Romanian developers working as freelancers face an immediate question: should I register as PFA (persoană fizică autorizată) or establish an SRL (societate cu răspundere limitată)? The choice significantly affects your taxes, administrative burden, and legal liability.

I’ve worked under both structures at different points. Neither is universally better—the right choice depends on your revenue, clients, and personal situation. Here’s what I learned.

PFA Basics

PFA is the simpler structure. You register as an authorized natural person conducting business. There’s minimal bureaucracy, relatively low setup costs, and straightforward accounting.

PFA doesn’t create a separate legal entity. You and the business are the same legally. This means unlimited liability—if something goes wrong, your personal assets are at risk, not just business assets.

For software development where liability risks are limited (you’re writing code, not manufacturing physical products or providing medical services), this unlimited liability is often acceptable.

SRL Basics

SRL creates a limited liability company. This is a separate legal entity from you personally. Your liability is generally limited to your capital contribution to the company.

SRL provides better asset protection and more professional appearance. Many clients, especially international companies, prefer contracting with a company rather than an individual.

But SRL has significantly more administrative overhead. You need to file annual financial statements, maintain corporate records, potentially hire an accountant, and navigate more complex tax reporting.

Tax Comparison for Typical Developer Revenue

For a developer earning €50,000-80,000 annually (common for experienced Romanian freelancers working with international clients), the tax situation varies between structures.

PFA pays income tax at normal rates (currently 10% in Romania), plus social contributions (health insurance and pension). There are simplified taxation options available under certain revenue thresholds.

Social contributions are calculated on declared income, with minimum and maximum limits. For developers, you’re usually well above minimum thresholds, so contributions are substantial—roughly 35-40% total between health and pension.

SRL pays corporate profit tax (currently 16% for revenues over certain thresholds, with a 1-3% microenterprise regime available under conditions). Then when you extract money as salary or dividends, personal income tax applies.

The optimal SRL strategy usually involves taking a modest salary (minimizing payroll taxes) and extracting remaining profit as dividends (which face 5% tax after the corporate level).

Running the numbers on typical developer income levels:

PFA effective tax rate: approximately 40-45% all-in SRL with optimized salary/dividend mix: approximately 25-30% all-in

The SRL advantage is significant but comes with higher administrative costs and complexity.

Administrative Burden

PFA administration is manageable for most developers. You need to maintain records of income and expenses, file quarterly or annual declarations, and pay social contributions. An accountant helps but isn’t strictly necessary if you’re comfortable with the requirements.

Time commitment is perhaps a few hours monthly plus some annual filing work. For simple situations (single client, straightforward invoicing), you can handle it yourself.

SRL administration is more demanding. Monthly accounting, annual financial statements, corporate record keeping, potentially audit requirements above certain thresholds. You essentially need an accountant unless you want to spend significant time on administrative work.

Accountant costs for SRL are higher than for PFA—perhaps €150-300 monthly for SRL versus €50-100 for PFA, depending on complexity and accountant.

Client Perceptions

International clients, especially larger companies, often prefer contracting with SRL over PFA. A company feels more professional and established than an individual.

Some companies have procurement policies requiring vendor to be a company, not an individual. PFA might disqualify you from certain contracts.

For EU clients under reverse-charge VAT rules, both PFA and SRL work fine. The VAT treatment is similar—you invoice without VAT, client accounts for it.

For non-EU clients, particularly US companies, SRL generally provides more comfortable legal positioning. They’re used to contracting with companies, and the corporate structure maps to their understanding better than PFA.

Liability Considerations

Software development liability is usually limited. You’re unlikely to face lawsuits for personal injury or property damage. Most risk involves contract disputes or IP questions.

Professional indemnity insurance can address many liability concerns regardless of structure. Both PFA and SRL can carry appropriate insurance.

However, SRL’s limited liability provides additional protection. If a client sued and won judgment beyond your insurance, your personal assets (home, savings) would be protected under SRL but potentially at risk under PFA.

For most developers, this scenario is unlikely. But if you work in sensitive domains (financial systems, medical applications, critical infrastructure), the additional protection might matter.

Switching Between Structures

You can start as PFA and switch to SRL later as revenue grows. Many developers follow this path: begin with PFA’s simplicity, then establish SRL when tax savings justify additional administrative burden.

Switching involves formally closing PFA and establishing SRL. There are administrative steps but it’s straightforward.

Going the reverse direction (SRL to PFA) is technically possible but less common. Usually once you’ve established SRL, the benefits continue justifying the structure.

The Revenue Threshold Question

Below roughly €40,000-50,000 annual revenue, PFA’s simplicity often outweighs SRL’s tax advantages. Administrative costs and time commitment of SRL reduce net benefit.

Above €80,000-100,000 annually, SRL’s tax savings become significant enough that the structure makes sense for most developers unless there are specific reasons to prefer PFA.

In the €50,000-80,000 range, it’s genuinely a judgment call depending on your situation. Consider client preferences, administrative tolerance, and whether you plan to grow revenue further.

Other Considerations

SRL allows hiring employees more easily. If you plan to build a small agency or bring on contractors, SRL structure makes more sense.

SRL can facilitate partnerships. Multiple people can own SRL shares. PFA is inherently individual.

SRL persists independently of you. If you want to eventually sell the business or bring in investors, SRL provides a structure for that. PFA is tied to you personally.

Banking relationships sometimes differ. Some banks offer better business services to SRL than PFA, particularly for international payments.

My Recommendation

If you’re starting out or earning under €50,000 annually, begin with PFA. The simplicity is valuable when you’re establishing your freelance business. You can always transition to SRL later.

If you’re earning over €80,000 and working primarily with international corporate clients, SRL probably makes sense despite the additional administration.

In the middle range, consider your specific factors: client preferences, administrative tolerance, growth plans, and desire for liability protection.

Whatever you choose, work with a competent Romanian accountant who understands freelance tech work. They can optimize your specific situation better than general advice.

The tax and regulatory environment changes periodically. What’s optimal in 2026 might shift with legislative changes. Stay informed about updates that could affect your structure choice.

Both PFA and SRL are viable structures for Romanian freelance developers. The “best” choice depends entirely on your specific circumstances. Understand the trade-offs, consider your priorities, and make an informed decision based on your situation rather than general rules.