If you are a foreign investor or a founder moving a Romanian company abroad, relocation is perfectly legal — but it only produces a tax effect if the place of effective management moves with it. Register the entity abroad, pay for a "setup" package, get an address and a licence, shift invoicing onto the new entity, yet keep working from the same office with the same people and the same decisions taken around the same table — and from the perspective of ANAF (the Romanian tax authority), nothing has relocated. Only the letterhead on the invoice has changed.
Relocating a business to another jurisdiction is entirely legal and, at times, commercially rational. But the entry price is not the registration fee — it is three things at once: where decisions are actually taken, what tax Romania levies on the way out, and whether the structure survives the substance test.
The Romanian Tax Code (Law no. 227/2015) does not ask where the company is registered, but from where it is managed. Under Art. 7(18), the place of effective management is the place where the foreign legal entity carries out operations that correspond to real and substantive economic purposes and where at least one of the following is met:
These are alternative conditions. And Art. 7(37) draws the conclusion: a resident is "any foreign legal entity having its place of effective management in Romania" — with a full tax liability, meaning taxation here on worldwide income.
In practical terms: the Dubai company whose sole director lives in Brașov and, from there, signs the contracts, negotiates, hires and decides the budgets meets both conditions simultaneously. It is a Romanian tax resident, and its profits are taxable here.
The residence-registration procedure. The regime is governed by Art. 8^1 of the Tax Code and by Order of the Minister of Finance no. 577/2021.
For establishing the tax residence of a foreign legal entity with its place of effective management in Romania (Annex 1 to Order no. 577/2021). Check the form and the filing channel in force on the date you complete it: the ANAF guide on establishing the tax residence of foreign legal entities indicated filing at the registry of the competent central tax authority, or by post with acknowledgement of receipt — not through the online SPV portal.
Art. 8^1(2): the resolution establishing the place of effective management in Romania, the updated articles of association, the extract from the foreign commercial register showing the shareholding structure, the document on the premises in Romania from which management is exercised, and the contracts with the executive directors — in legalised copy and authorised translation.
Within 30 days of filing, ANAF notifies whether or not the legal entity meets the residence condition.
Within 30 days of the notice, via Form 016 — the "tax registration declaration ... for foreign legal entities having their place of effective management in Romania" (ANAF Order no. 1,699/2021).
Residence takes effect from the date of tax registration with the central tax authority.
Art. 8^1(4): keeping the minutes of board meetings and shareholder meetings, keeping and maintaining the accounting records in Romania, with financial statements drawn up under Romanian law, registering as a corporate-tax payer, and maintaining residence for at least one fiscal year.
NOTE: Not filing the questionnaire does not protect you. Art. 8^1(6) allows the central tax authority to establish and register on its own initiative a place of effective management in Romania for a foreign legal entity that has failed to meet its registration obligation.
ANAF does not need your cooperation to declare the "Dubai" company a Romanian tax resident — it only needs evidence of where decisions are taken: IP addresses, signatures, correspondence, contracts, flight tickets, bank statements.
If the relocation is real, a second bill appears. Art. 40^3 of the Tax Code (the transposition of the EU Anti-Tax-Avoidance Directive, ATAD) taxes the latent capital gain at the moment Romania loses the right to tax.
The mechanism: the difference between the market value of the transferred assets and their fiscal value is determined; if the difference is a gain, the rate under Art. 17 — 16% applies; if it is a loss, it is recovered against gains of the same nature. It applies in four situations: the transfer of assets from a head office in Romania to a permanent establishment in another state; the transfer of assets from a permanent establishment in Romania to the head office or another permanent establishment abroad; the transfer of tax residence out of Romania (except for assets that remain effectively connected to a permanent establishment here); and the transfer of the business carried on in Romania through a permanent establishment.
The point that most often takes people by surprise: the tax is due on market value, not on a price received. You have sold nothing, not a single leu has come in — but goodwill, the brand, the client portfolio, internally developed software, any asset with a market value above its fiscal value generates a taxable base. Market value is established under Art. 11, which opens the transfer-pricing discussion directly.
Payment in instalments over 5 years is possible — with interest under Art. 197 of the Tax Procedure Code and, where there is a real and demonstrable risk of non-recovery, with a guarantee provided within 10 days of the agreement in principle.
No instalments. The 16% tax is declared and paid in full, by the usual deadline.
Instalments are not a set-off. Art. 40^3(4) grants payment in five equal annual instalments, but only for transfers to another EU Member State or to a third state party to the EEA Agreement — and, under paragraph (5), only if that state has concluded with Romania or the EU an agreement on mutual assistance for the recovery of tax claims equivalent to Directive 2010/24/EU.
