Romania offers a straightforward path for individuals wanting to operate as sole traders without forming a company. It’s called Persoană Fizică Autorizată—PFA for short. If you’re testing a business idea, doing freelance work, or just want to keep things simple while maintaining a legal structure, this status exists and it’s accessible.
I’ll walk you through what you need to know: how it works, what it costs you in taxes and contributions, and whether the compliance burden justifies the setup. This isn’t theory. It’s what you’ll face if you register as a PFA in Romania.
What Is a PFA?
The Persoană Fizică Autorizată is Romania’s version of a sole trader or authorized natural person. You remain an individual—not a legal entity—but you gain the right to conduct business activities under your own name. Think of it as the lightest possible structure. No corporate veil. No separate legal personality. Just you, your activity, and a tax ID.
It’s regulated by the National Trade Register Office (ONRC) and the tax authority ANAF. Registration is relatively fast. You pick your business activity codes, submit the paperwork, and you’re operational within days if everything is in order.
But.
There’s a ceiling. If your annual turnover exceeds €25,000 (approximately $27,000), you’re required to transition to a limited liability company (SRL). That’s the hard limit. The state doesn’t want you running a scaled operation without the formalities—and liabilities—of a corporation.
The Tax Reality
Here’s where it gets interesting. Romania has a flat 10% income tax on net profit. Sounds attractive on paper. And it is, compared to many Western European regimes. But the devil is in the mandatory social contributions, which can dwarf your income tax bill if you’re not careful.
Income Tax
You pay 10% on your net profit. Net profit = Revenue minus deductible expenses. Alternatively, you can opt for a fixed “income norm” system where the state assigns a presumed income to your activity, and you pay 10% on that. The norm system can work in your favor if your actual profit is higher than the norm, but it’s less common and depends on your business type.
Social Security (CAS)
This is the heavy hitter. CAS is 25% of a base you choose yourself—but there are minimum thresholds. If your annual income exceeds 12 times the gross minimum salary, you must contribute at least on that amount. If it exceeds 24 times the minimum salary, the floor rises again.
The 2025 minimum gross salary in Romania is 4,050 RON (roughly €815 or $880). So:
- 12 × 4,050 RON = 48,600 RON (~€9,780 or $10,560)
- 24 × 4,050 RON = 97,200 RON (~€19,560 or $21,120)
If your income crosses these thresholds, your minimum annual CAS contribution jumps accordingly. At 25%, that’s not trivial. You’re looking at thousands of euros in social charges even if your profit margin is thin.
Health Insurance (CASS)
CASS is 10% of your net income. But it’s capped: minimum based on 6 gross salaries, maximum based on 60 gross salaries. For 2025, that means:
- Minimum: 6 × 4,050 RON = 24,300 RON (~€4,890 or $5,280) → 10% = 2,430 RON (~€489 or $528) annually
- Maximum: 60 × 4,050 RON = 243,000 RON (~€48,900 or $52,800) → 10% = 24,300 RON (~€4,890 or $5,280) annually
So even if you earn very little, you’re still on the hook for a minimum health contribution of around €489 ($528) per year. And if you’re profitable, the cap protects you from runaway contributions once you exceed the upper threshold.
Who Should Consider a PFA?
This structure makes sense if:
- You’re starting small. Freelancers, consultants, digital nomads testing a Romanian base.
- Your turnover will stay comfortably under €25,000 ($27,000).
- You want to avoid the administrative overhead of a company (annual financial statements, mandatory accounting, etc.).
- You’re comfortable with unlimited personal liability. Your personal assets are exposed to business debts.
It’s not ideal if you plan to scale quickly, hire employees, or operate in a high-risk sector. And if you’re already earning above the thresholds, the social contribution burden can make an SRL more attractive for tax optimization purposes.
The Compliance Burden
You’ll need to:
- Register with ONRC and obtain a registration certificate.
- Register with ANAF for tax purposes.
- Keep records of income and expenses. You can use simplified accounting if you qualify.
- File quarterly or annual tax returns, depending on your regime.
- Pay CAS and CASS contributions on schedule.
Most people hire a local accountant. It’s cheap—usually €50-€100 ($54-$108) per month—and keeps you compliant without drowning in paperwork. Romanian tax law changes frequently, and the bureaucracy is opaque enough that DIY compliance is risky unless you speak Romanian and enjoy reading tax circulars.
The Turnover Trap
Let me be blunt: the €25,000 ($27,000) cap is both a feature and a trap. It keeps the PFA simple and low-risk for the state. But if you hit that ceiling, you’re forced to incorporate. And incorporation comes with:
- Minimum share capital (usually 200 RON, trivial).
- Annual financial statements audited if you exceed certain thresholds.
- Corporate formalities: shareholder resolutions, accounting standards, VAT registration (usually), etc.
So if you’re planning to grow, don’t get too comfortable as a PFA. Budget for the transition. It’s not catastrophic, but it’s not seamless either.
Practical Takeaway
The PFA is a pragmatic tool for low-turnover, solo operations in Romania. The 10% income tax is attractive. The social contributions are heavy but predictable. The turnover limit is strict. If you’re a digital freelancer earning under €25,000 ($27,000) annually and you want a legal structure without corporate complexity, this works. Just understand that the state will collect its pound of flesh through CAS and CASS, regardless of your actual profitability.
If you’re already operating at scale or plan to, skip the PFA and go straight to an SRL. The administrative cost is higher, but the flexibility and liability protection justify it. For everything else—test, iterate, stay lean—the PFA does its job.
Official resources: ANAF and ONRC publish guidelines, though navigating them in English can be a challenge. Find a local advisor if you’re serious about this. Romania’s bureaucracy rewards those who know the shortcuts.