Advice on tax savings

[eln33]

I run a small digital marketing and automation agency currently registered in Portugal. We’re mostly working with international clients, so the business isn’t tied to any specific location. I’ve been looking into potentially relocating the company to Romania and was curious if anyone here has experience with the tax and corporate environment there. It’s a one-person business for now, and I’m considering relocating the company to Romania due to the tax setup there. I’m paying around 23% on my profit, and then another chunk if I take money out personally. Last year I made about €65,000, and I ended up paying over €15,000 in tax.

From what I’ve read, Romania offers a micro-company tax regime (1–3% on revenue), and the overall corporate tax rate is still relatively low at 16%, which is tempting compared to other EU countries. I’m also curious how the setup process works in practice and whether the bureaucracy is as tough as people say. And also if you think the hustle will be worth it.

Thanks in advance!

[darthblingbling]

Are you also personally considering moving to Romania as just because a company is registered in a certain country, doesn't mean it's tax resident there.

[eln33]

Thanks for the follow-up!
Yes, I’ve actually been looking into both options, relocating personally and just setting up the business there remotely. From what I understand so far, residency and taxation can be separate, but if I want to benefit from Romania’s micro-company regime long-term, I’d likely need to become a tax resident there too in order to be able to hire myself, or potentially find a Romanian employee.

[dearie]

I opened an SRL there last year. Bureaucracy’s not horrible if you have a good local accountant. Just make sure to clarify if you’re going for the 1% tax based on revenue or the standard 16% profit tax. And yes, you cannot hire yourself if you are not a resident.

[Netherlands Virtual Office]

Sorry I do not have Romanian experience. Though would like to warn you that you shall be careful with starting a business in Romania without substance. You can end up in the situation that both Romania and the country your are residing, consider your business a tax resident. In particular if both countries do not have a tax treaty.

[darthblingbling]

I'm not a corporate residency expert, but yes if you just set up the entity in Romania but perform all work and management functions in your home country, more than likely the residency of the Romanian registered company would shift to your home country. You would need to be looking to shift operations to Romania to take advantage of their micro entity regime.

[dearie]

From what I know, the key is not just where the company is registered but where it’s effectively managed from. So if all business decisions and work are done from another country, tax authorities there might still consider it a local business, which kind of defeats the purpose unless you actually plan to relocate or hire locally as you mentioned.

Have you already looked into how you’d go about setting up the company practically? Would you do it remotely or go through a local agent/lawyer? This can also be tricky as you would need someone locally to deal with Romanian authorities not just for the incorporation itself..

The bureaucracy can be quite time-consuming (Romania is not so digitalised and the language barrier is also important to take into consideration), especially when it comes to things like getting the fiscal registration, submitting accounting statements, or dealing with the local tax office (ANAF). Having a reliable local contact whether it’s an accountant or legal rep really makes a difference in avoiding delays or miscommunication, so you should be careful and do your research well.

[eln33]

I did find a provider: https://go-eu.com/en/ that could help with everything. I have scheduled a call with them next week to find out more about the process. Indeed you are right, I will do my research before I sign up to this. I've also tried to find local lawyers but they did not feel trustworthy and most of them are older and do not speak English very well so the communication wasn't good at all.

Aha.. so you confirm the bureaucracy is tricky.. good to know and thank you for the insights

[AGoodman]

While you are in Portugal and running the company there, Portuguese law will consider the company tax resident there. Otherwise everybody would be doing it.

You then have the same overall taxes (at best) and all the expensive hassle of negotiating double taxation arrangements, tax calculations and filing obligations in 2 countries. At worst, you end up paying 2x corporation tax.

I imagine you need to tell them. If not, I'm not sure if the Portuguese tax authorities are like the UK, where they just hit you with massive penalties or like Spain, where they arrest and prosecute you.