Copyright income is an important source of income for creative people such as writers, artists, journalists or software developers. But to avoid problems with the tax authorities, it is essential to understand how this income is taxed in Romania.

What is copyright income?

Copyright income comes from the exploitation of works protected by copyright law. This may include:

• Publishing a book, article or scientific paper;
• Selling or licensing musical, cinematographic or photographic works;
• Related rights, such as those for performers or producers;
• Developing software or other digital works.

This income is regulated by Law 8/1996 on copyright and related rights.

How is copyright income taxed?

Under Romanian tax law, copyright income is considered as income from self-employment and is subject to the following taxes and contributions:

1. Income tax:

o The tax rate is 10% on net income.

o Net income is calculated by applying a flat rate of 40% deductible expenses to gross income. In practice, only 60% of gross income is subject to tax.

2. Social Health Insurance Contribution (CASS):

o According to Art. 170 para. (5) of the Tax Code, the annual basis for calculating the CASS for copyright income is determined according to the level of realized income. The obligation to pay CASS arises if the cumulated annual net income from royalties and other sources (such as rents, dividends, self-employment) exceeds the ceiling of 6 gross minimum wages per country.

o The CASS rate is 10% and is applied on the corresponding calculation base.

3. Social Insurance Contribution (CAS):

o According to Art. 148 para. (4) of the Tax Code, the annual basis for calculating the CAS is the income chosen by the individual. The obligation to pay CAS arises if the annual net income exceeds the ceiling of 12 gross minimum wages.

o The CAS rate is 25% and is applied according to the beneficiary’s option on the chosen income, but within the established ceilings.

How to declare copyright income?

Retention at source:

o If the estimated net estimated level of income is at least equal to 6 gross national minimum wages and the income is obtained from a single income payer, the payer is obliged to:

 Calculate the base;

 Apply the 10% CASS rate;

 Withhold and transfer the contribution due;

 Submit the Declaration 112 by the 25th of the month following the month in which the income is paid.

o The contract between the parties must designate the income payer as responsible for the withholding and payment of contributions.

Tax advantages for copyright income

Copyright income benefits from certain tax breaks:

• Flat-rate deductible expenses: Applying a 40% rate reduces the tax base.
• Option for CAS and CASS: Not all contributions are compulsory, depending on the level of earned income.
• Withholding tax: Simplifies tax obligations for the beneficiary.

How can we help you?

At our accountancy firm, we can assist you in managing your royalty income correctly:

• Calculating taxes and contributions: we work out exactly what taxes need to be paid and when.
• Completing the Single Declaration: We ensure compliance with ANAF requirements.
• Personalized tax advice: we help you take advantage of all available tax facilities.

Taxing copyright income can seem complicated, but with the help of a specialist, the process becomes much simpler. If you need help managing your tax obligations, contact us and we’ll find the right solution for you!

You can also read about other categories of income and their taxation here.