The Romanian tax treatment of income obtained from dividends has been the subject of several changes over time. These changes were enacted into the Romanian Tax Code by successive Romanian governments. The latest and most important of them was the recent increase of the tax rate from 10% to 16% as of 1 January 2026.
Below you can find out all the necessary information about Romanian taxes on dividends due in 2026, but also information on the recent tax rate change. We explain the obligations you have regarding tax reporting of dividend income, both as a company and as individual shareholder. All of them in the article below.
Romanian dividend taxation has undergone several important changes over the last few years, making it increasingly important for both entrepreneurs and individual investors to stay up to date with the applicable rules.
Following the increase of the dividend tax rate from 8% to 10% in 2025, another significant legislative amendment entered into force as of 1 January 2026. Under the current provisions of the Romanian Tax Code, dividends distributed starting with this date are generally subject to a 16% withholding tax, while the health insurance contribution (CASS) continues to follow separate rules based on the individual’s total annual investment and passive income.
Whether you are a Romanian tax resident, an expatriate living in Romania or a foreign investor receiving Romanian-source dividends, understanding when the tax is withheld, who has the reporting obligation and when additional CASS becomes payable is essential for avoiding unexpected tax liabilities.
According to Romanian companies law (Law no. 31/1990), any individual or legal person may benefit from the payment of dividends when he/she owns shares in a company, no matter if it is a limited liability company, or a joint stock company.
Specifically, as per Romanian law, dividends constitute part of the profit that a company makes during a financial period (e.g., during a year). This profit can be distributed to each shareholder or associate in that company, in proportion to the number of shares which the shareholder or associate owns.
Therefore, according to the same law, companies that can pay dividends are only those that book a profit at the end of their financial year. On the other hand, even if they make a profit, not all companies pay dividends. The decision to pay dividends always stays with the company’s management.
Among those who do not rush to pay dividends are usually small companies. These are at the beginning of their business development, and want to reinvest all profits for development purposes. Reinvestment of profit allows a company to develop at a more rapid pace.
One of the most common misconceptions among first-time entrepreneurs is that a company’s accounting profit automatically becomes dividend income.
In practice, the process involves several separate steps. A company must first determine its accounting profit and settle any corporate income tax or micro-company tax obligations, where applicable. Only the remaining distributable profit may subsequently be approved by the shareholders for distribution as dividends.
This distinction is important because not every profitable company distributes dividends every year. Many businesses choose to retain part or all of their profits in order to finance future investments, expand their operations or strengthen their cash flow.
Although dividend income is taxable at the level of the shareholder, the obligation to calculate, withhold and pay the Romanian dividend tax depends on who distributes the dividends.
For dividends distributed by Romanian companies, the withholding obligation rests with the paying company. Before transferring the dividend to the shareholder, the company deducts the applicable tax and remits it directly to the Romanian state budget. Consequently, the shareholder receives the net dividend amount.
For dividends received from foreign companies, the situation is different. Since the foreign company is generally not required to comply with Romanian withholding obligations, the Romanian tax resident receiving the income is responsible for declaring the dividends through the annual tax return and paying any Romanian tax due, while also applying the relevant double tax treaty where applicable.
Understanding this distinction is very important, because it determines who has the filing obligations and which reporting deadlines must be observed.
As already mentioned, as an important update, the Romanian tax law was amended as of 1 January 2026. Among the latest numerous tax changes as of 2026, the Romanian income tax on dividends have also changed. More precisely, the income tax rate applicable to dividends was increased from 10% to 16%. This means that any dividend income received as of 1 January 2026 will be taxed with the new income tax rate of 16%.
Romania has amended the taxation of dividend income several times in recent years as part of broader fiscal reforms aimed at increasing budget revenues and aligning the tax system with the government’s fiscal policies.
The evolution of the dividend withholding tax has been as follows:
| Period | Dividend tax |
|---|---|
|
Until 31 December 2022 |
5% |
|
1 January 2023 – 31 December 2024 |
8% |
|
During 2025 |
10% |
|
From 1 January 2026 |
16% |
As a consequence, the timing of a dividend distribution may have a significant impact on the final tax burden of a shareholder. Companies considering the distribution of accumulated profits should therefore always verify which tax rate applies based on the actual payment date and the transitional provisions in force.
