Dividends in Romania: distribution and taxation

26 May 2026 · Guides

A dividend is the share of a company’s profit that shareholders decide to take home in return for the capital they invested. It is the owners’ reward for the risk they took and for the money they left in the business. But between the accounting profit shown on the balance sheet and the amount that actually reaches the shareholder’s account lies a path governed by strict rules: resolutions, deadlines, dividend withholding tax and, sometimes, additional contributions.

For foreign investors running a subsidiary in Romania, the topic is especially important. When dividends are paid to a parent company abroad — in Germany, Austria, Italy or the Netherlands — double tax treaties and EU law come into play, opening the door to significantly reducing, or even eliminating, the Romanian withholding tax. Those who know the rules save real money; those who ignore them risk back-taxes, interest and penalties.

In this article we explain, step by step, when and how dividends may be distributed, who calculates and remits the tax, what rate applies, and what changes when the shareholder is a tax resident of another country. Figures that change frequently are marked with the reference year — always check the value in force on the distribution date.

What dividends are and when they can be distributed

Legally, a dividend is each shareholder’s share of net profit, usually in proportion to their holding in the share capital (unless the articles of association provide otherwise). The core rule is simple: dividends may only be distributed from real, existing profit. They cannot be paid out of share capital or from amounts that are not accounting profit.

Permitted sources for distribution are:

• the net accounting profit of the completed financial year, after the annual financial statements are approved;
• retained earnings from prior years;
• available reserves built from profit, within legal limits.

Before any distribution, prior-year accounting losses must be covered and the mandatory legal reserves must be set aside. Only the profit remaining after these steps is distributable.

Annual distribution

The classic model is annual distribution. After the financial year closes, the annual financial statements are drawn up and approved, and the general meeting of shareholders resolves how to allocate the profit. Approved dividends are usually payable within up to six months of the approval of the annual financial statements; exceeding this triggers late-payment interest.

Quarterly distribution

The law also allows quarterly distribution during the financial year, based on interim financial statements. This is useful for companies with healthy cash flow. Note, however, that quarterly distribution is an advance payment and must be reconciled after the annual financial statements are approved. If more than the actual annual profit has been distributed, shareholders must return the difference and the withheld tax is corrected accordingly.

How the dividend tax is calculated and withheld

Dividend tax is a tax that the paying company calculates, withholds at source and remits to the state budget. For dividends from a Romanian company, the shareholder does not file a separate return or remit the tax — the company handles everything and the shareholder receives the net amount.

1. The general meeting approves a gross dividend amount.
2. The company applies the dividend tax rate in force to the gross amount.
3. The withheld tax is remitted by the legal deadline (generally by the 25th of the month following payment; for dividends declared but not paid by year-end, by 25 January of the following year).
4. The shareholder receives the net dividend.

The dividend tax rate has been adjusted several times in Romania in recent years. For reference year 2026, check the exact rate in force on the distribution date, as the tax legislation was recently amended — do not rely on a rate memorised from previous years. Planning the timing of the distribution well pays off, and a tax advisor can help you evaluate the scenarios.

Health contribution (CASS)

In addition to dividend tax, Romanian-resident individuals earning dividend income may owe the health insurance contribution (CASS) if their cumulative annual income exceeds certain thresholds expressed in minimum wages. CASS is calculated on the threshold, not on the full amount, and is declared via the single tax return. Thresholds and calculation rules change frequently — check the values in force for the relevant year. This contribution generally concerns resident individuals, not foreign parent companies.

Non-resident shareholders: double tax treaties

For companies with foreign capital, the picture becomes more nuanced. When the shareholder — an individual or a parent company — is a tax resident of another country, for example Germany, Austria, Italy or the Netherlands, dividends paid from Romania may be taxed both in Romania (the source state) and in the state of residence. Precisely to avoid this double taxation, Romania has concluded double tax treaties with these countries.

The treaty usually sets a reduced maximum rate of withholding tax in Romania for dividends (often lower than the domestic rate). To benefit from this reduced rate, the essential condition is that the dividend recipient provides the Romanian payer with a valid tax residence certificate, issued by their tax authority and valid for the year of payment. Without this certificate, the Romanian company must apply the full domestic rate.

For EU parent companies, the Parent-Subsidiary Directive also applies: if the parent holds a minimum percentage of the Romanian subsidiary’s capital for an uninterrupted minimum period, the dividends may be fully exempt from withholding tax in Romania. The participation conditions (percentage and duration) must be met and documented. We review these situations as part of our tax advisory services and prepare the documentation needed to correctly apply the exemption or the reduced rate.

• Tax residence certificate — mandatory for the reduced treaty rate;
• Proof of beneficial ownership of the dividends;
• Meeting the Parent-Subsidiary Directive conditions (holding percentage and duration) for the exemption;
• Coordination with the parent company’s accounting for correct reporting of the income in the state of residence.

Common mistakes and penalties

Dividend distribution is one of the most frequently audited areas, and errors are costly. The most common problems are:

• Distributing without real profit — withdrawing money without profit is reclassified as another type of income, taxed more heavily;
• Missing shareholder resolution — the dividend must be formally approved, not merely transferred from the account;
• Tax calculated or remitted incorrectly — wrong rate or missed deadline, with late-payment interest and penalties;
• Unreconciled quarterly distribution — failing to correct after the annual accounts;
• Applying the reduced rate without a valid residence certificate — the risk of being required to pay the tax difference later.

Accurate bookkeeping and advance advice eliminate these risks. If you want to distribute dividends safely, plan the timing and documentation early. See how we help, or contact us directly for an analysis of your company’s situation.

Conclusion

Dividends are the natural way a company’s profit reaches its owners, but the process demands discipline: real profit, a shareholder resolution, correct calculation of the dividend tax and compliance with deadlines. For non-resident shareholders, double tax treaties and the Parent-Subsidiary Directive can reduce or eliminate withholding tax — but only with the right documentation, especially the tax residence certificate.

The Conta Fiscal team, a CECCAR member since 2004 and specialised in companies with foreign capital, can guide you through every step. Contact us for a correct, tax-optimised dividend distribution with no surprises at audit time.

Frequently asked questions