Instalment treatment is lost immediately if the assets are sold or disposed of, if they are re-transferred to a third state, if residence is later moved to a third state, in the event of bankruptcy or liquidation, or if the instalments go unpaid (with a tolerance of 90 days from the due date).
Many advisers still sell the idea that "the European substance test never entered into force, so there are no rules". The first half is true; the second is false.
The proposed ATAD 3 directive ("Unshell"), which would have imposed uniform substance criteria for shell entities in the EU, was not adopted: it was formally withdrawn, at Council level, in June 2025, for lack of unanimity.
The anti-shell principles did not disappear, however — they were redirected. On 24 June 2026, the European Commission adopted a tax simplification package that includes a recast of the Directive on Administrative Cooperation, codifying the nine DAC directives into a single instrument. The Council proposed integrating the Unshell proposal into this recast, and the text provides for the later development of substance criteria within hallmark D2, through a Council implementing act, within a five-year period — a solution chosen precisely so that the recast could advance without deadlock. The "frontloaded" simplification measures are expected to apply from 2028, the rest by 2030. The details of the DAC6 regime and what is changing are treated separately.
The disappearance of ATAD 3 therefore left not a vacuum but a set of tools already in force, which ANAF uses:
The authorities may disregard a transaction with no economic purpose, adjusting its tax effects, or may recharacterise the form of a transaction to reflect its economic substance.
An arrangement is disregarded where, having regard to all relevant facts, it is not genuine, being put in place with the main purpose (or one of the main purposes) of obtaining a tax advantage that defeats the object of the law. An arrangement is not genuine to the extent that it does not reflect valid commercial reasons corresponding to economic reality.
Art. 7(18), discussed above. The most direct and most frequently applied instrument.
From the Multilateral Instrument (MLI), ratified by Law no. 5/2022, which blocks access to treaty benefits if obtaining that benefit was one of the principal purposes of the arrangement.
The reporting of cross-border arrangements bearing hallmarks — including restructurings and transfers of functions or assets out of Romania.
The 0% free-zone regime in the UAE applies only to a "Qualifying Free Zone Person", which must, among other things, maintain adequate substance in the free zone. A mailbox passes neither the Romanian test nor the Emirati one.
The controlled-foreign-company rules are in Art. 40^5 of the Tax Code — Art. 40^4 is the general anti-abuse rule, and confusion between the two is common. The mechanism: if a foreign entity is controlled by a Romanian taxpayer — through holding, directly or indirectly, alone or together with associated enterprises, more than 50% of the voting rights, capital or profit entitlement — and if the tax actually paid by the entity is significantly lower than the tax that would be due in Romania, the undistributed income is included in the Romanian taxpayer's tax base, in proportion to the participation.
The included income is passive income: interest, royalties, dividends and income from the transfer of shares, financial leasing, insurance, banking or other financial activities, as well as income from goods and services purchased from and resold to associated enterprises with no or minimal added economic value. An entity is not treated as a controlled foreign company where its income in these categories represents one third or less of the total.
The decisive nuance: the CFC rules in Title II apply to corporate-tax payers, not to individuals. An individual entrepreneur has no "CFC". That does not help, however, because the other two — more direct — mechanisms catch him instead: if the foreign company is managed from Romania, it becomes resident here (Art. 7(18) and (37)), and if he remains a Romanian tax resident, the dividends drawn from the foreign company are in any event taxable in Romania, at the 16% rate applicable from 2026, plus the health contribution (CASS) on thresholds.
If the Romanian company starts paying the new entity for "management", "consultancy" or "licences", Title VI applies. Art. 223 lists the Romania-source income of non-residents taxable here, and Art. 224 sets the rates — the general rule being 16%, reduced or eliminated by treaty or by EU directives, but only if the Romanian payer holds the beneficiary's tax residence certificate at the time of payment (Art. 230). Without the certificate, the domestic rate applies, whatever the treaty says.
The increased 50% rate does exist, but it is far narrower than commonly believed: the two conditions are cumulative — the income must be paid into a state with which Romania has no legal instrument for the exchange of information and must result from a transaction classified as artificial under Art. 11(3). It is not an automatic penalty for "tax havens".
