Starting January 1st, 2026, Romania will increase the dividend income tax rate from 10% to 16%, marking a significant shift in its fiscal policy. This change comes as part of the new Fiscal-Budgetary Law (Law no. 141/2025), adopted by the Romanian Parliament through the Government’s fast-track legislative procedure.
While the move is officially aimed at boosting the country’s budget revenues, it raises some questions about general tax predictability and fairness. Especially in a system where other personal income types like rent, capital gains, interest and even salaries remain taxed at 10%. For many business owners, private investors, and entrepreneurs with Romanian companies the measure may significantly impact income planning strategies going forward.
According to Law no. 141/2025, the new 16% dividend tax rate will apply to all dividends distributed after January 1st, 2026. Importantly, it does not matter when the profits were generated – i.e., if they are from company profits obtained during 2025 or previous years. Only the distribution date is relevant for tax purposes.
However, there is an important exception for 2025. If a company distributes dividends in 2025 based on interim financial statements, the 10% tax will remain applicable, even if final distributions are adjusted later based on the full-year financials. In other words, advance dividends legally distributed in 2025 won’t be retroactively taxed at 16% when regularized in 2026.
This creates a narrow but valuable planning window for company owners who are considering profit distributions from 2025 profits. They can still make dividend payments in 2025 and benefit of the 10% income tax.
To understand the succession of dividend tax increase decisions over time, it’s worth revisiting the evolution of Romania’s dividend tax policy over the past decade. Before 2016, Romania applied a flat 16% tax rate on dividends, aligned with the flat tax rate on other personal type of income.
In 2016, with the introduction of the new Tax Code, the government significantly reduced the dividend tax to just 5%. This was as part of a broader fiscal policy aimed at encouraging reinvestment of profits and attracting foreign investors.
However, this investor-friendly approach has gradually been reversed after that:
What has changed now? The primary driver behind these increases appears to be short-term budgetary pressure, not long-term strategic planning. At the same time, all other categories of personal income remain taxed at 10%, including wages, rental income, capital gains, and interest.
This could create a distortion in the tax system, where dividends – typically the main form of income for entrepreneurs – are taxed significantly higher than other income streams.
Let’s take a concrete example. If you receive RON 100,000 in dividends from your Romanian company:
That’s a 60% increase in tax liability on the same income, with no change in the company’s performance. For high earning shareholders or portfolio investors, this can mean tens of thousands of euros in additional tax each year.
Given the above, the obvious consequence is that many shareholders and investors, if not already doing it, will look for legal tax planning strategies to mitigate the increased cost. For example, some might choose to:
This is simply rational behavior in response to policy asymmetry. When one type of income is penalized more than others, it’s only natural that taxpayers will look for more efficient alternatives.
The 2026 increase of Romania’s dividend tax rate to 16% marks a return to pre-2016 levels. Whether this is a temporary measure or the start of a new long-term direction remains to be seen. What’s clear is that shareholders and business owners need to reassess their income strategies in 2025. Waiting until the tax kicks in would mean accepting a higher tax burden without any financial benefit.
If you’re an entrepreneur or investor, it may be worth it to:
Do you have any experience with dividend tax increase optimization strategies that you can share with our community or readers? Please post some useful advice below in the comment box.
