How to Register a Sole Proprietorship (Persoană Fizică Autorizată – PFA) in Romania

Becoming a PFA in Romania gives you control over your work, flexibility in choosing clients and projects, and formal legitimacy—without the overhead of forming a company. It’s especially appealing for freelancers, consultants, creatives, and small-scale service providers.

The process is moderately bureaucratic: you’ll deal with registrations, annual declarations, and choosing between different taxation and social security systems. The rules can feel complex. But once everything is set up, many find the benefits—formal invoicing, access to public services, recognition—well worth the effort.

The main challenges include handling social security contributions (which depend on income thresholds), staying up to date with tax law changes, and making sure that your business activity (CAEN code) is properly registered. The main benefits are lower administrative burden than companies, simplified taxation options, flexibility, and full ownership of profits.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship (persoană fizică autorizată) in Romania?

In Romania the legal term is Persoană Fizică Autorizată (PFA). Other similar forms include Întreprindere Individuală (II) or Întreprindere Familială (IF). These are all ways for one individual to operate a business without forming a separate corporate entity.

These terms—sole trader, self-employed person, independent contractor—generally refer to similar legal models: one person carrying out business activities, personally liable for obligations, responsible for taxes and contributions.

In Romania, sole proprietors (PFAs) can choose between two taxation systems, each designed to fit different working styles:

Real system: You’re taxed 10% on your actual profit—your income minus eligible business expenses—so you have to keep detailed records but can deduct costs like rent, equipment, or travel.

Income norm system: Instead of tracking every expense, you’re taxed 10% on a fixed “normative income” set by the tax authority based on your profession and region. It’s lighter on paperwork, but if you earn far above the norm, you may end up paying more than under the real system.

How does a sole proprietorship (PFA) work in Romania?

Here are the core features of operating as a PFA.

PFA / II / IF vs a limited company in Romania

Here’s how a sole proprietorship stacks up compared to a limited liability company, such as an SRL.

Step-by-step guide: How to register a sole proprietorship in Romania

Step 1: Check if you are eligible to become a PFA

You must be at least 18 years old, have full legal capacity, and hold either Romanian citizenship or legal residence. EU/EEA citizens may have fewer hurdles; non-EU nationals may need additional legal documents. Certain activities require proof of qualifications or adherence to legislation for regulated professions.

Step 2: Choose your business name

Your business name must include your full personal name + “PFA” (or II / IF if using those forms). Reserve the name via ONRC (online or in person) to ensure it's not already in use.

Step 3: Gather required documents

You’ll usually need:

• Valid identity document (passport or national ID).

• Proof of residence/business address.

• Documents showing any required qualifications for regulated activities.

• Form for registration at the ONRC (Trade Register) for PFA / II / IF. You can use ONRC’s online portal for submission in many cases.

Step 4: Register with ONRC

Submit the application to the Trade Register (ONRC) for the registration of your PFA / II / IF. You can often do it online via ONRC’s portal. The trade register for the court district where your business address is located handles the case. Your registration should be completed within about 3 working days once all required documents are in order.

Step 5: Pay registration fees and contributions

The ONRC charges registration fees. The exact fee depends on the district and whether you use online or in-person service. Register for tax with the National Agency for Fiscal Administration (ANAF) for income tax, and for health & social insurance contributions (CAS for pension, CASS for health).

If your turnover exceeds the VAT registration threshold, you’ll need to register for VAT. As of September 2025, that threshold has risen from RON 300,000 to RON 395,000.

Step 6: Complete post-registration obligations

• Issue invoices compliant with Romanian law (name, tax ID, correct legal form).

• File annual tax return by 25 May of the following year.

• Calculate and pay social (CAS) and health (CASS) contributions. The rates are 25% for pension contributions and 10% for health contributions on taxable income above certain thresholds.

• Keep accounting records: income, expenses; if you use a real system, detailed bookkeeping; if using the income norm, ensure you follow the norms set for your CAEN activity.

• If your income crosses specific thresholds (e.g., a minimum number of gross salaries), you may lose the option for some simpler regimes and must move to the real system.

