PFA or SRL? Complete guide for 2026
“PFA or SRL?” is the first dilemma every entrepreneur in Romania faces. PFA (Persoana Fizica Autorizata — sole proprietorship) and SRL (Societate cu Raspundere Limitata — limited liability company) are the two most common legal forms for small businesses. The right answer depends on your specific situation — there’s no universally better option. This guide gives you the full comparison for 2026, with updated figures and practical scenarios.
The fundamental differences
Legal liability
PFA — you’re liable with your entire personal assets. If your business accumulates debt, creditors can go after your house, car, and savings.
SRL — you’re liable only up to the share capital (minimum 1 leu). Your personal assets are protected, except in cases of fraud.
Verdict: If your business involves significant financial risk (inventory, investments, large contracts), an SRL is the only reasonable option.
Income taxation
Things have changed substantially in recent years. Here’s the situation for 2026:
PFA — income norm or actual income
Option 1: Income norm (available only for certain CAEN activity codes and counties)
- You pay tax on a fixed income amount set by ANAF (the Romanian tax authority), regardless of how much you actually earn
- Income tax: 10% of the income norm
- CAS (social security contribution): 25% of 24 gross minimum wages = 25% x 24 x 4,050 lei = 24,300 lei/year (2026)
- CASS (health insurance contribution): 10% of 24 minimum wages = 9,720 lei/year
Option 2: Actual income system
- You pay tax on net income (revenue minus expenses)
- Income tax: 10% of net income
- CAS and CASS: same fixed amounts as the income norm (if income exceeds the thresholds)
SRL — micro-enterprise
- Income tax: 1% of turnover (with at least one employee) or 3% (without employees)
- Dividends: 8% tax when you extract money from the company
- CASS on dividends: 10% if dividends exceed 6 gross minimum wages/year
Practical comparison: 3 scenarios
Scenario 1: IT freelancer, income of 10,000 lei/month
| PFA (income norm) | SRL (micro 1%) | |
|---|---|---|
| Annual income | 120,000 lei | 120,000 lei |
| Income tax | ~2,000 lei (norm) | 1,200 lei (1%) |
| CAS | 24,300 lei | 0 (paid from salary) |
| CASS | 9,720 lei | 0 (paid from salary) |
| Admin salary (gross min.) | — | ~4,050 lei/month |
| Salary costs (CAS+CASS+tax) | — | ~1,460 lei/month = 17,520 lei/year |
| Net dividends available | — | ~85,000 lei |
| Dividend tax (8%) | — | ~6,800 lei |
| Total taxes/year | ~36,000 lei | ~25,500 lei |
| Take-home | ~84,000 lei | ~94,500 lei |
Winner: SRL with micro 1% — you save ~10,000 lei/year.
Scenario 2: Consultant, income of 5,000 lei/month
| PFA (actual income) | SRL (micro 3%) | |
|---|---|---|
| Annual income | 60,000 lei | 60,000 lei |
| Deductible expenses | ~10,000 lei | — |
| Income tax | 5,000 lei | 1,800 lei (3%) |
| CAS | 24,300 lei | 0 |
| CASS | 9,720 lei | 0 |
| Admin salary | — | 17,520 lei/year |
| Dividends + tax | — | ~3,200 lei |
| Total taxes/year | ~39,000 lei | ~22,500 lei |
Winner: SRL, even at 3% (without an employee).
Scenario 3: Tutoring, income of 3,000 lei/month
| PFA (income norm) | SRL (micro 3%) | |
|---|---|---|
| Annual income | 36,000 lei | 36,000 lei |
| Total taxes/year | ~36,000 lei | ~15,000 lei |
At low income levels, the fixed CAS and CASS for PFA become extremely burdensome relative to earnings. An SRL is almost always more advantageous once your income exceeds the cost of a minimum wage salary.
PFA advantages
It’s not all bad for PFA:
- Administrative simplicity — you don’t need a certified accountant for simplified bookkeeping
- Simple accounting — just a cash receipts and payments ledger (under the income norm)
- Zero setup costs — you register for free at ANAF
- Cash withdrawal — there are no dividends; the money is directly yours
- Income norm — if you have a low norm and high earnings, it can be very advantageous
SRL advantages
- Limited liability — personal assets are protected
- Micro-enterprise taxation — 1% or 3% of turnover
- Credibility — clients and banks prefer SRLs
- Partnerships — you can have partners and sell shares
- Scalability — hire people, grow, sell the company
When to choose PFA
- You’re a freelancer earning under 50,000 lei/year
- Your activity qualifies for a low income norm
- You want minimal accounting hassle
- You have no financial risk (no loans, no inventory)
- You work alone and don’t plan to hire
When to choose SRL
- Income above 50,000 lei/year (almost always more tax-efficient)
- You want legal protection
- You plan to grow your team
- You have corporate clients that require invoices from an SRL
- You want access to financing or bank loans
Can you switch from PFA to SRL?
Yes, at any time. The process involves:
- Close the PFA (deregistration at ANAF)
- Open the SRL (full procedure — see our guide)
- Transfer your contracts to the new entity
Important: you can’t “convert” a PFA into an SRL directly. They are completely different legal entities.
Shared obligations
Regardless of the legal form, in 2026 you have these obligations:
- eFactura (electronic invoicing) — mandatory for all B2B transactions
- SPV (Spatiul Privat Virtual — ANAF’s virtual private space) — the portal for filing tax declarations
- Tax deadlines — D300 (VAT), D100 (taxes and contributions), D112 (payroll) (see the full calendar)
- Bookkeeping — simplified for PFA, full double-entry for SRL
Conclusion
Regardless of which form you choose, monthly accounting remains a fact of life. What matters is choosing based on the numbers, not on a friend’s opinion. Calculate your taxes for both options using your actual situation. And if you’re unsure, a good accountant can advise you in 30 minutes better than any guide on the internet — including this one.