And the EU list of non-cooperative jurisdictions does not cover the destinations at issue. At the update of 17 February 2026, the Council added the Turks and Caicos Islands and Vietnam and removed Fiji, Samoa and Trinidad and Tobago; Annex I contains ten jurisdictions: American Samoa, Anguilla, Guam, Palau, Panama, Russia, the Turks and Caicos Islands, the US Virgin Islands, Vanuatu and Vietnam. The next revision is scheduled for October 2026. The UAE, Cyprus and Estonia are not on the list — so the argument "it's not a tax haven, so it's fine" says nothing about the real risk, which comes from substance and the place of management, not from lists.
Separately, there is VAT. Moving the business is not neutral: the change in the place of supply, registration obligations in another state, the treatment of inventory and transferred assets, possible adjustments of deducted VAT on capital goods — all require an analysis distinct from the corporate-tax one.
Fails: the company registered at a service address, with a nominee director who signs whatever is sent, no employees, no premises of its own, no decisions taken there, while the founder remains a Romanian tax resident and works from Brașov. The predictable result: Romanian tax residence, possibly established on the authority's own initiative, corporate tax on worldwide income, interest and penalties — plus taxation of the dividends at the founder's level.
Works: a real relocation, with two components carried out together. First — the actual move of the business: own premises, employees who work there, management that meets and decides there, contracts signed there, costs that reflect the operation, and records that can prove all of this. Second — the physical departure of the founder, with the change of personal tax residence documented through the departure questionnaire and the new state's residence certificate. Without the second, the first stays fragile: a Romanian-resident director single-handedly re-activates the criterion in Art. 7(18).
16% on the latent gain
No longer what it was
Recurring, not one-off
16% on dividends + CASS
Returns in both states
Art. 11 and documentation
Evidence built from day one
1. Exit tax — 16% on the latent gain of the transferred assets, including intangibles, with no instalments if the destination is outside the EU/EEA.
2. Tax in the new jurisdiction, which in 2026 is no longer what it was. The UAE applies 9% above AED 375,000, the 0% free-zone regime requires adequate substance and cumulative conditions, and the small-business relief below AED 3 million is provided for tax periods ending no later than 31 December 2026. Cyprus raised its corporate tax from 12.5% to 15% as of 1 January 2026. Estonia keeps, in 2026, the distribution-based taxation system, at a rate of 22% (22/78 of the net distributed amount): the increase to 24%, although previously enacted, was cancelled by the amendments adopted by the Riigikogu in December 2025, and the reduced 14/86 rate for regularly distributed dividends was abolished as of 1 January 2025. The belief that "in Estonia you pay nothing" is therefore valid only while the profit remains undistributed.
3. The cost of real substance — rent, salaries, local administration, accounting, audit: recurring, not one-off.
4. The founder's personal tax — if you remain a Romanian resident, dividends are taxed at 16%, plus CASS on thresholds. If you leave, the cost is a life genuinely relocated.
5. Transitional dual compliance — simultaneous reporting obligations in both states.
6. Transfer pricing — any relationship remaining between the Romanian entity and the new one falls under Art. 11 and the documentation obligations.
7. The cost of defence, if the structure is challenged: the evidence on the place of management is built from day one, not on receiving the inspection notice. Where the amounts are large, the analysis may also move toward the criminal dimension, and, on the personal side, toward the review of your personal tax situation.
The risk is that the company is treated as a Romanian tax resident on the basis of its place of effective management — including on ANAF's own initiative (Art. 8^1(6)) — with worldwide profits taxed here, interest and penalties for the open period, and separate taxation of dividends at your level. Clarifying the position yourself, through the questionnaire and Form 016, is clearly preferable to a finding made during an audit.
Not if it stays a formality. The test in Art. 7(18) looks at where the strategic economic decisions are actually taken, not who signs. A director who executes instructions received from Romania does not move the management, and Art. 40^4 and Art. 11 allow the arrangement to be recharacterised.
Yes, in principle. Art. 40^3 targets the transferred assets, valued at market value — and intangibles (client portfolio, brand, software, know-how) fall into that category. The absence of physical assets does not mean the absence of a taxable base.
Yes. The rules in Chapter III^1 of Title II — exit tax, GAAR, CFC — are built around corporate income tax and address corporate-tax payers. A micro-enterprise transferring its activity or residence is not resolved by a general rule: what matters is the regime applicable at the time of transfer, whether and when the company left the micro regime, and the nature of the transferred assets. This is exactly the type of situation to analyse case by case, before the operation.
Informational material, updated as at 18 July 2026. It does not constitute legal or tax advice; individual situations must be analysed case by case.
Deadlines run from the moment of communication. An initial discussion clarifies what is being alleged, what you need to justify and how the defence is built — before an estimate becomes a tax assessment.