Paying Romanian Contractors from a US Company: Treaty & PFA Guide

Why this guide exists

Romania is one of the strongest engineering talent markets in the European Union, with a deep base of developers, QA engineers, and data specialists, strong English, and rates that often beat Western Europe. US companies building nearshore-to-EU teams reach for Romanian contractors early, and the compliance picture is friendlier than most people expect once you know where the lines are.

There is an income tax treaty in force, the freelancer setup (the PFA) is well understood, and Romania sits inside the EU VAT system and SEPA, so payouts are cheap. The two things that trip up US founders are the treaty status (a replacement has been negotiated but the old 1973 treaty is what still governs) and the RO e-Factura e-invoicing mandate, which sounds like it applies to your invoice but is really a domestic obligation.

This guide covers what a US company needs to pay Romanian contractors. We cover the US side (W-8BEN, treaty application), the Romania side (PFA, ANAF, CUI, VAT, CAS and CASS, e-Factura), and the payment rail decision. If you want to skip the assembly and let a platform handle it, Omnivoo Contract Management handles SOW drafting, W-8BEN collection, invoice capture, and SEPA settlement for a flat $49 per contract.

US side: what you need to do as the payer

Step 1. Collect a W-8BEN before the first payment

Before any invoice is paid, the Romanian contractor must complete Form W-8BEN and return it to you. The form certifies the contractor is the beneficial owner of the income, is a tax resident of Romania, and is not a US person. The IRS Form W-8BEN page has the current form and instructions.

The W-8BEN is valid for three calendar years after signature. If your contractor operates through a Romanian company (an SRL or similar), the form is Form W-8BEN-E, the entity equivalent, available on the IRS W-8BEN-E page. Use the free W-8BEN collection checklist to confirm you have the right form and fields.

Part II of the W-8BEN is where the contractor claims treaty benefits, citing Romania as the treaty country. This is filled in only when treaty benefits are needed on US source income.

Step 2. Confirm the work is performed in Romania

Under IRS source of income rules for personal services, services income is sourced to the place where the services are physically performed. If your Romanian contractor does the work entirely from Bucharest, Cluj-Napoca, Iasi, or Timisoara, the income is Romanian source income from the US perspective.

Services performed outside the US by a nonresident alien are foreign source income and are not subject to US withholding or Form 1042-S reporting.

For a typical pure services engagement where the Romanian contractor never sets foot in the US, the result is: no withholding, no Form 1042-S, no 1099-NEC. The treaty is in the background but does not change the analysis.

If the contractor visits the US for an onsite sprint, the days physically worked inside the US are US source days. Those days have to be allocated and may trigger withholding and a 1042-S, so keep a simple onsite-days log.

Step 3. Know the treaty for the edge cases

The treaty status here matters, so be precise. The 1973 US-Romania income tax treaty, signed on 4 December 1973 and in force since 1976, is the treaty that governs the cases where your payment generates US source income. The Treasury and IRS technical explanation walks through how each article applies.

As of 2026, the IRS Romania tax treaty documents page lists only the 1973 treaty and its technical explanation, and Romania appears on the IRS list of income tax treaties A to Z. The two governments have negotiated a replacement treaty, but that newer text has not entered into force, so the 1973 treaty continues to apply. Do not draft a contract around treaty articles from a replacement that is not yet in force.

For services payments where US withholding does apply, the Romanian contractor files Form 8233 to claim treaty benefits on the services portion, using the IRS Form 8233. For royalty type payments, the contractor relies on Form W-8BEN with the relevant 1973 treaty article entered in Part II. The contractor’s Romanian accountant identifies the correct article. For more on this mechanic, see our Form 8233 treaty exemption guide.

For pure services performed in Romania, treaty article citations are not needed because there is no US source income to begin with. The treaty only enters the picture when US withholding would otherwise apply.

One related concept worth flagging for finance teams is permanent establishment. A contractor working from Romania does not, on their own, create a US permanent establishment for your company, and a properly structured services engagement keeps that line clean. The risk runs the other way too: if your company starts directing a Romanian contractor like an employee, with a fixed place of business and authority to bind the company, you can drift toward creating a Romanian taxable presence. Keeping the relationship to deliverables, not management control, protects both sides.

Romania side: what your contractor handles

You as the US payer are not in scope for most Romanian taxes. The Romanian contractor is. Understanding the landscape helps you have an informed conversation about invoice format, VAT treatment, and the contractor’s tax setup.

PFA, the Trade Register, and the CUI

Most Romanian freelancers working B2B with international clients run a PFA (Persoana Fizica Autorizata), Romania’s authorised sole-trader status. Registration goes through the Trade Register Office (Registrul Comertului) and ANAF, the National Agency for Fiscal Administration, which assigns the contractor a CUI (Cod Unic de Inregistrare, the unique registration code, sometimes shown as CIF).

A PFA holder generally pays a 10 percent flat income tax on net income, plus social contributions described below. Some contractors instead run a micro-company SRL, which has its own corporate tax regime. You as the US payer do not need to know which form the contractor uses. You only need to ensure they can issue you a valid invoice with the correct VAT treatment.

VAT 21 percent and the place-of-supply rule

Romania’s standard VAT (TVA) rate rose from 19 percent to 21 percent on 1 August 2025 as part of a fiscal package. You can confirm the current rate on the European Commission VAT rates page.

Romanian VAT follows the EU VAT system, which means for B2B services the place of supply is generally where the customer is established. When your Romanian contractor invoices your US company for services, the place of supply is the United States, outside the scope of EU VAT. The contractor issues an invoice marked as out of scope of Romanian VAT, or as reverse charge, and you do not pay VAT on it.

