Bulgaria and Romania sit side by side on the map, both joined the EU in 2007, and both built reputations as low-tax destinations in Eastern Europe. Romania's standard corporate tax has been 16% since 2005, while Bulgaria's has remained at 10% since 2007. Romania's micro-enterprise regime — which offered much lower rates — has been heavily restricted since 2023-2024, reshuffling the comparison for many entrepreneurs.
This article compares the two countries across every dimension that matters to entrepreneurs: corporate and personal taxes, company formation, banking, cost of living, residency, and practical infrastructure. We include worked examples at EUR 60,000 and EUR 120,000 annual income to show the real-world difference.
Tax Comparison: Bulgaria vs Romania
Here is the headline comparison. Note that Romania's tax landscape has shifted significantly since 2023, and some rates may continue to change.
| Tax | Bulgaria | Romania |
|---|---|---|
| Corporate tax | 10% flat | 16% |
| Personal income tax | 10% flat | 10% flat |
| Dividend tax | 5% | 16% (Law 141/2025, from Jan 1, 2026) |
| Combined corporate + dividend | ~15% | ~29.4% |
| VAT (standard rate) | 20% | 21% (raised from 19%, Aug 2025) |
| Social security (employee total) | ~13.78% | ~35% (employee 25% pension + 10% health) |
| Social security (employer) | ~18.92-19.62% | ~2.25% (work insurance) |
| Social contribution cap | EUR 2,112/month insurance base | 12 or 24 x national minimum gross salary |
| Micro-enterprise regime | Not available | 1-3% turnover tax (heavily restricted since 2023-2024) |
Romania tax warning: Romania's tax system has undergone major changes. The standard corporate tax rate has been 16% since 2005. The micro-enterprise regime was restricted since 2023-2024 — revenue caps were lowered, the rate structure changed, and sectors like consulting and IT management were excluded or limited. Under Law No. 141/2025 (published July 25, 2025), the dividend tax was raised from 10% to 16% for dividends distributed from January 1, 2026, and VAT increased from 19% to 21% (effective August 1, 2025). Verify current eligibility before relying on any Romanian tax regime.
Corporate Tax: 10% vs 16%
Bulgaria has maintained a 10% flat corporate tax since 2007 — the joint-lowest in the EU. There is no bracket, no revenue threshold, no complexity. All companies pay 10% on profits, period.
Romania's standard corporate tax rate has been 16% since 2005. Many foreign entrepreneurs mistakenly believed Romania had a 10% corporate tax — that was only available through the micro-enterprise regime (a turnover tax, not a profit tax). The standard rate for all companies subject to regular corporate tax is 16%. Additionally, Romania introduced a minimum turnover tax for large companies, adding another layer of complexity.
Dividend Tax: 5% vs 16%
Bulgaria taxes dividends at 5%. Romania taxes them at 16% — raised from 10% to 16% under Law No. 141/2025, effective for dividends distributed from January 1, 2026. Combined with corporate tax, this means:
- Bulgaria: EUR 100 profit → EUR 10 corporate tax → EUR 90 → EUR 5 dividend tax → EUR 85 net (15% combined rate)
- Romania: EUR 100 profit → EUR 16 corporate tax → EUR 84 → EUR 13.44 dividend tax → EUR 70.56 net (29.4% combined rate)
That is a 14.4 percentage point difference in the combined rate — significant for any company distributing profits.
Romania's Micro-Enterprise Regime
Romania once had one of Europe's most attractive micro-enterprise regimes: a 1% turnover tax for companies with employees, 3% without. This was a major draw for small businesses and freelancers incorporating in Romania.
However, since 2023-2024, the regime has been heavily restricted:
- Revenue cap lowered to EUR 500,000
- The rate is 1% (with at least one employee) or 3% (without employees)
- Companies in consulting, management, and certain IT activities may be excluded
- Companies must have at least one employee to qualify for the 1% rate
- Further restrictions are possible as Romania continues to adjust its fiscal policy
For entrepreneurs in services and consulting — the most common profile among foreign business owners — the micro-enterprise regime may no longer be available. Do not relocate to Romania based on the micro-enterprise regime without confirming current eligibility with a Romanian tax advisor.
Social Security Contributions
Social contributions work differently in each country:
Bulgaria: Total contributions are approximately 32.4-33% of gross salary, split between employer (~18.92-19.62%) and employee (~13.78%). Contributions are capped at a maximum monthly insurance base of EUR 2,112 (since Euro adoption in 2026). Above this ceiling, contributions are fixed.
Romania: The structure is heavily employee-weighted. Employees pay 25% pension contribution (CAS) and 10% health insurance (CASS) on gross salary. The employer pays approximately 2.25% work insurance contribution. The pension contribution is capped at a ceiling (12 or 24 times the national minimum gross salary, depending on the contribution type). Health insurance (CASS) has its own cap.
