Running Payroll in Romania

Romania offers a cost-effective hiring environment for international employers, thanks to comparatively low gross wages and a moderate employer contribution to social security. These financial advantages make it an increasingly attractive destination for companies seeking to expand their European workforce.

However, before hiring employees in Romania, foreign employers must understand the country’s payroll framework. This includes mandatory registrations with local authorities, compliance with Romanian labor laws, and adherence to specific payroll reporting requirements.

Before they can start processing payroll, employers need to register with the Territorial Labor Inspectorate (Inspectoratul Teritorial de Muncă, ITM) to add their new hires to the Revisal – the electronic General Registry of Employees, which stores key employment information, including each employee’s individual employment contract. This registration must be done electronically. Employers can either appoint an authorized individual or engage a registered payroll or employment service provider to submit the required data. The deadline for submission is no later than one day before the employee’s official start date.

Furthermore, employers are required to register for payroll tax purposes with the competent local tax office under the National Agency for Fiscal Administration (NAFA) in order to obtain a Romanian Tax Code (RTC). For companies that establish a legal entity in Romania, tax registration is done automatically during registration with the National Trade Register Office (NTRO). However, setting up a Romanian legal entity is not mandatory for hiring local employees, as long as other compliance requirements are met.

Since employee details are submitted via Revisal, no separate registration is needed with social security or tax authorities for each individual hire. Additionally, Romanian law does not require employers to open a local bank account. Payments to employees and authorities (such as social contributions and income tax) can be made from foreign accounts, provided the foreign bank can process transactions in Romanian Leu (RON) and issue payments to Romanian accounts.

Calculating income tax and social security contributions in Romania is a relatively straightforward process. A single, flat tax rate applies to all employment income, and the levels for social security contributions are well-defined with minimal variation. While the employee primarily bears the burden of social security contributions, employers also have specific responsibilities for withholding and remitting these payments.

Tax Considerations

Income from employment is taxed at a flat rate of 10%. Taxable income includes salary, as well as bonuses, benefits in kind, and any other employment-related income. Non-resident employees who are assigned to work in Romania by a foreign employer are also subject to this flat income tax on Romanian-sourced employment income.

Certain types of income are exempt from income tax under specific legal provisions. These include statutory allowances related to maternity, paternity, parental and other family-related leaves and income from R&D activities which may also be exempt from income tax if specific eligibility conditions set by Romanian law are met.

In addition, employees may benefit from personal deductions. These include:

• Deductions for dependent children and other qualifying family members,

• Social security contributions (i.e. pension and health insurance) paid by the employee, which are fully deductible from gross income for tax purposes, and

• Voluntary contributions to pillar III pension funds and private health insurance, both deductible up to a combined cap of EUR 400 per year, converted into Romanian Leu (RON) using the applicable exchange rate.

Romanian tax residency is determined based on several criteria. Tax residents are taxed on their worldwide income, whereas non-residents are taxed only on income from Romanian sources. An individual is generally considered a Romanian tax resident if they meet any of the following conditions:

• They have their domicile in Romania;

• Their center of vital interests is in Romania;

• They are physically present in Romania for more than 183 days in any rolling 12-month period.

Anyone fulfilling one or more of these criteria is classified as a Romanian tax resident and subject to corresponding tax obligations.

Tax Withholding and Reporting

Employers are responsible for withholding income tax and mandatory social contributions (pension, health, and work insurance contributions) from their employees’ wages and salaries, and for submitting both the payments and the corresponding reports to the Romanian tax authorities on a monthly basis.

The consolidated monthly tax return (Form D112) must be filed electronically via the ANAF system no later than the 25th of the month following the salary payment month. Payments for income tax and social contributions are due on the same date. Late submissions or payments may result in penalties and interest, and errors or false declarations in Form D112 are subject to fines.

Certain small employers may qualify to declare and pay payroll obligations quarterly instead of monthly, provided they meet specific legal thresholds (e.g., turnover limits and number of employees), as established in the Romanian Fiscal Code. These exceptions are subject to confirmation by ANAF.

