American Expats in Romania

Updated on August 23, 2025.

Romania & U.S. Tax Timeline: Critical Dates for Dual Filers

Managing dual tax obligations between Romania and the United States requires careful attention to two distinct tax calendars. Understanding these timelines is crucial for maintaining compliance and avoiding penalties in both jurisdictions.

The Romanian tax system operates on a pay-as-you-earn basis for employees, with employers withholding income tax monthly. Self-employed individuals and those with significant non-employment income must make quarterly advance payments (plăți anticipate) based on the previous year's tax assessment. These advance payments are due on March 25, June 25, September 25, and December 25, creating a continuous cycle of tax obligations that must be carefully managed alongside U.S. requirements.

Strategic Payment Planning to Avoid U.S. Penalties

The most critical aspect of dual tax compliance for U.S. expats in Romania is understanding that the June 15 automatic extension applies only to filing, not to payment obligations. This distinction has significant financial implications that require proactive planning to avoid unnecessary interest and penalties.

To effectively manage this payment timing challenge, expats should implement a multi-pronged approach. First, conduct a preliminary tax calculation by early March using your Romanian income documentation and estimated U.S. tax obligations. This projection doesn't need to be perfect but should provide a reasonable estimate of your U.S. tax liability. Consider working with a tax professional familiar with both systems to ensure accuracy in this crucial calculation. As an expat CPA firm, we can help you with these items.

Second, establish a tax reserve account specifically for U.S. obligations. Since Romanian taxes are paid through wage withholding and quarterly advance payments throughout the year, you'll need separate liquidity for U.S. payments. Many expats find it helpful to set aside funds monthly, treating U.S. tax reserves as a fixed expense in their budget. This approach prevents the April 15 payment deadline from creating a cash flow crisis.

Third, leverage safe harbor provisions to minimize penalties. If you're unable to calculate your exact tax liability by April 15, you can avoid penalties by paying either 100% of your prior year's tax liability (110% if your prior year AGI exceeded $150,000) or 90% of the current year's tax. This safe harbor payment strategy provides protection while you finalize your actual tax calculations. As an expat CPA firm, we can help you with this.

For those with irregular income or significant Romanian-source income, consider making quarterly estimated tax payments to the IRS. While Romania handles tax through wage withholding and advance payments, the U.S. system may require quarterly payments if your withholding is insufficient. These payments are due April 15, June 15, September 15, and January 15, and help spread the tax burden throughout the year rather than facing a large payment in April.

Currency fluctuations between the Romanian leu and dollar add another layer of complexity to payment planning. Since you'll likely earn income in lei but owe taxes in dollars, exchange rate movements can significantly impact your tax liability. Consider using the yearly average exchange rate for income reporting (as permitted by the IRS) to smooth out volatility, and monitor exchange rates when planning your April payment to optimize the conversion timing. As an expat CPA firm, we can help you with these items.

Romania vs. U.S. Tax Systems: Direct Comparison

Understanding the fundamental differences between Romanian and U.S. tax systems is essential for effective tax planning as an American expat. While both countries tax worldwide income for residents, their approaches to rates, deductions, and income classification vary significantly.

Romania's flat 10% tax rate on personal income represents one of the lowest in the European Union, making it particularly attractive for high earners. This compares to U.S. federal rates ranging from 10% to 37%, though U.S. expats may benefit from the Foreign Earned Income Exclusion (FEIE) of $120,000 for 2023 and $126,500 for 2024. The simplicity of Romania's flat tax system contrasts sharply with the progressive U.S. system, though Romania's high social insurance contributions effectively increase the total tax burden.

One crucial difference lies in the treatment of investment income. Romania applies the same 10% flat tax to most capital gains and investment income, with no distinction between short-term and long-term holdings. The U.S., conversely, distinguishes between short-term gains (taxed as ordinary income) and long-term gains (taxed at preferential rates of 0%, 15%, or 20% depending on income levels). This difference can significantly impact investment strategy for expats managing portfolios across both countries.

The Romanian Tax System Explained in Detail

The Romanian tax system presents unique opportunities and challenges for American expats. Romania's flat tax approach and specific income classifications differ substantially from the American system, requiring careful study to optimize tax positions and ensure compliance.