Financial and tax obligations for sole proprietors in Romania

• Income tax: Flat 10% tax on taxable income under the real system. If you use the income norm, tax is also 10% but on a set normative income instead of actual net income.

• Social security/pension contributions (CAS): 25% on taxable income, with a minimum base tied to 12 or 24 minimum gross salaries, depending on income level. If your net income from independent activities exceeds those thresholds, the contributions are mandatory.

• Health insurance contributions (CASS): 10% on taxable income. There is a cap in many cases (for example, contributions are capped at the taxable base of 60 minimum gross salaries per year).

• VAT/GST obligations: If your turnover exceeds RON 395,000 (as of Sept 2025), you must register for VAT. Before that, registration is optional unless you do VAT-liable services or intra-community transactions. The standard VAT rate is 21% (as of August 1, 2025); reduced VAT rate (11%) applies to certain goods & services.

• Record-keeping requirements: Maintain books of income and expenses, keep invoices, expense receipts, and contracts. If you choose the real system, you need to keep full records of your income and expenses to prove your actual profit. If you’re under the income norm system, you don’t track every cost—instead, the tax authority applies a fixed income level (the norm) for your activity, and your tax is calculated on that amount.

• Other obligations: Update ONRC if you change address or activity, deregister (strike off) when stopping activity, and file annual declarations with ANAF.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a PFA in Romania?
No minimum capital requirement. You just need to register, have the required documents, and meet eligibility.

Do PFAs need to register for VAT?
Only if your annual turnover exceeds RON 395,000 (from 1 September 2025). You may also need to register for VAT if your work involves VAT-liable services or cross-border/EU transactions.

How much are the standard social security and health contributions?
Social insurance (pension, CAS) is 25% on taxable income; health insurance (CASS) is 10%. There are minimum and maximum bases tied to multiples of the country’s minimum gross salary.

Can a PFA hire employees?
Yes. But hiring introduces additional obligations: payroll taxes, employer contributions, and labor law compliance.

How long does it take to register as a PFA in Romania?
Typically, it takes around 3 working days after you submit a complete application to ONRC and all required documents are accepted.

Can foreign nationals register as PFA in Romania?
Yes. EU/EEA citizens can register under similar terms. Non-EU nationals may need a residence or work permit. ONRC allows non-Romanian/EU persons to set up PFA / II / IF under conditions prescribed by law.

Do PFAs need a separate business bank account?
Not explicitly required by law for all cases. However, using a separate account is highly recommended for accounting clarity, compliance, and separating personal and business finances.

What happens if I stop working as a PFA?
You can apply for deregistration/strike-off with ONRC. You’ll still need to file final tax returns, settle any outstanding contributions, and ensure all business records are in order.

Are there any government incentives or reduced rates for new PFAs?
There are regimes like an income norm for eligible activities, which simplify taxation. Also, thresholds (minimum incomes) affect when contributions are due, so small or low-earning PFAs may benefit from lower obligations until they cross thresholds. Keep watching legal updates for changes.

Can I use Deel as a PFA to get paid by international clients?
Deel supports PFAs receiving payments from clients abroad. As long as you issue invoices compliant with Romanian law, maintain proper records, and meet tax and contribution obligations, you can use Deel for international clients.

Does Deel generate compliant invoices for PFAs?
Deel’s invoicing tools are designed to include required fields (personal name + legal form, tax ID, VAT info if applicable, invoice numbering, etc.) so your invoices meet Romanian legal requirements.

Can Deel help me with taxes as a sole proprietor in Romania?
Deel provides detailed transaction and payment reports, which simplify filling out your annual tax return and calculating contributions. Deel does not replace a local accountant but helps organize your financial data.

Does Deel offer contracts for freelancers and PFAs?
Deel offers contract templates that adhere to Romanian rules. That gives clear terms, helps with legal safety, and supports compliance.

Can I access benefits through Deel as a PFA?
Depending on your plan, Deel may offer tools or optional add-ons (insurance, benefits tracking, etc.) that help PFAs manage risk and access services beyond what bare self-employment gives.