How to pay and manage Romanian contractors: A practical guide
Complete guide to paying contractors in Romania: Wise vs PayPal fees, CIF requirements, ANAF compliance, currency considerations (EUR vs RON), and contractor management tools.
If you're paying independent contractors in Romania, you need to handle payment within EU framework and understand VAT rules. The payment part is straightforward once you know the right method. The compliance part—understanding CIF requirements, VAT considerations, and currency preferences—is where most foreign businesses struggle.
This guide walks through what you actually need to do. Then we'll show you where Kontrable helps organize the work.
The main things you need to do
1. Use Wise or SEPA for payments. These are the cheapest and most reliable ways to pay Romanian contractors. If you're an EU company, use SEPA transfers—they're free or nearly free ($0-5) and take 1-2 business days. If you're outside the EU, use Wise ($2-6 per transfer). PayPal costs $5-12 and has worse exchange rates. Traditional bank transfers cost $15-30 and take 3-5 days. Use Wise or SEPA.
2. Ask about currency preference. Most Romanian contractors prefer EUR for stability and EU work. USD works if you're a US company. The Romanian leu (RON) can fluctuate. Always ask the contractor which currency they prefer before setting up payments.
3. Verify CIF before starting work. CIF (Cod de Identificare Fiscală) is Romania's tax identification number. Always verify the contractor has a valid CIF before the first payment.
4. Understand VAT rules. Romania is an EU member, so VAT rules apply for cross-border services. For B2B services within the EU, the reverse charge mechanism applies—the contractor doesn't charge VAT on the invoice, you handle VAT in your country. For non-EU clients, no VAT is charged. Collect invoices from the contractor.
5. Use a written contract. Document the contractor relationship with a clear service agreement covering scope, deliverables, payment terms, currency, IP ownership, confidentiality, and explicit statement that they're an independent contractor (not an employee).
That's the foundation. Everything else builds on these five things.
Payment methods: What actually works
For paying Romanian contractors:
Use Wise or SEPA. Both are the cheapest and most transparent ways to pay contractors in Romania.
SEPA transfers (for EU companies): If you have a EUR account in the EU, use SEPA bank transfers. They're free or nearly free ($0-5) and take 1-2 business days. SEPA is ideal if you're paying in EUR. All Romanian banks support SEPA.
How to set up: Ask the contractor for their IBAN (International Bank Account Number). Use your bank's SEPA transfer system. The contractor receives EUR in 1-2 days.
Wise (for non-EU companies or USD): If you don't have a EUR account in the EU or need to pay in USD, use Wise. It charges $2-6 per transfer with real mid-market exchange rates—no markup. Wise works for EUR, USD, or RON.
How to set up: Create a Wise business account (free). Get the contractor's bank details (IBAN or account number). Send EUR or USD to their account. Wise converts at mid-market rate if needed. The contractor receives money in 1-2 business days.
What about PayPal?
PayPal is widely accepted in Romania and offers instant transfers, but it charges $5-12 per transaction with worse exchange rates than Wise or SEPA. For small one-time payments or if the contractor specifically prefers it, PayPal works. For regular payments, use Wise or SEPA.
What about Payoneer?
Payoneer is popular with Romanian freelancers and charges $5-10 per transfer with 1-3 day delivery. It's useful if the contractor already has an account and prefers it. But Wise or SEPA are still cheaper and faster.
What about traditional bank transfers?
Avoid them. They cost $15-30 per transaction and take 3-5 days. Use Wise or SEPA instead.
Currency: EUR, USD, or RON?
Most Romanian contractors prefer EUR for stability and EU work. EUR is the standard for European transactions. USD works if you're a US company. The Romanian leu (RON) can fluctuate and is less preferred for international work.
Tech workers especially prefer EUR or USD because they're paid by international clients and need stability. Some contractors may prefer RON for local accounting, but this is less common.
Always ask your contractor which currency they prefer before setting up payments. Have the conversation upfront so both sides know exactly what's being paid. If they're flexible, EUR is often simpler if you're in the EU.
Understanding CIF (Tax ID)
CIF (Cod de Identificare Fiscală) is Romania's tax identification number. All contractors must have one to operate legally in Romania.
You need to verify the contractor has a valid CIF before starting work. Ask them to provide their CIF and keep it on file. This is the contractor's responsibility to obtain and maintain, but you should verify it as part of your contractor onboarding process.
Understanding VAT for cross-border services
Romania is an EU member, so VAT rules apply for cross-border services. This is important to understand.
For B2B services within the EU, the reverse charge mechanism applies. This means the Romanian contractor doesn't charge VAT on the invoice. Instead, you (the buyer in your country) are responsible for VAT in your country. The contractor reports the sale to Romanian tax authorities under the reverse charge rules. You handle VAT with your own tax authorities.
For non-EU clients (if you're outside the EU), no VAT is charged on services to non-EU clients.
In practice: The contractor issues an invoice without VAT or with 0% VAT notation, indicating the reverse charge applies. You collect this invoice for your records. It shows you're paying for legitimate services. You don't need to understand all the VAT mechanics—just collect the invoices the contractor provides.
If you're an EU company with a VAT number, you may want to exchange VAT numbers with the contractor so they have documentation that the reverse charge applies.
Tax and compliance requirements
When hiring contractors in Romania, tax obligations are straightforward: the contractor is responsible for their own taxes with ANAF (Romanian tax authority). You don't withhold taxes or file anything with Romanian tax authorities.