Understanding U.S. Income Classifications

Before diving into the Romanian system, it's essential to understand how the United States classifies and taxes different types of income, as this provides the framework for comparison and planning strategies.

The Romanian Income Tax Categories

Romania categorizes income into distinct classifications, each with specific rules and tax treatment. The flat 10% tax rate applies to most income categories, though social contributions and specific deductions vary by income type.

1. Venituri din Salarii și Asimilate Salariilor (Employment Income)

Employment income includes wages, salaries, bonuses, and employment benefits. Romania's wage tax system involves monthly withholding at the flat 10% rate. Employers handle tax withholding and social insurance contributions, simplifying compliance for employees. The personal deduction (deducere personală) varies based on gross salary and number of dependents, ranging from 0 to 710 RON monthly for 2024.

Employee benefits face varied treatment. Company cars trigger taxable benefits based on 1.7% of vehicle value annually. Meal vouchers up to 30 RON per day receive tax exemption. Private health insurance paid by employers is tax-free within limits. Stock options face taxation at exercise based on the difference between market and strike prices.

2. Venituri din Activități Independente (Self-Employment/Professional Income)

Self-employment income covers independent professionals including consultants, IT specialists, lawyers, doctors, and other liberal professions. Unlike employees, self-employed individuals can choose between real taxation (actual income minus expenses) or the revenue quota system (norma de venit) for certain activities, which provides simplified taxation based on estimated income.

Deductible expenses for real taxation include office rent, utilities, professional equipment, travel costs, professional development, and marketing expenses. The revenue quota system eliminates detailed bookkeeping but may result in higher effective tax for profitable businesses. Social contributions (CAS and CASS) become mandatory when annual net income exceeds 12 minimum gross salaries.

3. Venituri din Cedarea Folosinței Bunurilor (Rental Income)

Rental income from Romanian real estate faces 10% taxation on net income after deductions. Taxpayers can choose between actual expense deduction or a flat 40% expense quota. Deductible actual expenses include maintenance costs, utilities paid by owner, property management fees, depreciation, and mortgage interest (for investment properties).

The 40% expense quota simplifies compliance by automatically deducting 40% of gross rental income without documentation requirements. This proves advantageous for properties with low actual expenses. Special rules apply to subletting and touristic rentals, which may face different tax treatment or require business registration.

4. Venituri din Investiții (Investment Income)

Investment income encompasses dividends, interest, and capital gains, all taxed at 10%. Dividend taxation involves 5% withholding at source with an additional 5% health insurance contribution for residents. Interest income faces 10% withholding by Romanian financial institutions. Capital gains from securities sales are taxed at 10% on net gains, with losses offsetable within the same category.

An annual tax-free threshold of 3,000 RON applies to interest income from bank deposits. Gains from selling shares held over one year in Romanian companies may qualify for exemption under certain conditions. Cryptocurrency gains face taxation as capital gains with specific calculation methods for determining acquisition costs.

5. Venituri din Pensii (Pension Income)

Pension income taxation depends on the amount and source. Romanian state pensions under 2,000 RON monthly are tax-exempt. Amounts exceeding 2,000 RON face 10% tax on the excess. Private pensions and foreign pensions are generally taxed at 10% on the full amount, though treaty provisions may modify treatment.

6. Venituri din Premii și din Jocuri de Noroc (Prizes and Gambling Income)

Prize and gambling income faces varied treatment. Prizes under 600 RON per event are tax-exempt. Amounts exceeding 600 RON but under 66,750 RON face 10% withholding. Large prizes above 66,750 RON are taxed at 10% on the first 66,750 RON plus 40% on the excess. Lottery and gambling winnings follow similar progressive taxation.

7. Venituri din Transferul Proprietăților Imobiliare (Real Estate Transfer Income)

Real estate capital gains taxation varies by property type and holding period. Properties held over three years are generally tax-exempt. Sales within three years face 10% tax on gains exceeding 450,000 RON. One principal residence sale per year may qualify for exemption regardless of holding period. Inherited properties receive stepped-up basis, potentially eliminating capital gains.

8. Venituri din Alte Surse (Other Income)

This residual category captures miscellaneous income including certain consulting fees, intellectual property income not qualifying as self-employment, income from sale of personal property exceeding thresholds, and various other sources not classified elsewhere. Standard 10% taxation applies with limited deduction opportunities.

