A common concern for entrepreneurs in Romania is the timeline for paying dividends for their company. It is natural for them to seek information on when they can access their company’s profits in the form of dividends. Shareholders are eager to receive their share of the profits as soon as possible.
According to Romanian company law, things move pretty fast, as long as there are profits to share within the company. Let me break it down further: some shareholders might want their Romanian company to pay out dividends into their personal accounts.
Applicable Rules for Dividend Payments by Romanian Companies According to Romanian Law
Based on the rules in Romania for 2024, a Romanian company has the option to dish out dividends once a year after the company’s financial statements for the previous year get the nod, or every three months throughout the year. The nitty-gritty for dishing out profits as dividends are laid out in Law No. 31/1990, Law No. 82/1991, and the Orders issued by the Ministry of Finance.
According to the relevant laws, companies have the option to distribute dividends on a quarterly basis throughout the year. This means that if the company meets the necessary financial and accounting criteria, they can withdraw funds from the company before the end of the year.
A company based in Romania has the ability to distribute dividends every quarter.
For example, let’s say a company is started on January 1st and makes a profit in the first quarter (January – March). They can then choose to pay out dividends at the end of that quarter. But it’s important to remember that they need to prepare interim financial statements for all quarterly dividend payouts. Specifically, they can start paying out dividends from April, based on the approved interim financial statements.
If the folks who own the company want to, they can dish out dividends every quarter.
The company needs the go-ahead for its dividend distribution policy from its Articles of Association or from a written decision by its shareholders.
Taxation also applies to dividend income.
Furthermore, shareholders should know that they gotta pay some taxes on dividends, according to Romanian tax laws.
The income tax rate for dividends in Romania is 8%, regardless of whether the shareholders are residents or non-residents. An important element of this tax system is the withholding tax mechanism, which mandates that Romanian companies must deduct the 8% income tax before distributing dividends to shareholders.
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