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When can you withdraw money from a Romanian company?
Introduction
Many clients have asked when they can withdraw money from their Romanian company.
This short guide answers that question.
Contents
What are dividends?
Dividends are the money you receive from your Romanian company.
You can only extract dividends from your company's net profits.
Net profits are your company’s income minus expenses and taxes.
For example, you cannot pay out dividends using a bank loan that your company has taken.
You don’t have to extract all net profits as dividends.
Your company can keep some profits for reinvestment or future dividends.
Who can receive dividends?
Only shareholders of your Romanian company can receive dividends.
If a company has many shareholders, they each receive dividends. The amount depends on their capital share.
Want to know more about shareholders, share capital, and Romanian companies? Check out our complete guide on Romanian company registration.
Dividends can be taken out every quarter or yearly
Quarterly dividend extraction
You can extract dividends quarterly or yearly.
For quarterly dividends, ask your accountant to issue the quarterly financial statements.
The quarterly financial statements are optional.
After issuing the quarterly financial statements, your accountant will update you on the net profits.
Your company needs to approve quarterly financial statements in a shareholder meeting. This meeting will also decide the dividend amount and payment date.
Once the resolution passes, the company can pay dividends to shareholders.
Yearly dividend extraction
At the end of the year, your accountant will issue the yearly financial statements.
The yearly financial statements are mandatory.
If you have extracted quarterly dividends, they will lower your yearly dividends. You can take only the remaining amount as yearly dividends.
You can only withdraw yearly dividends after the shareholders' meeting has approved the yearly financial statements. The resolution will specify the dividend amount and payment date.
If your quarterly dividends are more than your yearly dividends, you must pay back the extra amount to your company. You have to do this within 60 days after the yearly financial statements are approved.
If you don’t pay within 60 days, you will owe default interest on the unpaid amount to your company.
The dividend tax
The dividend tax must be withheld by your company when extracting dividends, whether quarterly or yearly.
It must pay the dividend tax to the Romanian government for each shareholder.
If you want to know the dividend tax amount and other company taxes, check our guide on company taxes.