This content is from: Romania
Romania: To attract digital nomads – how will it work?
Corina Mîndoiu and Iulian Pasniciuc of EY Romania take a closer look at the documents required for ‘digital nomads’ in Romania and the tax implications involved.

Digital nomads or ‘employees from anywhere’,
for whom since 2020, countries such as Estonia, Portugal and Croatia have
relaxed immigration requirements, encouraging employees to work locally and
offering employees work visas to tax exemptions, are now required by Romania as
well.
The Senate has recently approved a draft law
that would give employees the opportunity to obtain a temporary residence visa,
under certain conditions, some more bureaucratic and complicated to fulfil. The
project is good news and a step forward, as the current legal regulations do
not contain provisions regarding a possible residence of an ‘employee from
anywhere’, for obtaining a work visa; the existence of a Romanian employer or a
beneficiary of services is required.
What are the pros and cons of the
legislative proposal and what changes should the Chamber of Deputies, the
decision-making body in this case, take into account?
The Senate has established that the digital
nomad is a foreigner employed with an employment contract with a company
registered outside Romania, which provides services through the use of
information and communication technology.
A digital nomad is also a foreigner who
owns a company registered outside Romania, within which he provides services
through the use of information and communications technology and who can work
as an employee or carry out the activity within the company, remotely, by using
information and communications technology.
Thus, these nomads can obtain a long-stay visa, if they want to travel and stay in Romania, while continuing to obtain income from performing remote activities.
Documents required
In order to obtain a visa, applicants must
meet several cumulative conditions including having the means of support
obtained from the activity they carry out, amounting to at least three times
the gross average monthly salary in Romania for each of the last six months
prior to the visa application filing date, as well as for the entire period
registered in the visa, and to carry out activities from which they obtain
income, remotely, by using information and communication technology.
The draft project of the Senate does not
specify, however, how the nomad will prove to be using information technology.
Now comes the tricky part. Because every
digital nomad needs a whole list of documents, in order to obtain a visa: an
employment contract concluded with a company registered outside Romania,
through which to prove the supply of remote services, a document issued by the
employing company or the one they hold, through which to present all the
identification and contact data, as well as the field of activity, information
on the legal representatives of the company.
The nomad also needs a letter of intent, which
must include the purpose of the trip to Romania and the activities they intend
to carry out here. The series of necessary documents does not stop here.
A certificate is also required that states that,
at the date of the visa application, they or, as the case may be, the company
they hold, has paid taxes, fees and other up to date compulsory contributions,
and that they are not registered with documents and deeds that have or have had
the effect of tax evasion and tax fraud.
Also, the reservation of a travel ticket
valid to the destination or the driver's license, green card, proof of health
insurance for the entire period of visa validity, with coverage of at least €30,000 is required, and a certificate of the means of support
obtained from the activity carried out, amounting to at least three times the
gross average monthly salary in Romania for each of the last six months prior
to the visa application filing date, as well as for the entire period
registered in the visa; proof of accommodation conditions.
The nomad also needs a criminal record
certificate or other document with the same legal value. Of course, if the
competent Romanian authority finds it necessary to request something else, the
nomad must present other supporting documents as well.
If they want to extend the visa, again there is further bureaucracy. Because the nomad needs, once again, the employment contract, proof of remote work, by using, of course, technology, a document from the employer to present all the identification and contact details of the company, as well as proof of an income of at least three times the gross average monthly salary for the period for which the extension of the right of residence is requested (the first extension of the right of temporary residence is granted for a period of six months).
To clarify
Although, as we have seen, the state
intends to request all kinds of documents, the draft law does not mention the
digital nomad's family members, the conditions under which they can accompany
them and how they can enter Romania. In addition, obtaining a visa is not easy,
as it can take up to 60 days from the application filing date.
The impact on the employee's tax status
must also be taken into account. Remote work in Romania, for any period longer
than 183 days, over 12 consecutive months, could, for example, lead to the
treatment of the employee as a tax resident in Romania, but also in the country
of origin at the same time, which could cause the employee many problems.
The employee may also be subject to local salary
income taxes. The conditions of the existing applicable double taxation
treaties may repeal local rules depending on individual circumstances; for
example, an international tax treaty generally provides for an exemption for
income taxes in the host country for periods less than 183 days, subject to
certain conditions.
Problems could also arise in the area of
social security contributions. Generally, a person must pay social security in
the country where they work. Therefore, the foreign employer should check
whether it has local social security reporting and collecting obligations and
whether special arrangements need to be made in accordance with the relevant regulations
in Romania.
The submission of the draft law in
Parliament was motivated by "Romania's huge potential in tourism and
attracting professionals" – a justification used by other European
countries, which saw nomads as the way to counteract the decline of tourism,
the visa for digital nomads being seen as a tool that can attract financial
resources to the economy.
At the beginning of 2021, the digital nomad
index placed Romania in third place, after Canada and the UK at the top of ‘attractiveness
of working from home’ - with an average broadband internet speed of 188 mb/s,
an internet cost of €7.5 and a rent of €323.
Yes, there is potential, only that, as approved by the senators, the draft fails to achieve it. In other words, if we intend for Romania to attract digital nomads, the Chamber of Deputies, the decision-making body in this case, should also consider clarifying the problems that may arise in respect of social security contributions.
Corina Mîndoiu
Associate partner, EY Romania
E: corina.mindoiu@ro.ey.com
Iulian Pasniciuc
Senior manager, EY Romania
E: iulian.pasniciuc@ro.ey.com
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