Expat salary reporting assistance
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Expat salary reporting made clear and manageable
Expat salary reporting in Romania may become mandatory when an employee of a foreign company performs employment activities in Romania and the related salary income is taxable under Romanian law and the applicable double tax treaty.
However, the obligation does not arise automatically in every international assignment. It must be assessed based on the employee’s tax residence, presence and workdays in Romania, the duration of the assignment, the entity bearing the salary costs and the applicable social security rules.
TAX IQ provides complete expat salary reporting assistance, from the initial tax assessment and registration formalities to monthly calculations, tax return preparation and payment guidance. We work with individual expatriates, foreign employers, Romanian host companies and their HR, payroll and global mobility teams.
Our purpose is to make the Romanian compliance process predictable, accurate and easy to manage, while keeping the involvement required from the employee and employer to a minimum.
When is expat salary reporting required in Romania?
An employee does not necessarily avoid Romanian salary taxation simply because the employment contract and payroll remain outside Romania. The starting point is generally the place where the employment activity is physically performed.
If an expatriate works in Romania while continuing to receive salary from a foreign employer, a tax obligation assessment should be performed from the beginning of the assignment. Depending on the circumstances, the salary may be taxable immediately in Romania or may initially qualify for an exemption under the applicable double tax treaty.
The assessment usually considers:
- the employee’s tax residence and the availability of a valid tax residence certificate
- the nature of the activity and the number of days spent in Romania
- the physical presence condition under the applicable double tax treaty (the “183 day rule”)
- whether the foreign employer has a permanent establishment in Romania
- whether the salary costs are borne or recharged to a Romanian company
- whether the Romanian entity may be regarded as the employee’s economic employer
- the employee’s social security coverage
- and other aspects, depending on the case.
The 183-day rule should not be considered in isolation. Even if the employee spends fewer than 183 days in Romania, the salary may still become taxable here if another condition of the treaty exemption is not fulfilled. For example, if the remuneration is borne by a Romanian entity or permanent establishment.
If the employee remains in Romania beyond the period covered by the treaty exemption, reporting and payment obligations generally arise retroactively for the entire Romanian work period. An early assessment therefore helps the company avoid unexpected liabilities and last-minute corrections.
Important: Spending fewer than 183 days in Romania does not automatically guarantee an exemption from Romanian salary tax.
Who is responsible for reporting and paying the Romanian salary taxes?
The person or entity responsible for Romanian salary reporting depends on the employment structure and on the arrangements implemented between the employee, the foreign employer and, where applicable, the Romanian host company.
In practice, several reporting models may apply.
Reporting performed by the expatriate
In many foreign employment situations, the individual employee is responsible for declaring the taxable salary received from abroad and paying the related Romanian income tax. This involves registration with the Romanian tax authorities, monthly calculations, preparation of the applicable salary tax returns and payment of the tax by the statutory deadline.
Depending on the applicable filing mechanism and the employee’s particular circumstances, salary income received from abroad may be reported through Form 224. Official information and the current version of the form are available through the official Form 224 resources published by ANAF.
Reporting performed by the foreign employer
In certain situations, the foreign employer may have Romanian payroll registration and reporting obligations, particularly where Romanian social security contributions are due.
Depending on the available legal mechanism, the employer and employee may also agree that the employer will handle certain salary-related reporting and payment obligations in Romania. The appropriate approach must be reviewed and implemented before the reporting starts.
Involvement of the Romanian host company
Where salary costs are borne or recharged to a Romanian entity, this may be relevant when assessing the applicable Romanian tax treatment. The Romanian company may also need to provide information regarding remuneration or benefits paid locally and fulfil certain notification obligations towards the Romanian tax authorities at the beginning and end of the employee’s assignment in Romania.
Before the first filing, we identify the correct reporting model, clarify the responsibilities of each party and establish a practical monthly process.
