What are we gonna talk about:
What is a PFA?
Requirements for Setting Up a PFA
Romanian self-employment and social security
Taxation and VAT
FAQs
What is a PFA?
A PFA (Persoană Fizică Autorizată) is the Romanian equivalent of a sole proprietorship, a simple and flexible business structure for individuals working independently. As a PFA, you have full control over your work, but there’s no legal separation between you and your business. That means you’re personally liable for any debts, taxes, or legal issues related to your freelance activity.
It’s ideal for freelancers, consultants, and service providers who want to operate legally without the complexity of setting up a company.While the process is slightly more complex for foreigners, it’s fully accessible with proper documentation.
Requirements for Setting Up a PFA
Romanian PFAs must be:
- At least 18 years old
- Have a degree or professional certificate in their specialty
- Have no record of financial or tax-related crimes
Foreign nationals:
- Submit a lease agreement or property ownership document to confirm a business address
- Must show proof of Romanian residency
- Provide a passport
Romanian self-employment and social security
To register as a sole proprietor (PFA) in Romania, your business name must include your full name and legal form – e.g. Ana Ionescu PFA. Registration is done at the ONRC.
If you earn over 36,000 RON/year, you’re required to pay:
- 25% pension contribution
- 10% health insurance
Below that threshold, you only pay the 10% flat income tax.
Tax returns must be filed annually by May 25.
Taxation and VAT
Self-employed people are taxed the same as limited liability companies. Art. 269 of the Fiscal Code requires all regular income earners to register.
The state taxes income and earnings at 10%, one of the lowest in Europe. Sole proprietors must file their annual income tax return by May 25th each year.
Sales and clients determine VAT registration. If you work with clients inside the EU and your services are classified as B2B, you generally need to register for VAT, even below the 300,000 RON threshold. If you only operate with Romanian clients and earn above 300,000 RON, you must register for VAT. VAT reporting – submit reports weekly or quarterly.
Alternatively, you can use Abillio – invoicing and tax compliance service for cross-border freelancing. In Abillio’s case, you don’t need to establish a legal entity or apply for VAT, with Abillio’s company-as-a-service solution you can start your freelancing business right away. Register your free account here >>
FAQs
1. Do I need a Romanian residency to become a PFA?
Yes, residency or legal address in Romania is required for PFA registration.
2. What’s the minimum salary for foreigners in Romania?
The new minimum gross monthly salary is raised to 4,050 RON.
3. Do digital nomads pay tax in Romania?
Foreigners who come to Romania to work remotely for foreign companies by using information and communications technology, are expressly exempted from the requirement to pay income tax and social insurance contributions on the salary income gained from abroad.
The tax exemptions are valid only if the digital nomad stays in Romania for no more than 183 days (either a single period or several cumulative periods) during any consecutive 12-month period ending in a specific calendar year.
Note: This information is from official sources and should not be considered as a substitute for legal advice. Always check official websites or consult a lawyer or tax consultant before taking action.
