Flat tax (16%) and the taxes on the salaries are the main competitive advantages of the Romanian system

First, to start a business in Romania we need to know where is placed the Romanian taxation system in relation to European and world context.

This, because there is a substantial difference between the new Member States and the "the old states”, from UE (Poland, Slovakia, Czech Republic, Hungary, Estonia etc). In many of the countries that joined the EU in 2004 income tax was reduced lately, Romania passing directly to an income tax cut.

The flat tax.

If we talk about the tax regime in Romania we take into account the flat rate tax. Is obvious that Romania has entered recession for instance has been applied to flat tax. Although the example was taken from France, the flat tax was seen that should not be thinking on long term. In conclusion...

Flat tax (16%) and standard rate of VAT (19%) are two of the main competitive advantages of the Romanian fiscal system.

We remember, there is a reduction of income tax from 25% to 16% level - to join in an international trend. This in my optics is the biggest advantage to start a business in Romania.

Also on the salaries we have an advatage over the rest of Europe:

Some salary levels:

(average net salary by activity fields, December 2009)
Finances: 3.162 RON (ca. 746 €)
Insurances: 2.361 RON (ca. 557€)
Post and telecommunications: 2.416 RON (ca. 570€)
Industry: 1.328 RON (ca. 313€)
Health: 1.363 RON (ca. 321€)
Constructions: 1.143 RON (ca. 269€)
Agriculture: 1.010 RON (ca. 238€)
Tourism: 769 RON (ca.181€)

Employer's Taxation:
(on 31.12.2009)

Social insurance taxation: 20,8%
unemployment taxation: 0,5%
health social insurance taxation: 5,2%
taxation for holidays and health social insurance indemnities: 0,85%
taxation due for work accidents and professional diseases: between 0,15% and 0,85%
(According to the main activity, see the list:)
ITM commission: 0,75%
Taxation at the warranty Fund for the payment of the salary debts: 0.25%

Total: between 28,5% and 29,2%

Employee's taxation
(on 31.12.2009)

Social insurances taxation: 10,5%
unemployment taxation: 0,5%
health social insurance taxation: 5,5%

Total: 16,5%