Romanian Taxes and Foreign Tax Credit Eligibility

Understanding which Romanian taxes can be claimed as a credit on Form 1116 is crucial for reducing your U.S. tax liability. While most income taxes are creditable, social security contributions and certain other taxes are not.

SPV and ANAF: Understanding Romania's Digital Tax System

For American expats, navigating Romania's tax system means becoming familiar with two key concepts: Spațiul Privat Virtual (SPV) and ANAF. These are central to the process of filing your Romanian tax return and receiving your final tax assessment.

What is SPV?

SPV (Spațiul Privat Virtual) is Romania's official online portal for filing tax returns and communicating with the tax authorities. It's the digital backbone of the Romanian tax administration, allowing individuals and tax consultants to submit their tax declarations electronically. Think of it as the Romanian equivalent of the IRS's e-file system, but with additional interactive features. To use it, you must register with your CNP (personal identification number) and create a qualified electronic signature or use a digital certificate.

What is ANAF and the Decizie de Impunere?

ANAF (Agenția Națională de Administrare Fiscală) is Romania's National Agency for Fiscal Administration - the Romanian equivalent of the IRS. After you submit your tax return through SPV, ANAF processes your information and sends you a Decizie de Impunere (Tax Assessment Decision). This document is the final word on your Romanian tax liability for the year. The Decizie de Impunere clearly states:

• Your total calculated income tax (impozit pe venit).
• Your social insurance contributions (CAS and CASS), if applicable.
• The amount of tax already paid through withholding or quarterly prepayments.
• Whether you owe additional tax (diferență de plată) or are entitled to a refund (sumă de restituit).

The Decizie de Impunere is a critical document for U.S. tax purposes, as it provides the official amount of Romanian tax you paid that can be used to claim the Foreign Tax Credit on your U.S. Form 1040.

U.S.-Romania Totalization Agreement

The U.S. and Romania signed a Social Security Agreement (Totalization Agreement) that became effective on March 1, 2024. This recent agreement represents a significant development for U.S. expats in Romania, providing crucial protection against dual social security taxation.

For employees and self-employed individuals on temporary assignments, the agreement ensures they are subject to the social security system of only one country, typically their home country. This avoids the burden of paying into both systems simultaneously. This provision is usually valid for assignments lasting up to five years, though extensions may be possible. To benefit from this, a certificate of coverage must be obtained from the relevant social security agency.

Beyond preventing double taxation, the agreement allows workers to combine their credits from both countries to qualify for retirement, disability, or survivor benefits if they haven't earned enough credits in one country alone. This is particularly valuable given Romania's high contribution rates and the U.S. requirement of 40 quarters of coverage.

Romanian Social Security and Pension System

Three-Pillar System Overview

Romania's pension system is divided into three pillars:

• Pillar I - Pensia Publică (State Pension): This is the mandatory pay-as-you-go state pension system. Contributions (CAS) are 25% of gross salary, paid entirely by the employee. U.S. expats are automatically included unless a totalization agreement certificate is in place.
• Pillar II - Pensia Privată Obligatorie (Mandatory Private Pension): For those under 35 at implementation, this mandatory funded pension diverts 3.75% of the CAS contribution to private pension funds. This provides investment-based retirement savings managed by licensed pension companies.
• Pillar III - Pensia Privată Facultativă (Voluntary Private Pension): Optional private pension plans with tax deductions up to €400 annually. These supplement mandatory pensions through individual savings accounts.

Romanian Retirement Accounts and U.S. Tax Treatment

The U.S. tax treatment of Romanian retirement accounts is complex and varies significantly by the type of account. The IRS does not consider most Romanian plans to be "qualified" in the same way as a 401(k) or IRA, leading to potential reporting and taxation challenges.

Taxation of Distributions from Foreign Pensions

Distributions from foreign retirement plans, such as traditional US Individual Retirement Accounts (IRAs) or 401(k)s, face specific treatment under Romanian tax law. Romania generally taxes pension income at the flat 10% rate, though the treatment varies based on the source and amount of the pension.