Plan of action
Complete expat salary reporting assistance
Has your company assigned employees to Romania and you don’t know how to deal with their tax reporting? Have you started working in Romania and you don’t know how to assess if your salary is subject to tax? No worry, our tax team will provide comprehensive guidance and assistance throughout the entire salary tax reporting procedures, ensuring complete compliance with tax law requirements.
Managing the Romanian tax obligations of an international employee requires more than preparing a monthly calculation. The correct reporting process starts with understanding the employee’s assignment, the employment structure and the interaction between Romanian law, the applicable double tax treaty and the relevant social security rules.
We make things easy and stress-free for you. That’s why we’ve designed our expat salary reporting process to be quick and simple, requiring only a small amount of your time. We understand that time is valuable, so we aim to make the process as efficient as possible, while providing you with the best service.
Our tax team manages the entire process, including:
1
Assessment of the salary tax reporting obligations
Conduct assessment of the expatriate’s particular case, tax residency and employment contractual structure.
2
Building your case
Collect all relevant tax documentation and information to help us correctly deal with the expat’s salary tax obligations.
3
Ensuring A to Z tax compliance
Ongoing management of the salary tax reporting obligations: timely and accurate filing of tax returns and payment of salary taxes, maintenance of proper records.
Request for professional expat salary tax assistance
Simply reach out to us through the contact form below, and one of our tax experts will be happy to assist.
We are here every step of the way
Our expat salary reporting assistance includes:
Our team guides and assists through the mandatory procedures, ensuring full compliance. All with minimal involvement from your side: usually, less than a 1 hour time investment.
FAQ
Expats working in Romania are required to report their salary income to the Romanian tax authorities on a monthly basis. This includes declaring taxable salary income earned while working in Romania, regardless of whether it is paid by a foreign employer. The reporting ensures compliance with Romanian tax laws and helps determine the appropriate amount of taxes to be paid.
A thorough tax analysis must be undertaken to determine the tax reporting obligations, based on a few elements. Such elements may be: tax residency of the employee, number of days spent in Romania (e.g., if they spend more than 183 days in the country within a 12-month period), if their foreign employer has a permanent establishment in Romania, or if the salary costs are borne by a Romanian entity. Our team can help you assess whether your employees are subject to salary taxes in Romania, and determine their tax obligations accurately.
Salary reporting may be required, as staying fewer than 183 days does not automatically provide an exemption.
Under many double tax treaties, several conditions must be fulfilled simultaneously. For example, the salary may still be taxable in Romania if it is borne by a Romanian entity or permanent establishment or if the Romanian company is considered the economic employer.
No, income tax and social security reporting obligations must be determined under different sets of rules.
An employee may owe Romanian income tax while remaining covered by the home country’s social security system under an A1 certificate or an applicable bilateral agreement. The validity and scope of the certificate must be verified separately.
The documents required for expat salary tax reporting typically include employment contracts, assignment contracts/letters, monthly salary information, tax residency certificates (if the case), and any relevant social security information regarding the employee’s case. Our team will guide you through the documentation process, ensuring that all necessary paperwork is correctly prepared and submitted.
Extension of the tax return submission deadline is possible only by law amendment (by authorities). There is no option for extension that can be exercised by an individual taxpayer.
The procedure involves several steps:
- Initial assessment: through which we correctly determine the tax residency status of the employee and the tax reporting obligations.
- Documentation: collecting and/or preparing the necessary documents for reporting.
- Preparing calculations and filing declarations: preparing the applicable tax calculations and submitting the appropriate tax declarations to the authorities.
- Payment: ensuring timely payment of any taxes due.
Our team provides comprehensive support at each stage, making the process straightforward and stress-free.
Yes, expats may be eligible for certain tax exemptions or deductions based on tax treaties between Romania and their home countries, as well as specific Romanian tax provisions. These can include exemptions on certain types of income (such as assignment allowances, per-diems, accommodation expenses, etc.) or other tax deductions for specific business-related expenses. Our team will help identify and apply any applicable exemptions or deductions to optimize your employees’ tax position.