PFA (Sole Proprietorship) in Romania

Sole Proprietorship · Formation from $50

Last verified: June 13, 2026

Corporate Tax

10.0%

State Tax

0.0%

Formation Cost

$50

Annual Fee

Comparison Scores

Privacy, remote setup, banking, and tax efficiency

Privacy3/10

Remote Setup6/10

Banking8/10

Tax Efficiency7/10

Overall Score6/10

Calculate full formation cost

Break down one-time filing fees and recurring costs for any supported entity type.

Who Should Choose This?

Profiles that typically benefit from this entity

Freelancers and independent contractors with low to medium annual income.
IT professionals, consultants, and digital marketers starting their first business.
Individuals who want immediate access to their earned money without dividend restrictions.
Solopreneurs who want minimal administrative, legal, and accounting overhead.

Who Should Avoid This?

Scenarios where another structure may be better

High-earning professionals (due to high social security caps, an SRL is often more tax-efficient).
Founders planning to hire multiple employees, raise capital, or scale a large team.
Businesses with high liability risks (e.g., physical retail, manufacturing, heavy logistics).

Advantages

+Fast and inexpensive to set up compared to a Romanian SRL.
+Simplified accounting requirements (single-entry bookkeeping is sufficient).
+Direct access to business funds at any time without waiting for dividend distributions or paying dividend tax.
+Highly competitive flat 10% personal income tax rate.
+Easy to close, suspend, or dissolve the business if circumstances change.

Disadvantages

-Unlimited personal liability for all business debts and obligations.
-Strictly limited to a maximum of 5 CAEN (NACE) activity codes.
-Requires formal proof of education or professional qualification in the chosen field of activity.
-Mandatory social security contributions (pension and health) can be high for top earners due to increased caps.
-Lower perceived corporate prestige compared to an incorporated entity (SRL) when dealing with large enterprise clients.

Formation Steps

Obtain proof of education or professional qualification (diplomas, certificates) matching your desired CAEN codes.

Secure a registered office (headquarters) in Romania, which can be a rented apartment, owned property, or a virtual office.

Reserve your business name at the National Trade Register Office (ONRC).

Prepare the registration file, including your ID, proof of address, qualifications, and standard ONRC forms.

Submit the application to the local Trade Register either in person or via the online portal.

Receive the Registration Certificate (CUI) within 3 to 4 working days upon approval.

Register with the tax authority (ANAF) and set up the Virtual Private Space (SPV) to comply with the mandatory RO e-Factura system.

Cost Breakdown

Detailed breakdown of formation and ongoing costs

Item	Type	Amount
State filing & registration fees	One-time	$10
Registered office (Virtual Office)	Annual	$150
Accounting & e-Factura compliance	Annual	$200
First year total		$360
Annual ongoing		$350

Real-World Examples

Typical use cases for this entity type

A freelance graphic designer working with international clients, enjoying the 10% flat tax and direct access to funds.
An independent IT consultant who uses a PFA for the first year of business before transitioning to an SRL as revenue grows.
A local language tutor operating under a fixed income norm (normă de venit) to completely minimize tax administration.

Common Mistakes

Pitfalls to avoid during setup and operations

Failing to register for the ANAF SPV and missing the strict 5-day RO e-Factura submission deadline.
Choosing the wrong CAEN codes or not having the required diplomas to prove qualification for those codes.
Ignoring the mandatory social security thresholds and failing to submit the annual tax return (Declarația Unică) on time.
Mixing personal and business expenses in the same bank account, which complicates tax deductions.
Exceeding the VAT registration threshold (395,000 RON) without promptly registering for VAT.

