Romania has grown in popularity among international entrepreneurs thanks to its micro-company regime taxed at just 1% of turnover. A figure that circulates widely, but which comes with precise conditions since the 2026 reform. For an entrepreneur forming a Latvian SIA, here's how these two options really compare.
The Romanian micro-company regime, 2026 version
Since 2026, the micro-company regime's cap has been significantly reduced: the 1% rate now only applies up to 300,000 RON in annual turnover (around €60,000), versus 3% between 300,001 and 500,000 RON. An important new requirement: the company must now employ at least one full-time employee (or the part-time equivalent combined) to benefit from the regime.
What recently changed
The cap was reduced from €250,000 to €100,000 (RON equivalent) in the reform, and the intermediate 3% rate was replaced with a two-tier system (1% up to 300,000 RON, 3% up to 500,000 RON). Beyond that, the standard 16% CIT applies. These rules change frequently, so verify before any decision.
Latvia has no such cap or employment requirement to benefit from its 0% on reinvested profits, regardless of turnover.
The numbers-based comparison, point by point
| Criteria | Latvia (SIA) | Romania (SRL, micro-company) |
|---|---|---|
| Standard CIT | 0% reinvested / 20% distributed | 16% (beyond micro thresholds) |
| Reduced regime | Not applicable (0% already unconditional) | 1% up to ~€60,000, 3% up to ~€100,000 |
| Employment condition | None | 1 employee minimum required (micro regime) |
| Minimum capital | €1 / €2,800 | ~€40 (200 RON) |
| VAT | 21% | 19% (base) |
| Formation time | 2 to 5 days | 3 to 7 days |
| EU / Eurozone / Schengen | Yes / Yes / Yes | Yes / No (RON) / Yes (partial) |
| Typical annual costs | €1,500 – 3,000 | Very low |
Verdict
The Romanian micro-company regime is very competitive under its caps, but requires hiring and a turnover capped at €100,000 to fully benefit. Latvia has no cap and no employment condition for its 0% on reinvested profits.
Advantages of Latvia and Romania
Advantages of Latvia
- 0% with no turnover cap or hiring requirement
- Eurozone, no currency risk
- Stable tax regime since 2018, no recent threshold reform
- Much more developed international support ecosystem
Advantages of Romania
- 1% to 3% turnover-based rate, very competitive under the thresholds
- Near-symbolic starting capital
- Very low operating costs
- Skilled workforce and competitive salary costs in Europe
Who Latvia is the best choice for
If your turnover exceeds or is likely to exceed €100,000, if you don't want a hiring obligation, or if you prefer eurozone stability with no currency risk, Latvia offers a more predictable, uncapped framework.
Who Romania may suit better
Romania becomes very competitive for a small structure under the micro-company thresholds, which needs or plans to employ at least one person anyway, and for whom the 1% to 3% turnover rate represents a real saving compared to other regimes.
"Romania's 1% is real, but it's a regime with thresholds and conditions that was tightened in 2026. Before basing your choice on it, check that your project genuinely fits the current boxes."
Frequently asked questions
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