If the contractor is below the Romanian VAT registration threshold and is not voluntarily VAT-registered, the invoice is issued without VAT and the same out-of-scope treatment applies.

RO e-Factura: a domestic mandate, not your problem

This is the field that confuses US buyers most. RO e-Factura is Romania’s mandatory electronic invoicing system run by ANAF. It became mandatory for domestic B2B transactions in 2024, with full enforcement from 1 July 2024, and requires invoices in a structured XML format validated through ANAF’s platform.

The mandate is built around transactions between taxable persons established in Romania. A cross-border invoice to your US company, where the customer is established outside Romania, generally falls outside the mandatory e-Factura flow. In practice, your contractor issues you a normal invoice, and the e-Factura system is something they deal with for their Romanian clients, not for you. The contractor’s accountant confirms the exact treatment.

CAS and CASS social contributions

A PFA holder pays Romanian social contributions on their own income: CAS (the pension contribution) and CASS (the health contribution), each owed once income crosses thresholds tied to the national minimum gross wage. The ANAF guidance for individuals covers the current thresholds.

CAS and CASS are the contractor’s own obligation on their own income. You as the US client do not pay them, do not contribute to them, and have no Romanian social security reporting obligation.

A separate item to watch is the US-Romania social security totalization agreement. The two countries signed a totalization agreement in 2023, but it has not entered into force as of 2026, so it does not yet change anything in a contractor relationship. It is worth tracking only because, once in force, it would coordinate social security coverage for cross-border workers. For a pure contractor engagement where the contractor pays their own CAS and CASS in Romania, it has no effect on you today.

The payment rail decision

There are four real options for paying a Romanian contractor from a US bank account.

Romania is in the EU and part of SEPA (Single Euro Payments Area), so EUR-denominated transfers from any EUR-supporting provider land in the contractor’s Romanian bank account quickly and cheaply. For USD-denominated invoices, Wise USD-to-RON is typically the cleanest. A SWIFT wire remains a fallback for one-off larger payments, though it loses the most to FX margin. For a deeper comparison, see our guide on FX margin in international contractor payments.

Misclassification risk in Romania

Romania has two distinct reclassification risks, and a US buyer should understand both.

The first is tax reclassification. Under the Romanian Fiscal Code, ANAF can reclassify income from an “independent activity” to a “dependent activity” where the relationship looks like employment in substance: the worker uses the beneficiary’s premises and equipment, follows the beneficiary’s schedule, works under subordination, and lacks the freedom to serve multiple clients. A reclassification pulls the income into employment-type taxation with the associated contributions.

The second is labour reclassification under the Romanian Labour Code (Codul Muncii), where a contractor engaged on paper can be treated as an employee with retroactive entitlement to leave, severance, and employer social contributions.

The reclassification risk is highest when the contractor has only one client (your US company), works fixed hours at your direction, uses your equipment, and is integrated into your team like an employee. The mitigations are the same as in other markets: a properly drafted services agreement that establishes the contractor relationship in substance, a scope tied to deliverables not time, evidence the contractor has other clients, and a documented review at six and twelve months. For more depth, see our guide on drafting an SOW for global contractors. The Omnivoo Contract Management SOW templates bake these protections in by default, including clear IP assignment and a governing law clause.

End-to-end workflow

Here is the clean version for a US company onboarding its first Romanian contractor.

1. Send the contractor a B2B services agreement that defines deliverables, payment, IP assignment, and termination, anchored by a master service agreement and a statement of work.
2. Collect a signed W-8BEN before any payment moves. Part II references Romania as the treaty country only when US source income is involved.
3. Confirm the contractor has an active PFA (or SRL) with a CUI, and check whether they are VAT-registered, since the invoice format differs slightly.
4. Pick a payment rail (Wise, Payoneer, or SEPA-aware provider) and onboard the contractor’s payout details (Romanian IBAN).
5. Pay the invoice on schedule. Keep the W-8BEN, services agreement, invoice, and payment receipt together as a packet.
6. Review the engagement quarterly for misclassification risk and refresh the W-8BEN every three years.

If you are also comparing rails across countries, our global contractor payment methods compared 2026 guide covers the broader options, and our guide on how to pay international contractors from the US walks the general framework. If you pay contractors elsewhere in Europe, see our guides on paying Poland, Ukraine, and Serbia contractors.

When a platform pays for itself

A US founder paying one Romanian contractor can do this manually. A US team paying five or more Romanian contractors faces enough W-8BEN refreshes, VAT treatment confirmations, and FX margin questions that a platform pays for itself within a few months.

Omnivoo Contract Management costs a flat $49 per contract. We draft the B2B services agreement with Romania-specific IP and misclassification clauses, collect the W-8BEN, capture the invoice on every payment, run the FX payment through a SEPA or USD-to-RON rail to avoid SWIFT leakage, and store the full packet for audit. Transaction fees are passed through at cost, with no FX markup and no subscription.

A simple sanity check

Three questions for every Romanian contractor relationship.

1. Is there a signed W-8BEN on file and is it less than three years old?
2. Will all the work be performed in Romania for the foreseeable future?
3. Are we paying through a rail that handles SEPA or USD-to-RON cleanly and captures the invoice for every payment?

If yes to all three, you are in great shape on the US-Romania stack. The remaining work is misclassification hygiene over time, watching both the ANAF dependent-activity test and the Labour Code.

Want to skip the assembly entirely? See how Omnivoo Contract Management handles Romanian contractors end to end, or talk to our team about your specific setup.