Other entity types

Other formation options in Romania

Limited Liability Company (SRL)

Primary

Tax: 16.0%
Formation: $30

Joint Stock Company (SA)

Tax: 16.0%
Formation: $50

Branch Office

Tax: 16.0%
Formation: $50

Representative Office

Tax: 0.0%
Formation: $1,200

General Partnership (SNC)

Tax: 16.0%
Formation: $50

Limited Partnership (SCS)

Tax: 16.0%
Formation: $35

Partnership Limited by Shares (SCA)

Tax: 16.0%
Formation: $100

Compare with Other Countries

Country / Type	Tax	Formation	Annual
🇷🇴 PFA (Sole Proprietorship)(Sole Proprietorship)	10.0%	$50	$0

🇷🇴 vs 🇺🇸 United States 🇷🇴 vs 🇪🇪 Estonia 🇷🇴 vs 🇬🇧 United Kingdom 🇷🇴 vs 🇮🇪 Ireland All comparisons →

FAQ

Can a foreigner open a PFA in Romania?

Yes, but you must have a legal right to reside in Romania, which includes holding a Romanian residency permit and a Personal Identification Number (CNP).

Do I need an accountant for a PFA?

While not legally required due to simplified single-entry bookkeeping, hiring an accountant is highly recommended to handle the annual tax return (Declarația Unică) and ensure compliance with the RO e-Factura system.

What is the income tax rate for a PFA in 2026?

The income tax is a flat 10%, applied either to your actual net income or to a fixed income norm (normă de venit), depending on your activity and revenue.

How do I withdraw money from my PFA?

Unlike an SRL, a PFA is a sole proprietorship. You have direct and immediate access to the funds in your PFA bank account at any time without paying dividend taxes.

What are the social security caps for 2026?

Pension (CAS) is capped at 24 minimum wages. Health insurance (CASS) has higher progressive caps, reaching up to 72 minimum wages depending on your total income.

Is the RO e-Factura system mandatory for PFAs?

Yes. All B2B invoices issued by a PFA must be submitted through the national RO e-Factura system within 5 working days of issuance.

How many activities can a PFA have?

A PFA is legally restricted to a maximum of 5 CAEN (NACE) activity codes. If you need more, you must open an SRL.

What happens if my PFA goes bankrupt?

Because a PFA is not a separate legal entity, you have unlimited personal liability. Your personal assets can be seized to cover business debts.

Detailed Tax Rates

Corporate Income Tax

From	To	Rate

As a sole proprietorship, a PFA is not subject to corporate income tax. The standard 16% CIT applies only to incorporated entities like SRLs.

Personal Income Tax (Top rate: 10.0%)

From	To	Rate
$0	No limit	10.0%

PFA income is subject to a flat 10% personal income tax, applied either to the actual net income (real system) or a fixed income norm.

Capital Gains Tax

16.0%

Starting in 2026, standard capital gains and crypto gains are taxed at 16%. Gains from securities via Romanian brokers benefit from reduced rates of 3% (held >1 year) or 6% (held <1 year).

VAT / GST

21.0%

Registration Threshold: RON395,000

Non-resident providers of digital services to Romanian consumers must charge 21% VAT, typically registering via the EU OSS scheme.

Withholding Tax

Dividends16.0%

Royalties16.0%

Interest16.0%

The dividend tax rate increased to 16% in 2026. Rates may be reduced under Romania's extensive network of double taxation treaties.

Payroll & Social Security

Employer2.3%

Employee35.0%

For employees, employers pay 2.25% (CAM) and employees pay 35% (25% pension + 10% health). The PFA owner pays their own capped pension and health contributions based on minimum wage multiples (up to 72 salaries for health in 2026).

Other Taxes

Local Property Tax

Municipalities levy taxes on buildings and land. In 2026, the special tax rate for high-value properties increased from 0.3% to 0.9%.

RO e-Factura Mandate

Not a tax, but a strict compliance mandate: all B2B invoices must be transmitted through the national e-invoicing system within 5 working days.

Incentives & Support

Start-Up Nation Romania

A government grant program providing non-reimbursable funds to stimulate new small businesses and entrepreneurship.

Up to 250,000 RON (approx. 50,000 EUR) covering up to 90% of eligible project expenses.

Eligibility: PFAs and SRLs registered in Romania. Pillar I targets young entrepreneurs under 30. Must co-finance at least 10% of eligible expenses.

