Romania Tax Guide for U.S. Expats

IRS data from 2016-2021 shows that 62% of Americans filing from abroad owe $0 in federal taxes. Romania offers U.S. expats an attractive tax environment with its flat 10% income tax rate and comprehensive social security benefits. If you’re living in Bucharest or anywhere else in Romania, you’ll benefit from both Romanian tax advantages and U.S. tax treaty protections that help minimize your overall tax burden.

Tax year: January 1 to December 31
Tax filing deadline: May 25
Currency: Romanian leu (RON)
Primary language: Romanian
Population: Approximately 19 million
Capital city: Bucharest
Tax treaty: Yes
Totalization agreement: Signed (not yet in force)

How Does Tax Residency Work in Romania?

You’re considered a resident for Romanian tax purposes if you meet any of these conditions:

You have a permanent home in Romania
You spend more than 183 days in Romania within a 12-month period
Your “vital interests” are in Romania (family, work, or economic ties)

Tax residents are subject to taxation on their worldwide income, while non-residents are only taxed on Romanian-sourced income. The U.S.-Romania tax treaty prevents double taxation by establishing which country has taxing rights over different types of income. You may need a tax residency certificate from the Romanian authorities to claim treaty benefits.

What Are Romania’s Income Tax Rates?

Romania maintains a flat 10% tax rate on individual income. This applies to:

Employment income
Self-employment income
Retirement income exceeding RON 3,000 per month
Rental income

What Deductions Can You Claim?

Romanian residents can reduce their taxable income through several deductions:

Personal deductions: If your gross monthly salary is up to approximately RON 6,050 (RON 2,000 above the minimum wage), you qualify for personal deductions ranging from 0% to 45% of your income, depending on your salary level and number of dependents.
Voluntary pension contributions: You can deduct up to the RON equivalent of EUR 400 annually for contributions to voluntary pension funds.
Voluntary health insurance: Premiums paid for voluntary health insurance or private healthcare subscriptions are deductible up to EUR 400 annually.
Charitable donations: You may direct up to 3.5% of your annual income tax from salary income to charitable organizations.

Both you and your employer contribute to Romania’s social security system.

Your Contributions:

Pension (CAS): 25% of your gross salary
Health insurance (CASS): 10% of your gross salary

Your Employer’s Contributions:

Work insurance (CAM): 2.25% of your gross salary
Special conditions: 4% to 8% additional pension contribution if you work in special conditions

If you’re self-employed, you calculate contributions based on your declared income. The health insurance contribution for independent activities caps at a minimum of 60 gross salaries per year (RON 243,000).

What About the Totalization Agreement?

The U.S. and Romania signed a totalization agreement on March 23, 2023, which Romania ratified in January 2024. The agreement was transmitted to the U.S. Congress in September 2024. However, as of early 2026, this agreement has not yet entered into force.

Once effective, the agreement will let you avoid dual social security taxation under certain conditions. Until then, if you’re self-employed in Romania, you may owe both U.S. self-employment tax and Romanian social contributions.

How Do You File Taxes in Romania?

Step 1: Determine Your Filing Obligations

Your residency status and income sources determine whether you need to file:

Tax residents must report worldwide income.
Non-residents only report Romanian-sourced income (employment, self-employment, rental, and investment income).

Step 2: Gather Your Documentation

Collect these essential documents:

Tax residency certificate (if needed)
Income records (employment contracts, invoices, bank statements)
Deduction receipts (pension contributions, health insurance premiums)

Step 3: Choose Your Filing Method

Most expats file through the ANAF portal for digital submission. You can also submit forms at a local tax office if you need assistance or translation.

Step 4: Submit by the Deadline

Romania’s tax filing deadline is May 25. Extensions are rare, and missing this deadline results in severe penalties. Plan to file well in advance of the deadline to avoid complications.

Step 5: Keep Your Records

Retain copies of your tax return, receipts, and payment proof. This documentation protects you during audits or future inquiries.

How Can You Avoid Double Taxation?

The IRS provides powerful tools to eliminate or reduce double taxation:

Foreign Tax Credit: Claim a dollar-for-dollar credit for Romanian taxes paid. This often eliminates your U.S. tax bill entirely.
Foreign Earned Income Exclusion: Exclude up to $130,000 of foreign earned income from U.S. taxation.
Foreign Housing Exclusion: Deduct or exclude certain housing expenses.

Most expats reduce their U.S. tax bill to zero by strategically utilizing these benefits.

What Other Taxes Will You Pay in Romania?

