📊 Tax

Micro-Company vs Profit Tax in Romania (2026): Which to Choose

For a small foreign-owned Romanian SRL, the most expensive decision isn’t a missed invoice — it’s picking the tax regime on autopilot. The question “micro-company or profit tax” has an exact mathematical answer: the 1% micro regime is cheaper as long as your profit margin is above 6.25%. Below that, the 16% profit tax costs you less. Here is where the 6.25% comes from, and what the difference looks like in real numbers.

What you’re actually comparing

The micro-company is not a separate legal form — it’s a tax regime an SRL can qualify for. So you’re comparing two ways to tax the same company:

• Micro: 1% on turnover (revenue), regardless of expenses. From 1 January 2026 there is a single 1% rate (the old 3% tier was abolished). See Romania micro-company tax.
• Profit tax: 16% on profit (revenue minus deductible expenses). See Romania corporate profit tax.

The key difference: under micro you pay even in a thin-margin or loss year; under profit tax the base shrinks with your costs — and is zero in a loss year.

The break-even: a 6.25% profit margin

The two regimes cost the same when:

1% × Revenue = 16% × (Revenue − Expenses)

Solve it and expenses land at 93.75% of revenue — meaning a 6.25% profit margin. That gives one simple rule:

• profit margin above 6.25% → micro (1%) is cheaper;
• margin below 6.25% → profit tax (16%) is cheaper;
• exactly 6.25% → a tie.

The higher your margin (services with few costs), the more decisively micro wins. The thinner your margin (trading, distribution), the more the 16% profit tax pulls ahead.

Three worked examples (annual revenue 400,000 RON)

Same turnover — 400,000 RON/year, under the micro ceiling — varying only the expenses.

Example 1 — high-margin services (consulting/IT), expenses 120,000 RON (70% margin)

• Micro: 1% × 400,000 = 4,000 RON
• Profit tax: 16% × (400,000 − 120,000) = 16% × 280,000 = 44,800 RON

Micro wins overwhelmingly: 4,000 vs 44,800 RON. For service businesses, where the main “cost” is your own time, the 1% regime is almost always right — which is exactly why most non-resident-owned SRLs use it.

Example 2 — low-margin trading, expenses 380,000 RON (5% margin)

• Micro: 1% × 400,000 = 4,000 RON
• Profit tax: 16% × (400,000 − 380,000) = 16% × 20,000 = 3,200 RON

The result flips: profit tax is cheaper (3,200 < 4,000 RON), because the 5% margin is below the 6.25% break-even. A business reselling goods at a small markup pays a large share of revenue as cost — and 1% of all revenue can exceed 16% of a thin profit.

Example 3 — right on the break-even, expenses 375,000 RON (6.25% margin)

• Micro: 1% × 400,000 = 4,000 RON
• Profit tax: 16% × 25,000 = 4,000 RON

A perfect tie — exactly at a 6.25% margin. Run your own numbers with the micro vs profit tax calculator.

What the simple formula hides

The 6.25% margin is the compass, but the real decision has a few more layers:

1. The employee condition costs money. A micro-company must have at least one employee (or a paid administrator mandate). One position at the minimum wage (4,050 RON gross in 2026) costs the employer roughly 49,700 RON/year (gross plus the 2.25% work-insurance contribution). The profit-tax regime carries no such requirement. See hiring employees in Romania.

2. Micro pays even at a loss. In a weak year with zero or negative profit, profit tax is zero, but micro is still 1% of all turnover. Cyclical or early-stage businesses with loss years should weigh this.

3. The ceiling forces you out anyway. Above €100,000 of turnover the SRL leaves the micro regime and moves to profit tax, regardless of margin. If you’re near the ceiling, plan the transition early.

4. Dividends are taxed the same either way. Money taken out as dividends is taxed at 16% (from 2026 under Law 141/2025), plus health contribution (CASS) on fixed thresholds — in both regimes. So the dividend tax doesn’t tip the micro-vs-profit choice, but it matters for what actually reaches you. See dividends from a Romanian SRL.