The taxation of dividends in Romania follows a relatively straightforward sequence of events, as reflected below:
Although the process appears simple, additional reporting obligations may arise depending on whether the shareholder is a Romanian tax resident, whether the dividends originate from abroad and whether the annual CASS minimum threshold is exceeded.
An individual tax payer owes health insurance contribution only if his total income obtained from sources other than salary and freelance activities altogether (i.e., dividends, income from the sale of shares, income from rental, interest income, income from cryptocurrency transactions, etc.) reaches the threshold of 6 national gross minimum wages during a tax year.
Same as for 2025, for 2026 this threshold is set at the level of 24,300 Lei (i.e., 6 x 4,050 lei; the amount of 4,050 lei is the minimum national monthly wage established by the government for year 2026 which is used for determining the contribution bases for the health insurance).
This is the first threshold for which the health insurance contribution is due and is set at 6 national gross minimum wages/year. If this threshold is reached, the health insurance contribution is capped to 10% of this amount. This means a fixed annual contribution of 2,430 lei for the income obtained in 2026.
In addition, the second threshold applicable is set at 12 minimum wages per economy, while the third (and last) threshold is of 24 minimum wages per economy.
Thus, if the value of the annual taxable income reaches one of the two higher thresholds, the contribution will be calculated at that threshold (12 or 24 minimum wages per economy).
Whenever the contribution is due, it must be calculated on the taxable base capped at 6, 12 or 24 minimum wages, and not on the actual income derived. This means that, even if during 2026 someone derives income that far exceeds the threshold of 24 gross minimum wages, that person will pay the health insurance contribution (CASS) on the basis of 24 minimum wages and not on the actual income realized.
Another important detail is that the health insurance contribution is due by the beneficiary of income even if they also have the employee status under which they already pay this contribution during the year.
The tax reporting for the purpose of paying the health insurance contribution must be fulfiled by the individual beneficiary of income. This must be done through filing the annual tax return. For income generated in 2026, the annual tax return filing deadline is 25 May 2027. While for 2025 the reporting deadline was on 25 May 2026.
Through the same annual tax return an individual must also declare the estimated income of Romanian sources to be realized during the current year (the year in which the declaration is filed). If one estimates that he/she will be deriving income subject to taxation during that year, taxes will be due in advance for certain types of income.
In the case of taxation of dividends paid from abroad, it is important to correctly apply the double tax treaties that Romania has signed with other states. Generally, in all situations where, according to the applicable treaty, the dividend income is taxed in the source state, Romania, as the state of tax residency of the beneficiary individual, has the obligation to recognize the tax already withheld by the other state and to deduct it from the amount of tax due in Romania.
Dividends paid from abroad are subject to the same tax treatment (16% income tax, plus CASS 10% due on the annual capped thresholds described above), the difference being the application of the convention for avoiding double taxation, where the case, and also the method of declaring the income.
More specifically, given that the company which distributes the dividends is not resident in Romania, the obligation to withhold, declare and pay any Romanian taxes on dividends at source does not apply.
As a consequence, the obligation to declare and pay the income tax sits entirely with the beneficiary of income. Therefore, the individuals deriving such income have the obligation to declare and pay both the income tax (16%), as well as the health insurance contribution (CASS). The declaration and payment of Romanian taxes on dividends received from abroad must also be done through the annual tax return.
You can also find more guidance on how the double tax avoidance works in our Expat Tax Guide.
As a basic rule, according to the Companies Law currently in force (Law no. 31/1990 republished and updated) dividends are distributed only to the individuals or legal entities who have the status of associate or shareholder within a company, and can be both under the form of cash, shares, or under the form of goods (although very rarely).
The distribution of dividends is not mandatory, and this represents the decision of the board of directors or the general meeting of the associates of the respective company, as the case may be.
It is also important to know that in the past Romanian companies were allowed to distribute dividends only at the end of the financial year. But starting with July 15, 2018, when the government amended the Companies Law, the dividend payment can also be done quarterly. Therefore, shareholders no longer have to wait until the end of the year to collect their share of the company’s profit, but they can do so after the end of each quarter.