Romanian Tax Treatment of U.S. Pensions

Under the U.S.-Romania tax treaty, pension distributions (except social security) are taxable only in the country of residence. For U.S. citizens residing in Romania, this means:

• Traditional IRA/401(k) Distributions: Subject to Romanian tax at 10% on the full distribution amount.
• Roth IRA/401(k) Distributions: Romania may tax the earnings portion, despite U.S. tax-free treatment.
• U.S. Withholding: The U.S. may withhold up to 30% (reducible to 10% under treaty with proper documentation).
• Tax Credit: Romanian tax paid can be claimed as a foreign tax credit on U.S. returns.

Documentation Requirements

To optimize treaty benefits and avoid double taxation:

• File Form W-8BEN with U.S. financial institutions to claim treaty-reduced withholding rates.
• Maintain records of all distributions and Romanian tax paid for U.S. foreign tax credit claims.
• Consider timing distributions to optimize tax treatment in both countries.
• Report distributions on Romanian tax returns even if subject to U.S. withholding.

PFIC Mitigation Strategies for Romanian Retirement Accounts

A Passive Foreign Investment Company (PFIC) is a foreign corporation that meets specific income or asset tests. Many Romanian mutual funds (fonduri mutuale) and ETFs fall into this category, leading to complex and often punitive U.S. tax consequences. Navigating PFICs is one of the most significant challenges for U.S. expats with Romanian retirement accounts.

Identifying PFICs in Romanian Retirement Plans

• Request investment allocation details from your Pillar II or III administrator.
• Look for terms like "fond," "OPCVM," or "UCITS," which indicate mutual funds.
• ETFs traded on the Bucharest Stock Exchange are typically PFICs.
• Unit-linked insurance products investing in funds carry PFIC risk.

Compliance Options

Since a Qualified Electing Fund (QEF) election is rarely possible due to lack of required documentation, the most common strategies are:

• Mark-to-Market Election: Often the most practical choice, requiring annual gain/loss calculations based on fair market value.
• Default Excess Distribution Regime: The most punitive method, with deferred tax and interest charges on distributions.

Documentation Requirements

To comply with PFIC rules, maintain:

• Annual statements showing year-end values from pension administrators.
• Records of all contributions, distributions, and transfers.
• Detailed breakdown of underlying fund investments.
• Exchange rates for converting RON values to USD.

Romanian Financial Account Reporting Requirements

U.S. tax law requires you to report your foreign financial accounts to the IRS if their aggregate value exceeds certain thresholds. This includes FBAR and FATCA reporting.

FBAR and FATCA Reporting

Accounts that must be reported include:

• Bank Accounts: Cont curent (checking), cont de economii (savings), depozite la termen (time deposits).
• Investment Accounts: Brokerage accounts at Romanian banks or investment firms.
• Retirement Accounts: Pillar II and III pension accounts.
• Insurance Products: Life insurance policies with cash surrender value.
• Business Accounts: If you have signature authority or ownership exceeding 50%.

Form 8938 Thresholds for U.S. Expats

These are the reporting thresholds for U.S. citizens living abroad:

• Single/Married Filing Separately: $200,000 on the last day of the year or $300,000 at any point during the year.
• Married Filing Jointly: $400,000 on the last day of the year or $600,000 at any point during the year.

Romanian Government Benefits and Their U.S. Tax Treatment

Certain Romanian government benefits are not considered taxable income for U.S. tax purposes:

• Alocația pentru copii (Child Allowance): These payments are not taxable income and don't need reporting on Form 1040.
• Indemnizația pentru creșterea copilului (Parental Leave Benefits): Generally not reportable as it's considered a social welfare benefit.
• Ajutor de șomaj (Unemployment Benefits): Must be reported as income on U.S. returns.
• Ajutor social (Social Aid): Welfare benefits are typically not reportable.
• Venituri din burse (Scholarships): Treatment depends on use - tuition/fees generally tax-free, living expenses may be taxable.

Romanian Business Structures and U.S. Reporting

For self-employed individuals and business owners, the U.S. reporting requirements vary based on the Romanian business structure. Incorrect classification can lead to significant penalties.

Important Considerations

• Tax Treaty Benefits: Always claim applicable treaty benefits using Form 8833.
• Documentation: Maintain detailed records in both Romanian and English.
• Tax Year: Both countries use calendar year, simplifying reporting.
• Exit Tax: Romania doesn't impose exit tax, but U.S. expatriation rules may apply.