5. VAT is a separate calculation. Your income-tax regime (1% or 16%) has nothing to do with VAT. You can be micro and VAT-registered, or profit-taxed and VAT-exempt — the VAT threshold is a different number. See VAT registration in Romania.

Full example: the same company, both regimes

To see the whole picture at company level, take a service SRL with revenue of 400,000 RON and expenses of 150,000 RON (including one minimum-wage employee at roughly 49,700 RON/year, plus rent, software and accounting):

• Micro regime: tax is 1% × 400,000 = 4,000 RON. The remaining accounting profit (400,000 − 150,000 − 4,000 = 246,000 RON) can be distributed as dividends.
• Profit regime: tax is 16% × (400,000 − 150,000) = 16% × 250,000 = 40,000 RON. Profit left for dividends: 210,000 RON.

The company-level tax difference is 36,000 RON/year in favour of micro — at a 62.5% margin, far above the 6.25% break-even. Only after this stage does the dividend tax (16% + CASS) apply, identically in both regimes, on whatever you actually distribute.

How and when you can switch regime

The regime is not fixed for life, but you can’t switch on a whim:

• Leaving micro is automatic if you exceed the €100,000 ceiling or lose a condition (e.g. no employee) — you move to profit tax from the quarter in which it happened.
• Opting for a regime is communicated to ANAF via the amendments declaration (form 700) and generally applies from the start of the next fiscal year.

Timing matters: if you expect to cross the ceiling or your margin to drop below 6.25%, plan the switch early so you don’t overpay in a transition year. This is the kind of call your accountant should flag before year-end — see compliance after forming your SRL.

The decision at a glance

Situation	Regime to choose
Services, consulting, IT — low costs, high margin	Micro (1%)
Trading/distribution with small markup (margin < 6.25%)	Profit tax (16%)
Cyclical business with loss years	Often profit tax (16%)
Turnover near €100,000	Prepare the move to profit tax
Solo, no plan to hire	Mind the cost of the micro employee condition

Key takeaways

• The micro-vs-profit break-even is a 6.25% profit margin: above it, micro (1%); below it, profit tax (16%).
• At the same turnover, higher expenses shift the advantage to profit tax.
• Micro pays 1% even at a loss; profit tax is zero in a loss year.
• The employee condition, the €100,000 ceiling and dividends (16% + CASS) are separate layers.

Frequently asked questions

What regime does a new SRL start on? At formation you can opt for micro if you meet the conditions (including hiring within the legal deadline). Otherwise you’re on profit tax. The choice is made when we form the company.

Do I still pay micro tax at a loss? Yes. Micro applies to turnover, not profit — you pay 1% even in a loss year. Under profit tax, a fiscal loss means zero profit tax that year.

Do my cost of goods/services reduce micro tax? No — micro tax is on revenue. But costs still matter for the accounting profit you distribute as dividends and for staying under the ceiling.

Is the dividend tax different between regimes? No. Dividends are taxed at 16% (plus CASS where due) in both cases — see dividends from a Romanian SRL. Only the company-level tax differs (1% vs 16%).

Can I be micro and VAT-registered at the same time? Yes. Your income-tax regime is independent of VAT registration.

What if I do both services and trading? You look at the company’s overall margin, not per activity: a micro-company pays 1% on all revenue regardless of the activity mix. If a low-margin trading line drags the blend below 6.25%, run both scenarios on your real figures before deciding.

As a non-resident, does the regime affect how I’m taxed at home? The Romanian company tax is separate from your personal taxation abroad; dividends may also be taxable in your country of residence, subject to the relevant double-tax treaty. Confirm the personal side with a local adviser.

Not sure which regime fits?

We assess the choice on your real numbers and register the right regime when we form your Romanian company. Start here.