Key difference: Romania's social contributions appear lower for employers but are significantly higher for employees. If you are a sole director paying yourself a salary, the total burden is similar — but Bulgaria's cap structure tends to be more favorable at higher income levels.
Company Formation: EOOD vs SRL
| Factor | Bulgaria (EOOD) | Romania (SRL) |
|---|---|---|
| Entity type | EOOD (single-member LLC) | SRL (limited liability company) |
| Minimum capital | EUR 1 | RON 200 (~EUR 40) |
| Registration time | 3-5 business days | 3-5 business days |
| Registered address | Required | Required |
| Local director required? | No (foreign director allowed) | No (foreign director allowed) |
| In-person presence | Required for bank account | Usually required for notarization |
| Registration cost (with legal help) | ~EUR 500-1,000 | ~EUR 400-800 |
| Annual accounting cost | ~EUR 100-200/month | ~EUR 80-200/month |
| Currency of accounts | EUR (since 2026) | RON |
The formation process is comparable. Both require notarization of founding documents, registration with the commercial registry, and obtaining a tax identification number. Bulgaria's EOOD has the advantage of EUR-denominated accounting since Euro adoption, which simplifies bookkeeping for international businesses. Romania's SRL requires accounts in RON, which means conversion overhead for EUR-based businesses.
For a detailed walkthrough of the Bulgarian process, see our guide to starting a business in Bulgaria as a foreigner.
Banking for Foreigners
Bulgaria has historically been more difficult for foreign entrepreneurs opening business bank accounts. Some banks declined non-resident applications or required extensive documentation. However, the situation has been improving — particularly since Bulgaria's Euro adoption in January 2026, which brought more international banking integration. Several Bulgarian banks (including UniCredit Bulbank and DSK Bank) now accept foreign business clients with proper documentation and local legal representation.
Romania is generally considered somewhat easier. Banks like Banca Transilvania and ING Romania are more accustomed to working with foreign entrepreneurs. The process still requires in-person presence and standard KYC documentation, but rejection rates are lower.
In both countries, having a local legal advisor handle the bank account opening process significantly improves success rates. For our Bulgarian banking guide, see opening a bank account in Bulgaria as a foreigner.
Cost of Living: Sofia vs Bucharest
| Expense | Sofia | Bucharest | Difference |
|---|---|---|---|
| 1-bed apartment (city center) | ~EUR 500/month | ~EUR 550/month | +10% |
| Meal at mid-range restaurant | ~EUR 12 | ~EUR 14 | +17% |
| Monthly transport pass | ~EUR 25 | ~EUR 20 | -20% |
| Gym membership | ~EUR 25 | ~EUR 30 | +20% |
| Groceries (monthly) | ~EUR 200 | ~EUR 220 | +10% |
| Total monthly budget | ~EUR 1,200-1,600 | ~EUR 1,300-1,700 | +5-10% |
The cost-of-living difference between Sofia and Bucharest is relatively small — roughly 5-10% across most categories. Both are among the most affordable EU capitals. Secondary cities offer even lower costs: Plovdiv and Varna in Bulgaria, Cluj-Napoca and Timisoara in Romania. The difference is not significant enough to drive a relocation decision on its own — taxes and business infrastructure matter more.
Residency Process
EU Citizens
Both Bulgaria and Romania offer straightforward residency for EU citizens under EU free movement rules:
- Bulgaria: Register at the local Migration Office within 3 months of arrival. Proof of employment, self-employment, or sufficient funds required. Residency certificate issued within days.
- Romania: Register at the local Immigration Office. Similar documentation requirements. Process is comparable in speed and complexity.
Neither country creates significant bureaucratic hurdles for EU citizens. Bulgaria has the added advantage of using the Euro for all official fees and documentation since 2026.
Non-EU Citizens
For non-EU citizens, both countries offer business and investment visas:
- Bulgaria: D-visa for business purposes, followed by a residence permit. Bulgaria also introduced a Digital Nomad Visa in December 2025 for remote workers. Additionally, Bulgaria offers a Golden Visa program for investors.
- Romania: Business visa and residence permit available for company owners and directors. Romania does not currently have a specific digital nomad visa, though there have been discussions about introducing one.
Digital Infrastructure & English Proficiency
Both countries offer excellent internet connectivity — Romania, in particular, is famous for its fast and cheap broadband (consistently ranking among Europe's fastest). Bulgaria's internet infrastructure is also strong, with fiber widely available in major cities.
English proficiency is moderate in both countries, with the younger and professional populations generally speaking fluent English. Romania has a slight edge in overall English proficiency according to EF English Proficiency Index rankings, and Romania's IT sector is heavily English-oriented. In Bulgaria, the startup and tech communities are English-friendly, particularly in Sofia.
For day-to-day business operations, both countries are workable in English — but having local support for government interactions (tax office, commercial registry) is advisable in both cases, as official proceedings are conducted in the national language.