Romanian Visa Options and Their Tax Implications

Romania offers various visa categories for American citizens, each with distinct requirements, benefits, and tax implications. Understanding these options is crucial for optimizing your tax position while ensuring legal residence status.

Digital Nomad Visa

Romania's Digital Nomad Visa, introduced in 2022, represents one of Europe's most accessible remote work programs. Requirements include proof of remote employment or self-employment outside Romania, minimum monthly income of €3,700 (approximately 3x Romanian average), comprehensive health insurance, and clean criminal record. The visa provides one-year residence renewable for another year, with family members eligible for accompanying visas.

Tax implications strongly favor digital nomads through potential non-resident status if staying under 183 days, avoiding Romanian taxation on foreign-source income. Even as tax residents, treaty provisions may exempt foreign employment income. No social contribution obligations exist for foreign employers. The visa allows multiple entries and Schengen travel, optimizing tax residence planning through strategic presence management.

Employment Visa

The employment visa suits professionals with Romanian job offers. Requirements include employment contract with Romanian company, employer-sponsored work permit application, minimum salary meeting sector requirements, and relevant qualifications or experience. The visa provides residence tied to employment duration with pathway to long-term residence after five years.

Employees face standard 10% income tax with full social contribution obligations (CAS 25%, CASS 10%). However, the low flat tax rate benefits high earners compared to progressive U.S. rates. Employers often provide tax equalization packages for expatriate employees. Personal deductions vary based on salary and dependents, providing modest tax relief.

Business/Entrepreneur Visa

Romania's entrepreneur visa targets business founders and investors. Requirements include comprehensive business plan, minimum €100,000 investment for investor status, proof of business viability and job creation, and clean criminal and financial records. The visa provides residence for business operation with potential permanent residence after five years.

Business owners can optimize between 1-3% micro-enterprise tax (revenue-based) or 16% corporate tax (profit-based). Personal income from dividends faces only 5% tax plus 5.5% health contribution. Romania's favorable tax treaties facilitate international business operations. The lack of wealth tax and low dividend rates benefit successful entrepreneurs.

Student and Graduate Visas

Student visas offer pathways to Romanian residence with post-graduation opportunities. Requirements include university acceptance letter, proof of €600 monthly financial resources, health insurance coverage, and academic qualifications. Graduates receive nine-month extension for job searching.

Students can work part-time with income taxed at 10% above personal allowance. The personal deduction often eliminates tax on modest student earnings. Post-graduation employment transitions to full taxation with standard benefits. Education expenses may qualify as deductible professional development costs.

Retirement/Passive Income Visa

Romania offers residence permits for retirees and those with passive income. Requirements include proof of €1,200+ monthly pension or passive income, comprehensive health insurance, accommodation proof, and clean criminal record. The visa provides one-year renewable residence without work rights.

Retirees benefit from Romania's territorial approach to pension taxation under treaty provisions. U.S. Social Security remains U.S.-taxable only. Investment income faces favorable 10% flat rate. The low cost of living maximizes purchasing power of U.S. retirement income. Property ownership is permitted, offering investment opportunities.

Permanent Residence and EU Long-Term Residence

After five years of continuous legal residence, Americans can apply for Romanian permanent residence or EU long-term resident status. These statuses provide significant benefits including unrestricted work rights, access to social benefits, protection from deportation, and simplified EU mobility.

Permanent Residence Requirements

Applicants must demonstrate five years continuous legal residence (temporary absences under 6 months acceptable), sufficient financial resources for self-support, comprehensive health insurance coverage, basic Romanian language knowledge, and clean criminal record in Romania. The EU long-term resident permit additionally provides residence rights in other EU countries, though each country may impose additional requirements.

Tax Planning Implications

Permanent residence solidifies Romanian tax residence, triggering worldwide income taxation. However, the flat 10% rate and treaty benefits often result in favorable overall taxation compared to U.S. progressive rates. Long-term residents should carefully structure investments to avoid PFIC complications and optimize use of foreign tax credits.

The five-year residence requirement provides planning opportunities for timing major transactions, Roth conversions before establishing residence, and exit strategies if returning to the U.S. Consider maintaining some U.S. source income to preserve Social Security credits and retirement account contribution eligibility.

Path to Romanian Citizenship

After eight years of legal residence (or five years if married to a Romanian citizen), Americans may apply for Romanian citizenship. Romania generally requires renunciation of other citizenships, though exceptions exist. The decision involves complex tax and legal considerations beyond the scope of this guide.

