax involved. So, if you are a foreign citizen and are employed at the moment or you are considering starting a business in Romania, then you need to be aware of how taxes might impact your income. Learn in this article how to get your Romanian Tax Residency Certificate and when it is mandatory to declare your local tax residency.
What does Tax Residency mean?
Tax Residency is an important concept in fiscal law that determines the fiscal status and obligations of individuals and companies. More specifically, tax residency identifies the location where taxation taskes place, based on the physical region where the income is generated.
So, if you plan on performing any income-generating activity (eg. as an employee, a freelancer, or even as an entrepreneur) for more than 183 days / a year on Romanian territory, you should consider declaring your tax residency here. After this period, you must declare the income generated in Romania and of course, pay the corresponding taxes.
Why do you even need a Tax Residency Certificate in Romania?
Your tax residency determines the amount of taxes you will have to pay on the income you’ve generated, as per the tax legislation of the country that considers you its fiscal resident. Since many countries have entered treaties to avoid double taxation, by establishing your tax residency, you might be able to avoid being taxed double on your generated income.
Who must declare his residency and where to do it?
- In case you are away from Romania for more than 183 days a year, you must fill out a form for establishing the tax residency (as an individual) upon your departure from Romania.
- In case you’re staying in Romania for more than 183 days a year, you must get your Tax Residency Certificate.
What is the Tax Residency Certificate?
The tax residency certificate is a document that certifies the fiscal residency of an individual or a company in a specific country.
When should you get it? Any entity that engages in economic activity for more than 183 days in Romania must get the tax residency certificate.
What purpose does it have? With it, you will avoid double taxation.
How to get it? The tax residency certificate will be issued by ANAF through the SPV account.
What does the Double Taxation Convention mean?
The Double Taxation Convention represents a signed agreement between certain countries that allows the country where you earned your income as an employee/freelancer/entrepreneur to tax you.
What are the types of incomes that benefit from this Convention?
- salary income (as an employee)
- income from a professional activity (as a freelancer)
- income from a micro-company / profit (as an entrepreneur)
- real estate income
How does it work?
Based on a Double Taxation Convention, when there are different levels of taxation, the most favorable taxation will be applied. To benefit from the Convention, the entity (individual or company) must get its own Tax Residency Certificate.
You can check if your income is subject of the Convention by following the link to the list of countries which Romania has partnered with.
What are the steps to get your tax residency in Romania?
You got income from economic activities in Romania and you reached the threshold of 183 days a year in Romania?
- Check the list of countries that Romania has partnered with in this Convention
- and get your tax residency.
How do you get the residency certificate?
To get the tax residency, you just have to:
- Become a tax resident in Romania by filling out a questionaire and then sending it to ANAF (see the final page for instructions)
- Once you’re a tax resident, all you need to do to get the Tax Residency Certificate (to avoid double taxation) is fill out a form on ANAF’s website
- copy of your passport
- copy of your ID Card, permanent residency document, or staying permit
- documents that prove you live in Romania (your property or rental agreement)
- document issued by your home country that proves that you are signed off from their tax books. Of course, the document must be accompanied by a Romanian translation done by a certified professional.
- the Certificate of Fiscal Residency, issued by the State Authority in your country – translated into Romanian by a certified professional, too.
Where do you apply for tax residency?
To submit your tax residency application (consisting of the filled out questionnaire and the documents specified above), you can either send everything to ANAF (Romanian Fiscal Authority) by means of your SPV account or you can go directly to your local ANAF branch (the one corresponding to your address in Romania).
Once you’ve submitted your application, ANAF will review the following:
- your proof of address in Romania (physical residency)
- your ties to Romania (for example, you get extra points if you are hired by a Romanian employer)
- if your stay in Romania reached 183 days a year
- if you have a car registered in Romania
- your driving license
- Romanian passport
- your Health and Pension Security Registration
If you check all of the above, ANAF will issue a Tax Residency Certificate. You will be able to download it from your SPV account within three days after you’ve submitted the application.
Regardless of the physical location of your economic activity, it’s important to check once a year the list of countries that signed the Double Taxation Convention. This way you make sure that you have your taxes in check.