Companies typically use an Employer of Record for fast entry, payroll management for existing entities, and entity setup for durable presence. Romania's IT sector tax exemption and REVISAL employment registry are the two features most relevant to technology employers.

Employer of Record in Romania

An EOR removes the need to register with Romanian tax authorities and social contribution systems, and to manage the REVISAL employment registry requirement. It suits nearshoring and IT-sector hiring particularly well, given the IT income tax exemption that an EOR can apply correctly from the first payroll. It is less suited to established entities or companies with an existing Romanian presence.

How payroll works in Romania

Romanian payroll withholds a flat income tax rate (10 percent) and both employer and employee contribute to social security (pension, CAS) and health insurance (CASS). Employers additionally pay a labour insurance contribution. Payroll is monthly, and Romania's IT sector benefits from a specific income tax exemption for qualifying software development roles — a distinctive feature that makes Romania particularly attractive for technology employers and needs to be applied correctly from the first payroll to avoid later correction.

Payroll frequency and reporting obligations

Monthly payroll is standard, with contributions remitted monthly via the unified D112 declaration, which consolidates income tax withholding and all social contributions into a single monthly filing. Annual reporting reconciles the year's contributions and tax. Employers must register each employee in REVISAL (the national employee registry) before the employee starts work — this is a hard pre-start requirement, not a post-start administrative step.

Key payroll nuances

The IT income tax exemption is a genuinely valuable structuring consideration for technology employers hiring software developers. Qualifying roles are exempt from the 10 percent flat income tax, significantly increasing net pay for eligible employees without increasing employer cost. Eligibility criteria (role type, employer activity, and employee qualifications) need to be confirmed carefully for each hire — applying the exemption incorrectly creates a correction liability. There is no statutory 13th-month payment. Employer contributions beyond salary are comparatively modest since much of the social contribution burden sits with employee-side withholding.

Pay components and employer costs

Typical pay components include base salary and, in IT roles, the benefit of the income tax exemption (which increases net pay). Employer labour insurance contribution is modest — generally around 2.25 percent of salary — making Romania's employer on-cost load one of the lowest in the EU. The main cost advantage is the combination of competitive salary levels and low employer on-cost, making Romania a genuinely cost-competitive nearshoring market.

Benefits and leave entitlements

Statutory annual leave is 20 working days. Sick leave is covered by the health insurance system after the first five days, which are employer-funded. Maternity leave is 126 days (63 days before and 63 days after birth). Paternity leave is a separate statutory entitlement. Public holidays number around 15 nationally. The social security and health insurance systems provide Romanian employees with pension and healthcare coverage.

Hiring and employment contracts

Written contracts are mandatory in Romania and must be registered in REVISAL before the employee starts work. Probation periods are capped at 90 days for regular employees and 120 days for management roles. Fixed-term contracts are capped in duration and renewal count before conversion to indefinite status. Termination of indefinite-term employees requires notice and must follow the Labour Code's specific procedural requirements.

Entity setup in Romania

The Societate cu Responsabilitate Limitată (SRL) is the standard vehicle for foreign employers, with a minimum share capital as low as RON 1 — effectively no meaningful capital requirement. Registration is completed through the Trade Register Office, followed by tax registration and REVISAL access before hiring. End-to-end setup typically takes four to six weeks.

EOR vs Payroll Management vs Entity Setup — Romania

Frequently asked questions