Romania Dividend Tax

The distribution of dividends

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If we approach dividends from the point of view of Law no. 31/1990, the share of profit that is paid to each partner constitutes a dividend, in accordance with the provisions of art. 67 para. (1).

Looking at the Romania dividend tax, we must mention that art. 91 lit. a) of the Fiscal Code includes the income from dividends obtained by natural partners / shareholders in the category of investment income.

The distribution of dividends is made after the approval of the annual financial statements, in proportion to the share of participation in the paid-in share capital, if the shareholders don’t decide differently. Their payment shall be made within the time limit set by the AGM, but not later than six months from the date of approval of the annual financial statements for the financial year ended, and after the Romanian dividend tax has been paid.

Optional, dividends are distributed to the shareholders quarterly based on the interim financial statements, following an annual regularization through the year end financial statements. After withholding the Romania dividend tax, the dividends can be paid optionally on a quarterly basis within the term established by the AGM, while the regularization of the differences resulting from the distribution of dividends during the year, to be done through the annual financial statements, including the additional Romania dividend tax.

The dividend tax in Romania is 5%. May be exempted from Romania dividend tax, in accordance with the provisions of the Directive on parent companies/subsidiaries, provided that they hold at least 10% of the shareholdings for an uninterrupted period of at least 1 year ending on the date of payment of the dividend.

The obligation to calculate, withhold, pay and declare the Romania dividend tax belongs to the legal entity, together with the payment of dividends to the associates. The Romania dividend tax due is transferred in full to the state budget until the 25th of the month following the month in which the payment of dividends was made. The Romania dividend tax declaration is made during the exercise through the form 100 ”Declaration regarding the payment obligations to the state budget, code 14.13.01.99, approved by ANAF no. 587/2016 with the last modification approved by ANAF no. 3105/2018, where the payment obligation is selected (income tax from dividends distributed to individuals).

According to the provisions of art. 67, para. (2) of the Companies Law no. 31/1990, with the subsequent amendments, the regularization of the differences resulting from the distribution of dividends during the year is to be made through the annual financial statements, and the payment of the differences, including the dividend tax, resulting from the regularization’’ is made within 60 days from the date of approval the financial year ended. 

For the Romania dividend tax withheld, from the amounts due by the nature of dividends, at the end of the year the form 205 “Informative declaration regarding the withholding tax and the gains / losses from investments, on income beneficiaries” must be presented to the Fiscal Administration, until the last day of January.

An important change regarding the rules regarding the taxation of dividends appeared at the end of 2020. This is the situation of the return of interim dividends (after regularization), ie those cases in which partners / shareholders return the dividends received in addition, but for which already taxed. In such a situation, the company has the right to ask the Tax Office to reimburse the tax paid for the returned dividends (but the measure still needs implementing rules to be effective).