Tax perspectives on dividends

In the context of recent legislative changes, strategic planning of dividend distribution becomes essential for tax optimization and maintaining the company’s liquidity.

1. How dividends will be taxed in 2025 and 2026

In 2025, the standard tax rate for dividends paid is 10%, withheld at source by the company when the distribution is made. Starting January 1, 2026, the tax rate on dividend income increases to 16%.

This change applies to all categories of beneficiaries, including individuals, Romanian companies, and non-residents, as part of the tax reforms adopted by Law No. 141/2025.

Dividends distributed based on interim financial statements prepared in 2025 remain subject to 10% tax, even if the adjustment takes place in 2026.

2. Dividend distribution strategies

For companies that record profits in 2025 or that have retained earnings from previous years, the recommendation is to approve and pay dividends before the end of the year. This allows them to benefit from the reduced tax rate of 10%.

Companies can also use interim balance sheets to distribute dividends during the year. This approach offers financial flexibility and optimises cash flow, provided that the annual profit justifies the amounts distributed. If interim dividends exceeding the annual profit are distributed, the difference must be refunded within 60 days of the date of approval of the annual financial statements. Otherwise, ANAF may impose fines on the company and charge interest. The task of pursuing the recovery of these amounts lies with the company’s management.

If, at the time of approving the dividends, the company does not have sufficient liquidity, the distribution decision may be drawn up, and the actual payment to the shareholders may be made at a later date. In this case, the tax applicable on the date of distribution (i.e., 10% in 2025) applies, even if the dividends are not actually paid in 2025. The tax must be withheld and paid to the state by January 25, 2026.

Withdrawing dividends is not mandatory. Partners or shareholders may decide to leave the profit in the company and reinvest it. In some cases, this option may bring greater long-term benefits than immediate withdrawal.

3. Changes to the dividend distribution policy – Law 239/2025 (package of 2 fiscal measures)

Companies that distribute dividends on a quarterly basis may not grant loans until the differences resulting from the distribution of dividends have been settled.
Failure to comply with these prohibitions entails joint and several liability of the company and the beneficiary, as well as penalties imposed by the National Agency for Fiscal Administration (ANAF).

The distribution of dividends from the current year’s profit will be made: only after the legal reserves have been set up, the losses carried forward have been covered, and the net assets have been restored to the legal level. In other words, if the company’s net assets fall below half of the share capital, the partners or shareholders can no longer withdraw dividends. (Net assets = Total assets held – Total liabilities)

4. Dividend income, CASS, Single Tax Return

For associations or shareholders who, in 2025, receive dividends (the net amount after withholding tax on dividends) exceeding the equivalent of 6 minimum wages per year (i.e., 24,300 lei in 2025), there is also an obligation to pay the Health Insurance Contribution (CASS) of 10%.

It is important to note that CASS does not apply to the amount collected, but is based on ceilings related to the minimum wage:

• Between 6 and 12 minimum wages/year (24,300 – 48,600 lei) → 10% of 6 minimum wages is due, i.e. 2,430 lei.
• Between 12 and 24 minimum wages/year (48,600 – 97,200 lei) → 10% of 12 minimum wages is due, i.e. 4,860 lei.
• Over 24 minimum wages/year (over 97,200 lei) → 10% of 24 minimum wages is due, i.e. 9,720 lei.

The declaration and payment of CASS will be made through the Single Declaration submitted per individual, not per company, by May 25, 2026.

In conclusion, careful planning of dividend distribution can ensure tax optimization, maintain liquidity, and ensure legal compliance for a company, minimizing the tax and financial risks to which it is subject.