Frequently Asked Questions for U.S. Expats in Romania

Q: How does the U.S.-Romania tax treaty prevent double taxation?

The treaty provides multiple mechanisms to prevent double taxation. First, it assigns primary taxing rights for different income types - employment income is generally taxable where work is performed, pensions (except social security) are taxable only in residence country, and business profits are taxable where permanent establishment exists. Second, both countries provide foreign tax credits for taxes paid to the other country. Third, the treaty includes tie-breaker rules for residence determination. Finally, reduced withholding rates apply to dividends (10%), interest (10%), and royalties (10% or 15%), facilitating cross-border investments.

Q: Can I contribute to both Romanian and U.S. retirement accounts?

Yes, with careful planning. Romanian Pillar III contributions are deductible up to €400 annually in Romania. U.S. retirement contributions (IRA, 401(k)) remain available if you have U.S.-source earned income or elect to include some foreign earned income. The new U.S.-Romania totalization agreement (effective March 2024) prevents double social security taxation, allowing you to pay into only one system. Romanian pension plans may face U.S. reporting as foreign trusts. Consider the treaty's pension article, which generally prevents double taxation of retirement distributions.

Q: What happens to my U.S. state tax obligations when I move to Romania?

State tax obligations depend on your former state and steps taken to establish non-residence. States like California, New York, Virginia, and New Mexico aggressively pursue former residents. Key steps include registering with Romanian authorities (obtaining CNP and residence permit), obtaining Romanian driver's license and canceling U.S. state license, closing state bank accounts and establishing Romanian accounts, updating voter registration to overseas status, and filing final part-year or non-resident state returns. Some states continue taxing certain income (like state pensions) regardless of residence. States with no income tax (Texas, Florida, Washington) simplify expatriation.

Q: How are Romanian real estate investments taxed for U.S. expats?

Romanian real estate faces multiple tax considerations. Rental income is taxed at 10% with either actual expense deductions or 40% standard deduction. Property sales within three years trigger 10% capital gains tax; after three years, most gains are tax-free. Annual property tax applies at 0.08%-0.2% on buildings. For U.S. purposes, report rental income on Schedule E with depreciation over 27.5 years. Capital gains face U.S. tax regardless of Romanian exemption, with primary residence exclusion ($250,000/$500,000) potentially available. Foreign tax credits apply for Romanian taxes paid. Consider timing sales for Romanian three-year exemption while managing U.S. tax impact.

Q: Should I choose the Foreign Earned Income Exclusion or Foreign Tax Credit?

For Romania's 10% flat tax environment, the choice depends on your income level and sources. The Foreign Tax Credit (FTC) often provides better results for high earners since Romanian taxes may generate excess credits carrying forward 10 years. FTC preserves eligibility for U.S. retirement contributions and doesn't require meeting physical presence or bona fide residence tests. However, FEIE might benefit those with income under $126,500 who can eliminate U.S. tax entirely, particularly given Romania's low tax rate. Many expats combine strategies, using FEIE for earned income and FTC for investment income. Once you revoke FEIE, you cannot re-elect for five years without IRS permission.

Q: How do I handle Romanian taxation of my U.S. investment accounts?

Romania taxes worldwide investment income for residents at 10% flat rate. U.S. investment accounts face Romanian taxation on interest, dividends, and realized gains. The annual tax-free threshold of 3,000 RON applies only to Romanian bank interest. You must self-report U.S. account income on Romanian returns. U.S. mutual funds and ETFs may be classified as non-transparent funds, facing adverse Romanian tax treatment. Consider individual stocks or Romanian-compliant investment products to avoid complications. The U.S. provides foreign tax credits for Romanian investment taxes paid.

Q: What are the implications of maintaining U.S. LLCs or corporations while living in Romania?

U.S. business entities face complex Romanian tax treatment. Single-member LLCs, disregarded for U.S. purposes, may be treated as corporations in Romania, creating double taxation. Multi-member LLCs might be classified as partnerships or corporations depending on characteristics. C-corporations face double taxation with Romanian tax on distributions plus U.S. corporate tax. S-corporations lose pass-through benefits for Romanian tax purposes. Romanian controlled foreign company (CFC) rules are less stringent than many EU countries but may still apply to passive income. Management from Romania could create Romanian tax residence for the entity, triggering Romanian corporate tax at 16%. Consider restructuring before relocating or establishing Romanian entities.

