Dividend payment in Romania as per 1 January 2025
Entrepreneurs starting new businesses in Romania frequently ask about the timeline for receiving dividends from their companies. They want to understand when they can access their company’s profits through dividend payments. Most shareholders aim to receive their profit share as quickly as possible.
Romanian company law provides a relatively swift process for dividend distribution, provided the company has distributable profits. We will explore the practical aspects of this process, as many shareholders seek ways to expedite dividend transfers from their Romanian companies to their personal accounts.
Applicable Rules for Dividend Payments by Romanian Companies According to Romanian Law
Romanian laws effective in 2025 allow corporations to distribute dividends in two ways: annually after approving the previous year’s financial statements, or quarterly throughout the year. Law No. 31/1990, Law No. 82/1991, and the implementing Orders from the Ministry of Finance govern these profit distribution regulations.
Companies established at any point during the year can distribute dividends shortly after formation. This distribution depends entirely on the company generating distributable profits. Companies operating at a loss cannot distribute dividends to shareholders.
The current laws enable companies to distribute dividends quarterly throughout the year. Companies meeting specific financial and accounting requirements can withdraw funds before the year ends.
Romanian companies maintain the flexibility to distribute dividends every three months.
Consider this example: A company established on January 1st generates profit in its first quarter (January – March). This company can distribute dividends when the quarter ends. However, companies must prepare interim financial statements for all quarterly dividend distributions. Specifically, dividend allocation can begin in April, based on the approved interim financial statements.
Companies can execute dividend distributions quarterly if shareholders agree.
The company must authorize its dividend distribution policy through either its Articles of Association or formal shareholder decisions.
Taxation also applies to dividend income
Shareholders must understand their obligation to pay taxes on dividends according to Romanian tax regulations.
Romania has implemented a new tax rate of 10% on dividend income starting January 1, 2025, increasing from the previous 8% rate.
The new 10% tax rate applies to all dividends distributed after January 1, 2025. However, companies will continue to apply the 8% tax rate for dividends distributed based on interim financial statements prepared during 2024 or for amended fiscal years that begin in 2024.
Recipients of dividend income need to pay attention to health insurance contributions (CASS). These contributions become mandatory when their total yearly income from non-salary sources exceeds specific thresholds. For 2024, authorities have set this threshold at 19,800 Lei, equivalent to six times the national gross minimum wage.
Romania applies a uniform 10% dividend tax rate from January 1, 2025, which affects both resident and non-resident shareholders equally. The tax system operates through a withholding mechanism, requiring Romanian companies to deduct the 10% tax before transferring dividends to shareholders.
For resident shareholders, the 10% tax withheld at source typically fulfills their tax obligations. However, shareholders must still include this income in their annual tax returns, especially when their total yearly income surpasses the government-set threshold, triggering health insurance contribution requirements.
Remember that tax regulations frequently change, so we recommend consulting tax professionals or official sources for the most up-to-date information.
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