Beyond the 10% income tax, Romania imposes several additional taxes.

Capital Gains Tax

Tax rates vary by asset type:

Real Estate:

Property owned less than 3 years: 3% on proceeds up to RON 200,000; 2% on the excess
Property owned 3+ years: 2% on proceeds up to RON 200,000; 1% on the excess

Securities (effective January 1, 2026):

16% on gains (increased from 10%)
1% advance payment required on certain transactions

Virtual Currency (effective January 1, 2026):

16% tax rate (increased from 10%)

Dividend Tax

Important update: Dividend tax rates changed significantly:

Through 2025: 10% tax rate
Starting January 1, 2026: 16% tax rate

This rate applies to dividends distributed after January 1, 2026. Dividends distributed in 2025 based on interim financial statements still qualify for the 10% rate.

Property Tax

You’ll pay local taxes on buildings and land based on location, property type, and value:

Residential buildings: At least 0.1% of property value
Non-residential buildings: At least 0.5% of property value
Agricultural buildings: 0.4% of property value

Local councils set rates annually. Payments are typically due in two installments: March 31 and September 30.

Value Added Tax (VAT)

Important update: VAT rates changed effective August 1, 2025:

Standard rate: 21% (increased from 19%)
Reduced rate: 11% (unified from previous 5% and 9% rates)

The standard rate applies to most goods and services. The reduced rate applies to specific items like food products, medicines, and books. You must register for VAT if your annual turnover exceeds RON 300,000 (approximately EUR 60,000).

Excise Duties

Romania levies excise duties on alcohol, tobacco, and energy products. These taxes are included in prices and ultimately affect you as a consumer.

Recent increases:

August 1, 2025: Approximately 10% increase in gasoline, diesel, alcohol, beer, wines, and sugary beverages
January 1, 2026: An Additional approximately 10% increase planned
New excise duties on still wines and fermented drinks (cider)

What Tax Changes Should You Know About?

Romania implemented significant tax reforms affecting expats:

Changes Effective August 1, 2025:

Standard VAT rate increased from 19% to 21%
Reduced VAT rates unified at 11%
Excise duties increased approximately 10%
Pension income exceeding RON 3,000 per month is now subject to health insurance contributions
Gambling winnings tax increased from 3% to 4%

Changes Effective January 1, 2026:

Dividend tax rate increased from 10% to 16%
Capital gains tax on securities has risen from 10% to 16%
Virtual currency transfer tax increased from 10% to 16%
Health insurance contribution cap for independent activities increased from 60 to 72 minimum gross salaries

How Can You Maximize Your Tax Benefits?

Use Tax Treaties and Credits Strategically

The U.S.-Romania tax treaty, combined with IRS deductions like the Foreign Tax Credit and Foreign Earned Income Exclusion, can eliminate your U.S. tax bill entirely. Most expats owe nothing to the IRS after correctly applying these benefits.

Stay Compliant with Reporting Requirements

Beyond Romanian and U.S. income taxes, you may need to file:

FBAR (Foreign Bank Account Report): Required if your foreign financial accounts exceed $10,000 at any time during the year.
FATCA (Form 8938): Required if your foreign assets exceed certain thresholds.

These forms don’t create additional tax liability, but failing to file them when required triggers severe penalties.

Stay Informed About Tax Changes

Romania’s tax landscape underwent significant changes in August 2025 and January 2026. Increases to VAT rates, dividend taxes, and capital gains taxes make staying current essential. Regular updates help you avoid penalties and capture new savings opportunities.

Work with an Expat Tax Expert

Professional guidance helps you maintain compliance while optimizing your tax benefits. At Greenback Expat Tax Services, we’ve helped 23,000+ expats file over 71,000+ returns worldwide, including many in Romania.

Get Expert Help with Your U.S.-Romanian Taxes

Romania’s recent tax reforms make professional guidance more valuable than ever. The increases to VAT rates, dividend taxes, and capital gains taxes create new complexities for U.S. expats.

Whether you’re planning to move to Romania, already living there, or need to catch up on unfiled returns, our CPAs and Enrolled Agents specialize in helping Americans abroad stay compliant while minimizing their tax burden.

File Your U.S. Taxes From Romania With Confidence.

You can stay compliant without overpaying or missing required forms.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Romanian tax laws underwent significant changes in August 2025 and January 2026, including increases to VAT rates, dividend taxes, and capital gains taxes. Tax laws change frequently. Consult with a qualified tax professional about your specific situation.