Early Payment Tax Discount

A reduction in income tax and social contributions for early compliance and electronic filing.

Typically a 3% to 10% discount on the total tax amount owed, depending on the annual ANAF ordinance.

Eligibility: Filing the Declarația Unică and paying the full tax liability electronically before a specified early deadline (e.g., April 15).

Formation Requirements

Minimum Capital

No requirement

No minimum share capital is required to establish a PFA.

Local Director

Not Required

The founder acts as the sole proprietor (authorized individual) and must have the legal right to reside and work in Romania.

Registered Office

Required

Virtual office allowed. $100 - $300 per year

Notarization Required

Yes

Power of Attorney (Remote)

Required

Required if a lawyer or agent is submitting the registration file to the Trade Register (ONRC) on your behalf.

Timeline

Standard: 3-4 business days days

Expedited: 1-2 business days days ($50)

Required Documents

1Passport or National ID copy
2Proof of education or professional qualifications (diplomas/certificates)Apostille needed
3Proof of registered office (lease agreement or property deed)
4Specimen signatureApostille needed
5Standard ONRC registration forms

Compliance & Reporting

Annual Filings

Declarația Unică (Single Tax Return)

Penalty: Fines of 50 to 500 RON for late filing, plus late payment interest (0.02% per day) and penalties (0.01% per day) on unpaid taxes.

May 25 of the following year

RO e-Factura Submission

Penalty: Penalty of 15% of the invoice value for B2B transactions, or fines of 1,000 to 2,500 RON for B2C transactions if not submitted via the SPV portal.

Within 5 working days of invoice issuance

Audit Requirement

Not Required

Not applicable. PFAs are not subject to statutory audits.

Accounting Standard

Single-entry bookkeeping (Partidă simplă)

Tax Return Deadline

May 25 of the year following the income generation.

VAT Filing Frequency

Quarterly (turnover < EUR 100,000) or Monthly (turnover >= EUR 100,000 or intra-EU acquisitions)

Data Protection

Must comply with GDPR if processing personal data of EU residents.

Banking & Payments

Banca Transilvania

The largest bank in Romania, offering dedicated packages for PFAs, but requires an in-person branch visit to open an account.

ING Bank Romania

Popular among freelancers and IT professionals for its excellent mobile app, though initial setup usually requires a physical visit.

Revolut Business

Remote-friendly

Highly recommended for PFAs dealing with international clients. Fully remote opening and excellent multi-currency support.

Wise

Remote-friendly

Ideal for receiving payments in multiple currencies with low conversion fees. Easy online setup for Romanian PFAs.

Payment Gateways

Stripe, PayPal, Netopia Payments, PayU, 2Checkout, Paddle

Currency

RON

Multi-Currency: Supported

Account Opening

Opening a traditional bank account for a PFA requires a Romanian Personal Identification Number (CNP) and usually an in-person visit to a local branch. However, since a PFA founder must already have legal residency to register the entity, local banking is straightforward once the CNP is obtained. For faster, remote setups, fintechs like Revolut Business and Wise are widely used.

Practical Information

Timezone

UTC+2 to UTC+3

Business Language

Romanian (official), English (widely spoken in business)

Legal System

Civil law

Ease of Doing Business

#55

IP Protection

Strong IP protection aligned with EU directives. Trademarks and patents are registered through the State Office for Inventions and Trademarks (OSIM) and are enforceable across the EU via EUIPO.

Double Tax Treaties

90 countries

Notable treaties: United States, United Kingdom, Germany, France, China, Canada

Visa & Residency Options

Digital Nomad Visa (D/AD)

Allows non-EU remote workers to live in Romania for up to 1 year (renewable) if they earn at least 3 times the Romanian average gross salary (approx. €5,550/month in 2026) from a foreign company.

Commercial Activities Visa (D/AC)

A long-stay visa for foreign nationals who act as shareholders or administrators in a Romanian company and make a qualifying investment in the country.