The year 2026 brings a significant increase - from 10% to 16% - in taxes on dividend income and capital gains, with a major impact for Romanian entrepreneurs. This increase of 601TPTP3T raises crucial questions about how capital can be structured and used efficiently, especially when talking about medium- and long-term investment or exit plans, says Raluca Popa, Partner, Tax Advisory, EY Romania.
In this context, the use of holding companies offers the possibility of reinvesting profits without paying income tax at the level of individual shareholders.
It would be useful to emphasize one point at the outset: if we are talking about an entrepreneur who wants to use the funds generated by his business only for personal expenses, the holding company does not bring any benefits. But for entrepreneurs who want to reinvest, to grow, the holding platform is a suitable solution.
What are the benefits of holding?
From a tax point of view - dividend income received by the holding company and capital gains from the sale of holdings in companies owned by the holding company are exempt from corporate income tax at the level of the holding company.
A simple example: a company realizes a net profit of 100 lei. If the dividends are distributed directly to individuals, dividend tax of 16 lei is payable and the net income will be 84 lei.
In comparison, a holding company receives dividend income of 100 lei which is tax-free and can be fully reinvested. Things become even more relevant in the case of some transactions (sale of securities held in the company), in which case we are talking about a saving of 161TPTP3T of the total transaction price.
The holding company is an efficient vehicle not only for tax savings, but also for a coherent organization of group lending, separation of business lines and, in general, better governance of the investment portfolio.
Last but not least, for entrepreneurs concerned about succession planning or the involvement of family members, the holding company can be the right platform and can be optimally articulated with succession and wealth protection structures such as trusts or foundations.
How do you benefit from the holding tax regime in Romania?
In order for a holding company to benefit from the tax exemption on dividends and capital gains, it must hold at least 10% of the capital of the operating company for a minimum period of 12 months.
The time aspect is crucial and often overlooked. Suppose the decision to create a holding company is taken on March 1, 2026: the implementation takes, in practice, around 3 months (we are not strictly talking about the deadlines at the Trade Register, but about all the activities related to the process). So we have the holding company on June 1, 2026, and the 12-month deadline doesn't come until July 1, 2027.
So if, for example, we are talking about a sale of the business and discussions with the potential buyer have started - it may already be too late for a holding company. This is why it is important that a holding structure is proactively implemented to accommodate various business opportunities in the long term. Not infrequently we see entrepreneurs setting up holding companies after they have made an initial sale.
Holding in Romania or abroad?
For entrepreneurs resident for tax purposes in Romania, the local holding company is, in most cases, the most efficient solution, for at least three reasons: lower implementation and administration costs; easier to fulfill substantive requirements; stability of the tax regime (n.b. we are talking here about provisions whose source is to be found in European directives and OECD norms).
The experience of the last few years shows a clear trend: after the introduction of the 5% dividend tax in 2016, traditional holding structures in countries such as the Netherlands, Luxembourg or Switzerland have become much more expensive for Romanian entrepreneurs, due to the 15% dividend withholding tax in those jurisdictions. Thus, we have witnessed a process of repatriation of these structures, and nowadays most of the newly created holding companies are in Romania and operating efficiently.
With the return of the 16% rate, „historical” jurisdictions re-enter the strategic calculations, as the dividend withholding tax of 15% is lower than the local rate. However, the „substance” discussion becomes mandatory: local directors and employees, other administrative costs (e.g. premises, accounting, etc.) have to be taken into account versus the anticipated benefit.
There are, of course, also situations in which an external holding is justified, such as, for example, partnerships with investors with international structures, relocation of the personal tax residence of the associates, businesses with an operational hub outside Romania, etc.
Increasing dividend and capital gains tax at 16% fundamentally impacts entrepreneurs' financial decisions. Accelerated dividend payouts may be useful in the short term, but it is not a structural strategy. Holding structures become a key tool for protecting capital and maximizing reinvestment capacity. In this context, a Romanian holding company may represent the most advantageous option for Romanian entrepreneurs.