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The immediate impact on profitability is determined by the withholding tax rate, the timing of distribution, and compliance with the legal conditions for profit allocation.
- Corporate framework and distribution conditions
Dividends represent a proportional share of profit allocated to shareholders according to their participation in the share capital, in accordance with Legea nr. 31/1990. Distribution is approved through the General Meeting of Shareholders (GMS), either annually (within a maximum of 5 months after the end of the financial year) or based on interim financial statements.
Before any distribution, the following cumulative conditions must be met:
- constitution of legal reserves;
- coverage of carried-forward losses;
- restoration of net assets to at least 50% of subscribed share capital;
- compliance with statutory requirements.
Failure to meet these conditions exposes directors to liability and may trigger audit adjustments.
- Dividend taxation – paying entity
According to Legea nr. 227/2015, starting 1 January 2026, the dividend tax rate is 16% applied to the gross dividend, and the tax is final.
For dividends distributed in 2025 based on interim financial statements, the rate is 10%, without subsequent adjustment.
Operational obligations:
- calculate and withhold tax at the time of payment;
- report via Form 100;
- payment by the 25th of the month following the payment;
- for dividends declared but unpaid by 31 December – payment by 25 January of the following year.
- Romanian legal entities – exemption regime
No tax is due if the beneficiary:
- holds at least 10% of the share capital of the paying company;
- the holding is continuous for at least one year as of the payment date;
- both entities are corporate income taxpayers without exemption.
This structure is relevant in corporate groups and intra-group cash flow planning.
- Individuals – CASS impact
Dividends are classified as investment income under Art. 155 of Legea nr. 227/2015.
Dividend tax is withheld at source (16% or 10% in 2025, as applicable). Additionally, if cumulative investment income exceeds six gross minimum salaries per year, CASS becomes payable.
CASS calculation base is capped at 6, 12, or 24 minimum salaries depending on income level. Net dividends received are considered.
The Single Tax Return (Form 212) must be submitted by 25 May of the year following the income.
- Non-residents – application of double taxation treaties
Dividends paid to non-residents are taxed at 16% under Art. 223 of Legea nr. 227/2015, with the possibility of applying a reduced rate under a double taxation treaty based on a tax residency certificate.
Tax is calculated using the BNR exchange rate on the payment date and reported via Form 100 and Form 207.
In international structures, proper documentation of tax residency and analysis of EU exemption rules can significantly reduce the fiscal cost of profit distribution.