While there is no obligation for employers to file an annual income tax return on behalf of their employees, they must issue an annual salary certificate (Form 205 or a similar document) if requested by the employee for their own filing purposes or for bank or social authority use.

In the case of foreign individuals working in Romania under an employment contract governed by foreign legislation (i.e., not Romanian labor law), and without a Romanian payroll, the obligation to declare and pay income tax and social contributions generally falls on the individual. This applies unless the foreign employer has voluntarily registered for tax purposes in Romania or a local host entity takes on the reporting obligations.

Employees with other sources of income in addition to employment income—such as freelance income, rental income, or foreign earnings—are required to file an annual individual income tax return. This return must be submitted by 25 May of the year following the relevant tax year. Additionally, a declaration of estimated income for the current year is due by the same date. The Romanian tax year aligns with the calendar year (1 January to 31 December).

Social Security Contributions

Employers are generally required to pay a 2.25% contribution towards employment insurance based on the employee’s gross salary. However, for employees who work in special working conditions, an additional pension contribution ranging from 4% to 8% of the employee’s income may apply.

Employees, on the other hand, are obligated to contribute 10% to health insurance and 25% to the pension fund.These contributions are calculated based on the employee's gross monthly salary. In addition to the mandatory contributions, employees can also make voluntary contributions to a supplementary pension scheme, as long as the pension provider is officially recognized by Romanian authorities. In such cases, the employee contracts directly with the pension provider, and the employer’s responsibility is limited to making the necessary deductions for income tax purposes.

Employers are responsible for calculating and withholding the employee's share of social security contributions every month and paying both the employer’s and employee’s share to the competent authorities. The due date for social security payments is the 25th of the month following the payroll period to which the contributions apply. In some cases, depending on the company’s size and industry, payments may be made quarterly instead of monthly, provided certain conditions are met.

Foreign employers may transfer the social security obligations to employees in Romania, but this is only applicable if the employee is subject to the Romanian social security system. Details regarding the monthly social security contributions are included in the monthly income tax return (Form D112) filed with ANAF, and no separate filing is required for social security purposes.

Employees in Romania are entitled to various benefits. These include:

• Annual leave and public holidays: 20 days of paid annual leave (minimum), plus 15 national public holidays.

• Maternity leave: 126 days (63 days before and 63 days after birth), paid by social security at 85% of the mother’s normal wages.

• Paternity leave: 5 to 10 days at the birth of the child.

• Parental leave: Paid by social security at 85% of the employee's usual wages, starting after maternity leave and lasting until the child’s second birthday.

• Sick leave: 5 days paid by the employer, with further sick leave paid by social security. The sick leave allowance varies between 75% and 100%, depending on the illness type.

For more information on employee benefits and other employment requirements in Romania (including severance pay and termination procedures), check out our Global Hiring Guide.

As of 1 January 2025, the national minimum wage in Romania is RON 4,0500 per month, which equals RON 24.50 per hour. This wage applies to all employees, regardless of their seniority or qualification—with the exception of employees in the construction sector for whom the monthly minimum wage is RON 4,582.

Overtime work is compensated at 175% of the employee’s regular wage, and 200% for work on public holidays. Alternatively, overtime can be compensated with additional paid time off, which must be granted within 60 days of the overtime work. There is no legal obligation for employers in Romania to provide an annual bonus or 13th salary.

Romanian law mandates that employees must be paid at least once a month. The specific pay date should be set in the individual employment agreement. While employers are free to choose, most typically issue payments at the end of the month. Payments to employees must be made in local currency, which is Romanian Leu (RON). Although not legally required, payslips are generally provided to employees at the end of each pay period, with most employers offering them in either paper or digital format.

Employers are also required to keep accurate records of employee working hours and maintain a registry containing employment and payroll-related documents. These records must be retained for a period of 50 years. Additionally, employers must file payroll-related reports with the Romanian National Institute of Statistics on a monthly, quarterly, and annual basis.