How do we calculate the income tax of a micro-enterprise?

But how should these be calculated? Read below to find out how income tax is calculated in 2022 and how it will be calculated from next year!

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At this point, a microenterprise must make an income tax calculation of:

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- 1% tax, if the micro-enterprise has a full-time employee;

- 3% tax if the micro-enterprise has no employees.

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From 1 January 2023, the application of the micro-enterprise income tax system becomes optional

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According to Government Ordinance no. 16/2022, a Romanian legal entity may opt for payment of this type of tax if it meets the following requirements on 31 December of the previous year:

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- The income obtained does not exceed the equivalent in lei of 500.000 EURO (condition modified - currently the threshold is 1 million EURO);

- Share capital is held by persons other than the State or administrative-territorial units - (unchanged condition);

- It is not in the process of dissolution followed by liquidation (unchanged condition);

- At least 80% of its total revenues are generated from activities other than consultancy and management (newly introduced condition);

- Has at least one employee (newly introduced condition);

- Has associates/shareholders holding more than 25% of the value/number of equity securities or voting rights in no more than three Romanian micro-enterprises (newly introduced condition).

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The income tax rate for a micro-enterprise remains at 1% (the 3% rate is thus repealed)

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Rules applicable in case of exit from the income tax system of micro-enterprises during the year

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If a micro-enterprise earns more than EUR 500,000 or 20% or more of its income will be from consultancy/management services, then it owes corporation tax from the quarter in which it exceeds these limits.

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If the sole employee of a microenterprise terminates his/her employment contract, the microenterprise must hire a new employee within 30 days with a permanent/fixed-term employment contract of at least 12 months. Otherwise, it can no longer apply the micro-enterprise tax system.

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If the employment contract is suspended and if the suspension lasts less than 30 days - a situation recorded for the first time during the tax year in question - then the condition of a single employee can be deemed to be met.

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Other points to note

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If the Romanian legal entity carries out activities in the following fields, it will be excluded from the scope of this tax on microenterprise income: banking, insurance and reinsurance, capital market, including intermediation activities in these fields; gambling; exploration, development or exploitation of oil and gas deposits.

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If the income comes from dividends and is received from a branch of an EU Member State, it can be deducted when calculating the tax on microenterprises, as long as both the microenterprise and the branch meet the conditions of the EU Parent-Subsidiary Directive.

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Banqup your tax calculation solution!

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Banqup is a multinational platform dedicated to entrepreneurs and small and medium-sized companies. Through a digital work ecosystem, administrative tasks can be done quickly and hassle-free, anytime and anywhere.

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If you can't apply this tax system in 2023, then Banqup comes to your rescue! Get rid of the countless documents needed to calculate your tax and use our app to make your job easier!

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