Which one is the Best Tax Setup for eCommerce?

[Marzio]

You should explain what are the advantags of incorporating in Romania because i don't see any. Especially for ecommerce.

 

[spartan78]

You should explain what are the advantags of incorporating in Romania because i don't see any. Especially for ecommerce.

Romanian taxation system:

- The corporate tax in Romania is 16% on profit (income minus tax-deductible expenses).

- There is another possibility for companies that have a turnover lower than 500K Euro(micro companies), 1% on the turnover if the company has at least one employee. The employee must have the full work rate of 8 hours/day, at least the minimum brut salary(which will increase every year, but we do not know yet what will be the amount for the next year, for the year 2023 the minimum salary is 3.000 RON, approx. 605 Euro), and the employee must have the right to work in Romania.

- If a person has more than 3 companies, and owns more than 25% of the companies' shares, only 3 companies could be micro companies, with 1% income tax, and the other companies will be regular companies with 16% corporate tax.

- The taxes for work are pretty high, and there are as follows:

- 10% social security health insurance- which is paid by the worker;

- 25% social contributions- which is paid by the worker;

- 10% payroll tax- which is paid by the worker;

- 2,25% labor insurance contribution- which is paid by the company;


An example of a salary calculation would be:

This means that for a minimum salary, the total cost for one month will be 3.067,5 RON(approx. 618 euro).

- For a turnover of 450.000 EURO/year and one employee, the income tax will be 4500 euro+7416 Euro(618*12 months)=11.916 euro the total expense. That is mean an average charge of 2,65% on the turnover(11.916/450.000 Euro).

- The dividend tax is 8% on the net profit of the company, and the shareholder can pick up dividends after the accounting company prepares and submit the annual financial statement, which means after April of the next year.

- Also, there is another possibility to withdraw dividends in the year, from every quarterly profit made by the company, but this will be extra charged by the accountancy company because they will need to do extra work, will need to prepare interim financial statements, and that will cost approx. 150 Euro+VAT each.

- To be a micro company, the company's turnover resulting from consulting and/or management services must not exceed 20% of it's revenues;

- The general VAT rate in Romania is 19%, less in the food sector where it is 9%. A company will automatically become a VAT payer if its turnover will exceed 88.000 Euro(300.000 RON), or you can become a VAT payer on demand even the company do not exceed this turnover.

 

[Marzio]

There is another possibility for companies that have a turnover lower than 500K Euro

This is not a possibility for ecommerce since that business model usually has a lot of expenses (physical goods, ads) so turnover could be over 500K but low margins.

There are better options.

 

[spartan78]

This is not a possibility for ecommerce since that business model usually has a lot of expenses (physical goods, ads) so turnover could be over 500K but low margins.

There are better options.

Over 500k turnover:

- The corporate tax in Romania is 16% on profit (income minus tax-deductible expenses).