Romania used to be the quiet favourite. A micro-enterprise rate of 1% on turnover — then bumped to 3% — made it look almost too good for small tech founders. But 2026 looks very different, and the comparison with Cyprus is worth running properly.
What Romania's Tax Stack Actually Looks Like in 2026
Romania operates a dual-track corporate tax system. Companies with annual revenue below RON 500,000 (roughly EUR 100,000) can use the micro-enterprise regime at 3% on turnover, not profit. Above that threshold, normal corporate tax applies at 16% on net profit.
The catch that most summaries skip: once you take money out of the company, you pay 8% dividend tax on top. For a founder drawing EUR 100,000 in dividends from a normal Romanian company, the effective combined rate on corporate profits distributed as dividends sits around 22-23% — before social contributions.
For self-employed founders (PFA), the situation is harder. You pay income tax at 10% plus mandatory CASS (health) at 10% and CAS (pension) at 25% if you exceed the threshold. That stacks up fast.
And residency: Romania uses the 183-day rule. You need to spend more than half the year in the country to qualify as a tax resident. There is no shortcut equivalent to what Cyprus offers.
The Cyprus Structure in the Same Scenario
Cyprus has a 15% corporate tax rate — higher than Romania's headline, but that is not where the comparison ends.
The actual lever is Cyprus Non-Dom status. A non-domiciled Cyprus tax resident pays 0% Special Defence Contribution on dividends. The only charge on dividends is the GHS healthcare contribution at 2.65%, capped at EUR 4,770 per year. That means a founder taking EUR 300,000 in dividends pays a maximum of EUR 4,770 in contribution — and nothing else.
Combined with 15% corporate tax, the all-in rate on distributed profits for a Cyprus Non-Dom comes to roughly 17% — and stays at 17% regardless of whether you draw EUR 100k or EUR 1 million. Romania's structure gets more expensive as you scale.
Establishing Residency: The 60-Day Route
One reason founders overlook Cyprus is the assumption that full-time relocation is required. It is not.
The 60-day tax residency rule allows you to establish Cyprus tax residency with just 60 days in the country per calendar year, as long as you meet specific conditions: no tax residency elsewhere, no more than 183 days in any single other country, maintain a permanent home in Cyprus, and have local business activity or employment.
For a founder who works remotely and already travels, this is often achievable without restructuring day-to-day life significantly.
The Documentation Step Most People Underestimate
Once you establish residency, the first administrative requirement is registering as an EU citizen in Cyprus. This produces the Yellow Slip — the MEU1 certificate of registration — which you need before opening a bank account, signing a lease in your own name, or registering as a director of a Cyprus company.
The process involves submitting documents at the Civil Registry office in your district. Processing time is typically 4-6 weeks for the physical card, though the temporary receipt issued on the day is accepted for most purposes.
Comparing the Numbers Side by Side
| Romania (normal corp) | Romania (micro-enterprise) | Cyprus Non-Dom | |
|---|---|---|---|
| Corporate tax | 16% | 3% of turnover | 15% |
| Dividend tax | 8% | 8% | 2.65% GHS (capped) |
| Residency requirement | 183 days | 183 days | 60 days |
| Social contributions (founder) | High (CAS + CASS) | Variable | 8.3% GHS on salary |
| Capital gains on shares | Taxable (10%) | Taxable (10%) | 0% |
| Crypto gains | Taxable (10%) | Taxable (10%) | 8% flat |
The micro-enterprise route keeps corporate tax low but does not change the dividend rate, the residency requirement, or the capital gains treatment. A founder building equity and planning an exit will face Romanian CGT regardless of how they structured the operational side.
The Practical Conclusion
Romania made sense in 2019 when micro-enterprise rates were at 1%. The 2023 reforms moved the goalposts. The threshold dropped, the rate increased, and the conditions tightened. For a founder generating above EUR 100,000 in annual profit, the Romanian tax advantage over Cyprus has largely closed — and in some scenarios reversed.
Cyprus offers a predictable rate, 0% on capital gains from share disposals, and a residency route that works for people who travel. The combination is harder to replicate in most EU jurisdictions.
If you want to understand the full picture before making a decision, the 60-day tax residency rule and Cyprus Non-Dom status pages cover the legal requirements in detail.
This article is for informational purposes only and does not constitute tax or legal advice. Consult a qualified Cyprus tax advisor for your specific situation.
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