Choosing between a PFA and an SRL is one of the first decisions any entrepreneur in Romania has to make — and its consequences last for years: in how you are taxed, how you are liable for debts, and how easily your business can grow. The good news is that there is no universal answer. The right structure depends on your numbers, your type of activity, and your medium-term plans.
A quick orientation for international readers: the PFA (Persoană Fizică Autorizată) is Romania’s authorised sole trader / self-employed individual. The SRL (Societate cu Răspundere Limitată) is the equivalent of a limited liability company (LLC) — a separate legal person with limited liability. For foreign investors, that distinction is usually decisive.
Please note upfront: tax rates, thresholds and ceilings change frequently in Romania. The figures below are indicative for 2026 — always verify the value in force at the time of your decision, or ask us for a personalised simulation.
PFA — simple to run, but with limits
The PFA is the most direct way to start working for yourself in Romania. It is registered quickly at the Trade Register (ONRC), uses simplified single-entry bookkeeping, and lets you withdraw the profits you earn without extra formalities — the profit is directly yours.
Taxation of a PFA works in one of two ways:
- Real system — income tax applies to net income (revenue minus deductible expenses). Advantageous when you have significant, documented expenses.
- Income norm (normă de venit) — for certain activities the state sets a fixed presumed annual income, and tax is calculated on that norm regardless of what you actually earn.
On top of income tax come the social contributions CAS (pension) and CASS (health), due based on ceilings tied to the minimum wage. Because they apply on thresholds rather than on all income, the real burden depends heavily on your annual earnings.
The two big drawbacks of a PFA are liability with your personal assets — you answer for business debts with your own property — and certain activity limitations. A PFA also generally requires a resident individual, which makes it unsuitable for most foreign investors.
SRL — protection, credibility and tax flexibility
The SRL is a legal person separate from you. That is the fundamental difference: company assets are separated from your personal assets, and you, as a shareholder, are in principle liable only up to the share capital (with legal exceptions, for example in cases of fraud or mismanagement).
From a tax standpoint, the SRL offers two main regimes:
- Micro-company tax — a reduced rate applied to revenue (turnover), available if the company meets the threshold and income-structure conditions. Simple to compute, but payable even when profit is small.
- Profit tax — the standard rate applied to profit (revenue minus expenses). Relevant above the micro-company threshold or when expenses are high.
When you withdraw money as dividends, a dividend tax applies, plus potentially CASS depending on ceilings. It is important to understand this second layer of taxation: company money is not automatically your personal money, and moving it to you carries its own tax cost.
For foreign investors, the SRL is almost always the right choice: it allows foreign legal entities as shareholders, group structures, consolidated reporting to the parent company, and a clear framework for double taxation treaties. See our services or learn how we help depending on your type of business.
Head-to-head: PFA vs SRL
| Criterion | PFA | SRL |
|---|---|---|
| Legal personality | No (natural person) | Yes (separate legal person) |
| Liability | With personal assets | Limited to share capital |
| Bookkeeping | Simplified (single-entry) | Double-entry |
| Taxation | Net income or income norm | Micro-company revenue or profit |
| Access to money | Direct, no dividends | Salary and/or dividends (taxed extra) |
| Foreign shareholders | Not available | Yes |
| Credibility | More modest | Stronger |
| Admin cost | Low | Higher |
How to choose, in practice
Do not compare tax rates alone — compare the total cost (tax plus contributions plus administration) against the money that actually reaches you. A few guideposts:
- Small revenue, low expenses, simple activity, no employees — a PFA is often enough and cheaper to run.
- Higher revenue, significant documented expenses, employees or growth plans — the SRL usually wins, both on tax and on protection.
- Foreign investors or group structures — almost always the SRL.
An often-overlooked point: switching from PFA to SRL later is possible, but it costs time and money. So it is worth thinking from the start not only about what you need today, but where you want to be in two or three years.
Conclusion
PFA or SRL is not a question with a fixed answer, but a decision to be calibrated to your numbers and goals. The PFA wins on simplicity and low cost for small activities; the SRL wins on protection, tax flexibility and credibility for growing businesses — and is almost always the right structure for foreign investors. Before you register, run a simulation for both scenarios; the difference over a full year can be significant.
Need an analysis tailored to your situation? Contact us for a discussion and a comparative PFA-vs-SRL simulation matched to your activity and income.
Frequently asked questions
Which is cheaper, PFA or SRL?
It depends on your revenue and expenses. For small revenue and low expenses, a PFA has lower administration costs. Above certain thresholds, an SRL can become more tax-efficient even though it is more complex to administer.
Can a foreign investor set up a PFA in Romania?
A PFA generally requires a resident individual and has limitations. For foreign investors, the SRL is normally the right form, as it allows legal entities as shareholders, group structures and reporting to the parent company.
How am I taxed when I take money out of an SRL?
Money can be taken as salary or as dividends. Dividends are taxed additionally, and depending on ceilings CASS may also apply. In practice there are two layers of taxation: at company level and on withdrawal.
What is my liability with a PFA?
With a PFA you are liable for business debts including with your personal assets. With an SRL, liability is in principle limited to the share capital, subject to legal exceptions.
Can I switch from PFA to SRL later?
Yes, switching is possible, but it involves setting up a new company along with costs and administrative steps. That is why it helps to consider your medium-term plans from the outset.
Is an SRL the same as an LLC?
Structurally, yes. The SRL is Romania’s limited liability company: a separate legal person with limited liability, suitable for foreign shareholders and group structures, comparable to an LLC or GmbH.