← Tax Optimization · Self-Employed (PFA) / Company
1% micro-company or 16% profit tax?
The choice between the two regimes is decided by your profit margin, not by preference for one regime or the other — and the 100,000 EUR cap can force a regime change mid-year.
What the law says
If your profit margin is high (roughly over 15-20% of revenue), the micro-company regime — 1% on total revenue, with no expense deduction — is usually much cheaper than the 16% profit tax, which applies only to net profit. But watch the 100,000 EUR annual cap: exceeding it automatically and irreversibly switches the company to profit tax, starting from the very quarter the cap was exceeded — the check is quarterly, not just at year end.
Law 227/2015, Title III (micro-companies), 100,000 EUR cap in force since 2026.
How it applies, in numbers
Illustrative example: a company with 90,000 EUR revenue and 20,000 EUR profit (22% margin) — micro-company tax = 1% × 90,000 = 900 EUR; profit tax = 16% × 20,000 = 3,200 EUR. The micro-company regime is much cheaper. Same revenue, but only 5,000 EUR profit (5.5% margin) — micro-company tax stays 900 EUR; profit tax = 16% × 5,000 = 800 EUR. This time, profit tax would be somewhat cheaper.
Common mistakes
The common mistake is assuming the micro-company regime is always cheaper because 1% sounds like a low rate — but at low profit margins, profit tax can come out more favorable. The second mistake is not tracking the 100,000 EUR cap quarterly and being caught off guard by the automatic switch to profit tax mid-year.