Q: How does Romania tax U.S. Social Security benefits?

Under the U.S.-Romania tax treaty, U.S. Social Security benefits received by U.S. citizens are taxable only in the United States, regardless of Romanian residence duration. This favorable treatment differs from many other European countries. Romania cannot tax these benefits, providing significant planning advantages for retirees. The U.S. taxes Social Security based on total income, with maximum 85% includable. This treaty provision makes Romania particularly attractive for U.S. retirees relying on Social Security income.

Q: Can I use the Romanian healthcare system, and how does it affect my taxes?

Romanian residents must have health insurance, either through the public system (CASS) or private insurance. Public health insurance costs 10% of gross income for employees and self-employed individuals above thresholds. Private insurance premiums vary but often provide better service and English-speaking providers. Health insurance contributions are not creditable against U.S. taxes but may be deductible as medical expenses if itemizing. U.S. expats satisfy ACA requirements through Romanian coverage. Many maintain international insurance for U.S. visits or medical evacuation coverage.

Q: What triggers Romanian tax audits, and how should I prepare?

Romanian tax authorities (ANAF) employ risk-based audit selection. Common triggers include unreported foreign income or accounts (especially with CRS data exchange), discrepancies between lifestyle and declared income, excessive deduction claims, frequent amended returns, international transactions lacking documentation, and VAT refund claims. U.S. expats face scrutiny due to complex international finances. Preparation strategies include maintaining documentation in Romanian with certified translations, working with a Romanian tax consultant familiar with expat issues, keeping proof of foreign taxes paid for treaty claims, documenting exchange rates and calculation methods, and responding promptly to ANAF requests (typically 30-day deadlines). Audits may review five years, or ten years for tax evasion cases.

Why Choose American Expat CPA as Your Tax Partner

Navigating the intersection of U.S. and Romanian tax systems requires specialized expertise that goes beyond traditional tax preparation. At American Expat CPA, we've built our practice specifically around the unique challenges faced by U.S. citizens living abroad, with particular depth in Romanian tax matters.

Our Specialized Expertise

Our team combines U.S. tax expertise with deep knowledge of Romanian tax law and regulations. We maintain relationships with trusted Romanian tax consultants to ensure seamless coordination of your dual filing obligations. Our professionals stay current with both U.S. tax reform and Romanian legislative changes, including the impact of Romania's flat 10% tax rate and the new totalization agreement on your overall tax strategy.

We understand that every expat situation is unique. Whether you're a digital nomad leveraging Romania's favorable visa program, an employee navigating social insurance contributions, or an entrepreneur optimizing between micro-enterprise and standard taxation, we develop customized strategies that develop your specific circumstances. Our approach goes beyond compliance – we develop proactively identify opportunities to legally minimize your global tax burden while ensuring full compliance in both jurisdictions.

Comprehensive Service Offering

Technology-Enabled Global Service

We've built our practice for the digital age, serving clients across Romania and worldwide through secure, cloud-based systems. Our portal provides 24/7 access to your documents, secure messaging with your tax team, and digital signature capabilities that eliminate the need for physical meetings. We conduct video consultations that accommodate Romanian time zones, ensuring convenient access to expert advice regardless of your location in Romania.

Transparent, Value-Based Pricing

We believe in transparent pricing with no surprise bills. Our comprehensive expat tax packages include all necessary forms and schedules, with clear pricing for additional services like amended returns or multi-state filings. Most importantly, our fee structure is designed to deliver value – the tax savings we identify typically far exceed our professional fees, making our services a smart investment in your financial future.

Your Success is Our Mission

Living in Romania as a U.S. expat should be about enjoying the incredible culture, affordability, and quality of life – not stressing about tax compliance. We handle the complexity of dual taxation so you can focus on building your career and life in Romania. Our clients consistently save thousands in taxes while gaining peace of mind that their obligations are properly managed.

Whether you're just planning your move to Romania, already established as a resident, or anywhere in between, American Expat CPA provides the expertise and support you need. We understand the expat journey because we specialize exclusively in international tax matters for U.S. citizens abroad.