Euro Adoption & Schengen
Euro
Bulgaria adopted the Euro on January 1, 2026. All prices, salaries, tax filings, and bank accounts are now in EUR. For international businesses invoicing in EUR, this eliminates currency conversion risk entirely.
Romania still uses the Romanian Leu (RON). The Euro adoption target date has been pushed back multiple times — most recently, Romania indicated a target of 2029 or later, but no firm date has been set. RON/EUR fluctuations add conversion costs and uncertainty for EUR-based businesses.
Schengen
Both countries are now full Schengen members:
- Romania joined Schengen for air and sea borders in March 2024, with full land border accession in January 2025.
- Bulgaria joined Schengen for air and sea borders in March 2024, with full land border accession in January 2025.
This means both countries offer passport-free travel throughout the Schengen Area. For business owners who travel frequently within Europe, neither country has an advantage here — both are fully integrated.
Worked Examples: EUR 60K and EUR 120K
Let's compare what an entrepreneur actually keeps in each country, operating through a company (EOOD in Bulgaria, SRL in Romania) and paying themselves a modest salary while taking the rest as dividends.
Note: These are simplified illustrations. Actual results depend on salary level chosen, applicable social contribution caps, deductible expenses, and other factors. Romanian figures use the standard 16% corporate tax rate and 16% dividend tax rate (Law 141/2025, effective from January 1, 2026). Consult qualified advisors for your specific situation.
At EUR 60,000 Annual Company Profit
Assumptions: Entrepreneur pays themselves a low salary (minimum or near-minimum) and distributes remaining profits as dividends.
| Bulgaria (EOOD) | Romania (SRL) | |
|---|---|---|
| Company profit before tax | EUR 60,000 | EUR 60,000 |
| Corporate tax | EUR 6,000 (10%) | EUR 9,600 (16%) |
| Profit after corporate tax | EUR 54,000 | EUR 50,400 |
| Dividend tax | EUR 2,700 (5%) | EUR 8,064 (16%) |
| Net after all taxes (dividends) | EUR 51,300 | EUR 42,336 |
| Effective combined rate | 15% | ~29.4% |
| Bulgaria advantage | EUR 8,964/year more in pocket | |
At EUR 60,000, the Bulgarian entrepreneur keeps nearly EUR 9,000 more per year — purely from the corporate and dividend tax rate difference. This does not include the additional savings from Euro-denominated accounting (no RON conversion costs) or potentially lower accounting fees.
At EUR 120,000 Annual Company Profit
| Bulgaria (EOOD) | Romania (SRL) | |
|---|---|---|
| Company profit before tax | EUR 120,000 | EUR 120,000 |
| Corporate tax | EUR 12,000 (10%) | EUR 19,200 (16%) |
| Profit after corporate tax | EUR 108,000 | EUR 100,800 |
| Dividend tax | EUR 5,400 (5%) | EUR 16,128 (16%) |
| Net after all taxes (dividends) | EUR 102,600 | EUR 84,672 |
| Effective combined rate | 15% | ~29.4% |
| Bulgaria advantage | EUR 17,928/year more in pocket | |
At EUR 120,000, the difference grows to nearly EUR 18,000 per year. Over five years, that is close to EUR 90,000 in additional retained earnings — enough to fund significant business investment, property acquisition, or simply a better standard of living.
Practical Verdict
Bulgaria wins when:
• You want one of the lowest combined corporate + dividend tax rates in the EU (~15%)
• You prefer Euro-denominated accounting and zero currency risk
• You value tax system stability (10% since 2007, no changes)
• You earn above EUR 40,000/year through a company
• You are a non-EU citizen who can use the Digital Nomad Visa
• You want to serve clients across the EU from a Schengen base
Romania might make sense when:
• You qualify for the micro-enterprise regime (1% turnover tax) in an eligible sector — verify carefully
• You have an existing Romanian client base or Romanian-language operations
• Banking ease is critical and you need accounts open quickly
• You are in a sector where Romania's specific IT talent pool is an advantage
• You plan to operate at very low revenue where micro-enterprise qualification is clear
For the majority of international entrepreneurs — particularly those in consulting, IT services, e-commerce, and professional services — Bulgaria offers a structurally better tax environment. The 10% corporate tax has been unchanged since 2007, creating predictability that Romania's shifting rates cannot match. Euro adoption in 2026 removed the last significant friction point, and full Schengen membership in 2025 ensures seamless EU integration.
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Book Free Consultation →Disclaimer: This article provides general comparisons based on publicly available tax rates and representative calculations. Romania's tax system has undergone significant changes in 2023-2024 and may continue to evolve. Actual tax obligations depend on individual circumstances, applicable double taxation treaties, and current legislation in both countries. Romanian figures use the standard 16% corporate tax rate and 16% dividend tax rate (Law 141/2025, effective from January 1, 2026). VAT is 21% (effective August 1, 2025). Consult qualified tax advisors in both countries before making relocation decisions. This article does not constitute legal or tax advice. Last updated: April 4, 2026.