Economy of Romania

Exports & Imports

Romania's main exports are machinery and equipment, vehicles, and chemicals. It also exports agricultural products, textiles, and metals. Major imports include machinery and equipment, fuels and minerals, and chemicals.

Balance of Trade

Romania typically has a trade deficit, meaning the value of its imports exceeds the value of its exports. This gap is partially offset by income from tourism and foreign direct investment.

Infrastructure Development

Romania has made significant strides in infrastructure development in recent years. The total road network stretches for over 80,000 kilometers, with ongoing investments in highways and expressways. Additionally, the country is modernizing its railways, ports, and airports to improve connectivity and trade.

Fiscal Policy

Romania's fiscal policy aims to achieve sustainable economic growth while reducing the government budget deficit. The government spends on social programs, infrastructure projects, and healthcare. However, public debt remains a challenge, and the government is focusing on fiscal consolidation through spending controls and tax reform.

Monetary Policy

The National Bank of Romania (NBR) is responsible for maintaining price stability and managing the exchange rate. To combat inflation, the NBR has implemented a tight monetary policy with increased interest rates. This aims to curb inflation without hindering economic growth.

Trade Agreements

Romania is a member of the European Union (EU) and benefits from free trade with other member states. It also has free trade agreements with other countries and regional blocs, expanding its export markets.

Environmental Regulations

Romania aligns its environmental regulations with EU standards. These regulations address air and water pollution, waste management, and conservation efforts. While progress has been made, challenges remain in areas like industrial pollution and sustainable development.

Tax System in Romania

Capital Gains Tax: The rate depends on the type of asset and holding period. Generally, a 16% tax applies on profits exceeding €22,000 for assets held less than one year. Lower rates or exemptions exist for some assets like stocks or real estate held for longer durations.
Corporate Tax Rate: Romania boasts a flat corporate tax rate of 16% on profits, which is one of the lowest in the European Union.
Sales Tax (VAT): Romania uses a VAT system with two main rates: (i) Standard rate: 19% (applied to most goods and services) (ii) Reduced rate: 9% (applied to specific items like food, medicine, and books)
Property Tax: Property tax rates in Romania vary depending on the property type and location. Generally, these rates are low. Residential properties typically have rates between 0.1% and 0.25% of the cadastral value, while commercial properties may have slightly higher rates.
Payroll Tax: Romania has a social security system funded by mandatory contributions from both employers and employees. The contribution rate for employees is 10.25%, and employers contribute 25.5%. This is separate from income tax.
Tax Deductions and Credits: While Romania has a flat tax system, there are some limited deductions and credits available. Businesses may qualify for tax breaks for investments in certain sectors or research and development activities. Individual taxpayers with low income may benefit from tax deductions.
Tax Compliance: Tax compliance in Romania has been improving in recent years. The government has implemented stricter regulations and digitalization efforts to enhance tax collection efficiency. However, a grey market persists in some sectors.
Tax Burden: Compared to other European countries, the overall tax burden in Romania is considered moderate. The flat tax rate and absence of progressive income tax keep the burden lower for individuals, while the corporate tax rate is attractive for businesses.