Working as a freelancer can be the right option if you have the interest in determining your own line of work. This can be a great way to combine a passion with earning an income. However, there are certain issues that arise when freelancing in Romania, so make sure you understand the laws and regulations that apply. This guide will help you to understand and take steps to become a freelancer and open a solo business as a freelancer in Romania.
Freelancing Overview in Romania
To set up a freelance business in Romania, you may need to register as a self-employed person. In Romania, you can work under contract as an Authorized Physical Person, or PFA. This will enable you to conduct creative activities as a freelancer. However, the Romanian tax system doesn’t differentiate between freelancers, or self-employed, and traditional workers.
This means that you will have to file taxes using the existing system, which is designed for employees. To avoid any confusion, consider using the automated tax software provided by Xolo to simplify this process. Freelancing can be easier when you use Xolo’s robust software tools that enable you to register for VAT, obtain a PFA, send invoices and keep track of your accounts.
Freelancing Benefits in Romania
There are many benefits you can enjoy when working as a freelancer in Romania. Freedom is usually cited as one of the top motivators. Freelancers enjoy the ability to control their own work schedules, which provides a level of work and life balance that is often unavailable in traditional forms of employment.
A typical freelancer will choose to do a type of work that is enjoyable, which improves morale. The ability to work remotely reduces commuting times, and there is a significant savings involved in working from the comfort of home. Freelancers get to feel proud of their work, and it tends to increase their self-confidence as well as well-being as a consequence.
How to Register as a Freelancer in Romania
The Trade Register Office can authorize you to work as a PFA in Romania legally. To do this, you need to be over 18 years of age and have the qualifications for the type of work you plan to perform. This could be proven by submitting professional documents, licenses or certificates of training. In addition, you need to pass a background check to clear you of any convictions or other offenses involving financial crimes. Once this process is complete, you will be able to start working as a freelancer in Romania.
Taxes and VAT for Freelancers in Romania
The legal obligations for freelancers in Romania must be met to remain compliant with the law. The type of taxes freelancers must pay depends on whether you’re paying as a PFA or an SRL. The authorized self-employed person’s tax is called PFA, and it’s based on a minimum gross salary, which was 1,900 RON in 2018. This is adjusted each year based on a formula calculated by the Ministry of Finance.
How to report taxes as a freelancer in Romania: Taxes are reported annually based on the income classification in the Fiscal Code. Deductible expenses are subtracted from the gross income to get the net income, which is reported on the annual tax return filed by 25 May of each fiscal year.
How to open a VAT number as a freelancer in Romania: After establishing a freelance business in Romania, you must apply to register your VAT number if your annual earnings are over 300,000 RON. To get the Romania VAT number, go to the National Agency of Fiscal Administration website, or NAFA, and complete an application.
VAT Rate for Freelancers in Romania
Reliable information about the VAT rate for freelancers in Romania can be very helpful when setting up a freelance business Romania. As a member country, Romania follows all of the procedures for VAT registration used by the European Union. This means that the VAT tax must be paid by the freelancer in the country where the service or product is being provided.
The National Agency of Fiscal Association website has all the detailed information about VAT; however, this site is in the Romanian language. This is the site where you can download registration forms like the 010 and 088, which enable you to register as a freelancer and for VAT, respectively. Use a professional translator to help you get the most reliable information from this site as a direct source. This might be a critical step because there are four VAT rates in the country.
Here is an overview of the most important details on VAT for freelancers in Romania:
- Registration for VAT in Romania is necessary if the amount of revenues generated by your freelance business exceeds 88,500 EUR.
- Find out if your business qualifies for the standard rate of 19 percent VAT, the reduced rate of nine percent, the reduced rate of five percent or the zero percent rate for exempt institutions.
- Freelancers are required to pay VAT on any earnings through their Romanian business. Make sure you fulfill all of the conditions for VAT. You’ll need identification papers and any relevant forms completed. You must show your long-term visa or certificate for freelancers outside of the EU. A criminal record and income proof for the last year are also necessary.
How to Start a Business as a Freelancer in Romania
There are many ways to start a business as a freelancer in Romania. No matter what kind of business activities your freelance operations will use to generate revenues, accounting and tax compliance are always issues. The paperwork needed to run a freelance business in Romania is more intensive when you’re not a member of the EU. For example, citizens of EU member countries don’t need to apply for a visa or work permit. Passport rules also don’t apply. Additionally, freelancers may benefit from some tax incentives in this country.
Here's the steps you need to take to start your Romania freelance business:
- Decide what business structure to use for legal purposes: Most freelancers will choose to operate as a sole proprietor, but other options are also available.
- Register your business in Romania: You need to have an address in Romania to register your business; however, you can run the business remotely from anywhere in the world when you e-register.
- Create a plan to attract customers: This part of opening your business is the most enjoyable. You will need to set up a website or physical location to get customers to make a transaction.
Normally, there is a lot of paperwork involved in starting a formal business in Romania. This can include documents like a birth certificate, proof of income, house deed and marriage or divorce decrees. There is a way to reduce the amount of paperwork involved in setting up and starting your freelance business in Romania, which is to get your business up and running remotely is to launch an Estonian e-residency business with Xolo Leap. By having your business registered by Xolo Leap, you'll get lots of accounting, compliance and legal help so you can focus on finding clients and delivering your freelance work. This is a convenient way to get around the cumbersome bureaucracy while maintaining the ability to freelance in Romania.
Fulfil your Freelance Dream in Romania
Become and work as a freelancer in Romania by following the steps in this guide. However, if you are overwhelmed by the amount of paperwork involved, you are not alone. This is how many of our regular clients came to learn about Xolo; they wanted to get the paperwork over as fast as possible. This is understandable because no one wants to spend valuable time on bureaucratic procedures.
Xolo makes it possible for you to register your freelance business in Romania, obtain a VAT number, keep accurate accounting records and file taxes. Find out how Xolo can help you to send your electronic invoices, calculate VAT automatically, and manage your business financial health. Open your own business and run it from anywhere today.
