All companies that achieve an annual turnover of less than EUR 1,000,000 will be classified as “micro companies” from 01.01.2018. The previous year’s sales are used as the basis for the sales calculation.

Micro companies pay no profit tax (equivalent to German corporate tax) but a tax of 1% of sales if at least one employee is employed or 3% of sales if there are no employees.

The condition that a maximum of 20% of sales may be generated from consulting activities in order to be classified as a micro company has been removed.

At the same time, this classification also benefits other company activities that were previously excluded: insurers, capital markets, banks, competitions.

The option that corporation tax payment (16% of profit) can be selected in the case of share capital of at least RON 45,000 has been abolished.

Conclusion: for many companies whose annual turnover is less than EUR 1,000,000, this means an interesting tax cut. For companies with a small profit margin, this type of taxation could have disadvantages, the 16% profit tax would have been more advantageous in such cases.

Source: Urgent Ordinance O.U.G no.79 / 2017
(Publication in the Official Journal on November 10, 2017)

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