Your responsibilities: Verify the contractor has a valid CIF. Collect invoices for your records. Have a clear written service contract. Keep documentation of all payments. Don't withhold Romanian taxes. Ensure proper contractor relationship (they control their work, use their own tools, work for multiple clients, are project-based).
Contractor's responsibilities: They handle their own tax compliance with ANAF. They register and maintain their CIF. They issue proper invoices for each payment. They file tax returns as required by Romanian law. They handle VAT compliance (reverse charge) with ANAF. They keep records of income and expenses.
Important note: As a foreign company paying a Romanian contractor, you typically don't have tax withholding obligations in Romania. The contractor handles their own ANAF tax compliance. For VAT, the reverse charge mechanism usually applies for B2B services. Consult with a tax professional in your country about reporting requirements in your jurisdiction.
Contractor vs employee classification
One mistake businesses make is treating contractors like employees. Romania has labor laws that distinguish between the two, and misclassification can create legal risk.
A proper independent contractor relationship means they control how work is done, use their own tools and equipment, work for multiple clients, and are engaged on a project basis with defined deliverables. They shouldn't have set working hours, provided equipment, exclusive work requirements, or ongoing employment-like arrangements.
Document the relationship carefully with a written contract that explicitly states independent contractor status.
Why hire Romanian contractors?
Romania is an EU member with excellent advantages for nearshoring. The country has a growing tech talent pool with strong engineering and IT workforce. Rates are 40-60% lower than Western Europe while maintaining quality. EU membership simplifies legal and tax framework. Time zone alignment (EET is UTC+2) overlaps well with both EU and US East Coast hours. English proficiency is high in the tech sector—most contractors speak English fluently. Romania has European business culture and professional standards.
Common mistakes and how to avoid them
Mistake 1: Using expensive bank transfers. Traditional international wire transfers cost $15-30 per transaction with poor exchange rates. Over a year, paying a single contractor, this costs hundreds extra.
Solution: Use SEPA (if EU company, free) or Wise ($2-6). You save 70-90% on transfer fees.
Mistake 2: Not asking currency preference. You assume RON is fine, but the contractor prefers EUR for international work. This creates friction.
Solution: Always ask which currency they prefer before setting up payments. Most prefer EUR or USD.
Mistake 3: Not understanding VAT reverse charge. You pay the contractor and don't understand that VAT rules apply differently. You handle the invoice incorrectly for your tax purposes.
Solution: Understand that for B2B services within the EU, reverse charge applies—contractor doesn't charge VAT, you handle VAT in your country. Collect invoices showing 0% VAT or reverse charge notation.
Mistake 4: No written contract. Verbal agreements lead to disputes about scope, deliverables, and payment terms. Without documentation, there's no clarity when disagreements arise.
Solution: Always have a written service agreement before starting work. Cover scope, deliverables, payment terms, currency, IP ownership, confidentiality, and termination terms.
Mistake 5: Misclassifying employees as contractors. You treat a contractor like an employee—setting hours, providing equipment, requiring exclusive work. This creates legal risk.
Solution: Ensure true contractor relationship. They control how work is done, use their own tools, work for multiple clients. Document this in the contract.
Frequently asked questions
Q: Should I pay Romanian contractors in EUR or RON? A: Most Romanian tech contractors prefer EUR for stability and EU work. Always ask your contractor which currency they prefer before setting up payments.
Q: Do I need an EOR platform for Romanian contractors? A: No. EOR is for hiring employees internationally. Romanian contractors handle their own ANAF tax compliance. You just need a good payment method (Wise or SEPA) and the ability to organize contracts and invoices.
Q: What's the best payment method for Romania? A: If you're an EU company with a EUR account, use SEPA transfers (free or nearly free). If you're outside the EU, use Wise ($2-6) for the best rates.
Q: How does VAT work with Romanian contractors? A: For B2B services within the EU, the reverse charge mechanism applies—contractor doesn't charge VAT on the invoice, you handle VAT in your country. For non-EU clients, no VAT is charged. The contractor handles all VAT compliance with ANAF.
Q: Do I need to withhold Romanian taxes? A: No. As a foreign company paying a Romanian contractor, you typically don't withhold Romanian taxes. The contractor is responsible for their own ANAF tax compliance.
Q: Do I need a local presence or business registration in Romania? A: No. You're paying independent contractors for services. You don't need a Romanian business entity, registration, or tax ID. The contractor handles their own compliance.
Q: What should be in a contractor agreement for Romania? A: Include scope of work, deliverables, payment terms, currency, independent contractor status, IP ownership, confidentiality, and termination terms. A simple written agreement protects both sides.
Getting started
If you're paying Romanian contractors, here's the process:
- Verify contractor has valid CIF
- Ask contractor for currency preference (EUR, USD, or RON)
- Set up SEPA (if EU company) or Wise account (if outside EU)
- Get contractor's IBAN or bank details
- Exchange VAT numbers if you're both EU companies
- Create written service agreement
- Request invoice for each payment
- Keep records for your tax purposes
- Maintain contractor contact and documentation
Kontrable helps with steps 3, 4, 6, 7, 8, and 9 by organizing contractor information, tracking payments, managing contracts, and storing invoices. You stay in control of your payment method and use SEPA or Wise directly.
If you're managing a few contractors, a spreadsheet works. If you're managing dozens or coordinating across a team, Kontrable saves time and keeps contractor data organized.
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[Start a free trial of Kontrable] – Get invoice workflows, payment tracking, and contract storage. Try it free.
