Absolutely! Employer of Record is your legal gateway to hiring software developers without the complexities of opening a legal entity abroad. Your EOR partner serves as the legal employer of programmers on your behalf, taking care of all the admin functions, like payroll, HR, legal, and benefits management. They also assume full liability for adhering to local labor laws, employment rules, and tax obligations, bearing any potential legal risks.

But make no mistake—you remain the one and only real employer of software engineers. From day one, you manage your team directly and integrate it into your culture and practices. All the bureaucracy? Gone. Legal risks and admin burdens? Off your shoulders. Instead, you focus on what matters the most—developing your software product.

So, an EOR service in Romania is simply a means for tech companies to swiftly expand into new markets and hire a development team compliantly. Exactly what tech companies like BigCommerce, People.ai, Dotmatics, and Sift did. With the help of Alcor, an EOR provider for tech, they have seamlessly and securely built fully backed teams of 30+ developers and fast-tracked their product growth.

There are two prevalent models for hiring Romanian developers: employment agreement (Contract de Muncă) and B2B contract (Contract Civil).

An employment agreement forms an employer-employee relationship governed by the Romanian Labor Code. For employers, this type of employment comes with tax obligations, including paying payroll taxes and social security contributions (SSC), as well as withholding income tax and SSC on behalf of the employee. Additionally, it is full of rigorous working terms and employee termination procedures. That’s where Alcor’s IT EOR in Romania can serve as your lifeline in the deep employment waters.

For employees, an employment contract serves as a safety net, securing their salary amount, benefits, working hours, paid time off (PTO), and termination terms. The downside? Their salary is paid in a local currency, which may be affected by inflation.

A B2B contract is signed between a hiring tech company and a software developer, establishing a contractor-client relationship under the Civil Code and Fiscal Code. The programmer must register as a sole trader to provide IT services.

Unlike an employment agreement, in B2B relations, the employer is free from tax obligations, while the contractors handle taxes and social contributions on their own or via an EOR vendor in Romania. The reward is paid in a foreign currency, so inflation and exchange rate swings are not an issue. However, benefits, PTO, and working terms are typically negotiated individually and are usually more restrictive than those outlined in the employment contract.

An employment agreement typically entails tax obligations for both the employer and the employee. 

What does the employer’s share include?

1. Social Security Contributions in Romania consist of:

• Labour insurance contribution: 2.25%
• Pension insurance contribution: 0%-8%*

*0% — rate for normal working conditions; 4% — rate for particular working conditions, 8% — rate for special working conditions

Now, the employee’s share:

1. Personal income tax constitutes 10% of the employee’s gross income.
2. Social Security contributions on the employee’s side are higher compared to those of the employer, constituting a total of about 35%, including:

• Pension insurance contribution
• Health insurance contribution

The employer is responsible for calculating all taxes and deductions and paying them by the 25th of the month following the one in which they are due. An Employer of Record company in %geo%, like Alcor, can take care of the taxes for you, so you wouldn’t have to worry about miscalculations or missed deadlines.

The second employment model is the B2B contract, which enables tech companies to hire Romanian software engineers as contractors. In this case, paying payroll taxes is not mandatory for the company. Developers, on their part, are responsible for covering:

1. Personal income tax depends on the type of registration, whether SRL (Societate cu Răspundere Limitată) or PFA (Personă Fizică Autorizată). 

The former refers to a Limited Liability Company, which means that a developer acts like a firm that provides IT services to a tech company. In this case, the programmer pays either a 16% income tax on net income or a 1%-3% micro-company tax if eligibility criteria are met.

The latter refers to an Authorized Physical Person, meaning that a developer acts as a sole trader and provides IT services to the company. In this case, the programmer pays 10% of their gross income.

2. Social Security contributions include:

• Pension insurance contribution (for income over 24 minimum salaries, where the min. salary in Romania is $831): 25% or $4,986 per year.
• Health insurance contribution: 10% of the net income or around $4,986 per year. The rate is subject to a minimum threshold of 6 min. salaries, which is about $4,986, and a maximum threshold of 60 min. salaries, which is around $49,860.

Romania is a goldmine of skilled software engineers, offering a competitive advantage without the Silicon Valley price tag. The average senior developer salary here constitutes about $72,000 per year, with the most in-demand tech talents, such as AI Engineers, Cloud Developers, and DevOps Engineers, earning between $78,000 and $84,000. 

Even the highest-paid tech experts don’t break the bank in Romania. For instance, a senior Site Reliability Engineer gets about $81,500, while a Head of R&D receives an annual salary of $107,000. 

That’s about 40% savings compared to the US. See yourself:

So, how much should you really budget to hire a software developer in Romania? To break down the total cost beyond just salary, you need to include:

• annual income of a software engineer,
• taxes, social contributions, and additional payments presupposed by the local labor laws,
• employee benefits package, which typically includes health insurance, professional training, hardware, and corporate merchandise, totaling about $6,350 in Romania and $15,400 in the US per developer/year,
• recruitment fee, which is typically 20% in Romania and 30% in the US of the senior developer’s gross annual salary.

Have a sneak peek at the figures:

Contact Alcor, your EOR service provider in Romania, to get precise payroll calculations for your tech positions and discover your true savings.

When hiring software engineers in Romania, as an employer, you must comply with the statutory employee benefits outlined in the Romanian Labor Code. They are mandatory for tech specialists working on the employment contract. Failure to provide these benefits may lead to legal troubles, penalties, and fines.

So, what are these statutory employee benefits?

• Social security contributions, including health, disability, unemployment insurance, pension contributions, and others.
• Annual vacation consists of paid days off, which may increase due to seniority or special conditions.
• Leaves, including sick, maternal, paternal, and parental.
• National holidays, including Christmas Day, New Year’s Day, and Independence Day, are all set out in the Romanian Labor Code.
• Termination protection includes a notice period and just cause.

There are also supplementary employee benefits, which are optional but good to have if you want to attract top software engineers in Romania, like:

• Private medical insurance is a common addition to basic medical coverage, typically covering diagnostics, vision and dental care, emergencies, mental health services, etc. 
• Tech courses & English classes to promote professional development;
• Gym membership is offered as a subsidized benefit or fully paid by the employer.
• WFH setup & Internet allowance, relevant for international dev teams working remotely; 
• Stock options are predominantly offered to C-level experts.

According to Romania’s Labor Code, the standard workweek in the country clocks in at 40 hours, with the possibility of overtime, which shouldn’t exceed 8 hours per week. The overtime compensation is generous—175% of the base salary in regular hours and 200% on national holidays.

When you hire a software developer in Romania, their probation period is typically 3 months, while for managerial roles, it extends to 4 months. Usually, this time is enough to test the skills and assess the performance of the new hire. We at Alcor guarantee only high-quality tech talent, with 98.6% of our hires passing probation with flying colors. In the rare case that someone doesn’t meet your expectations, we provide a replacement free of charge.

Software developers working on an employment contract in Romania are entitled to the following paid time off (PTO):

Annual leave consists of 20 working days regardless of the employee’s years of working experience. It can only be compensated with money upon contract termination.

Sick leave: the first 5 days are paid at 75% of the employee’s salary by the employer. If it extends from the 6th to the 183rd day, then it’s covered by health insurance.

Maternity leave lasts for 126 calendar days, of which 63 days must be taken before childbirth and the other 63 after.

Extraordinary paid leave includes

• Paternity leave: 10 working days; can be extended by an additional 5 days under the childcare course;
• Marriage leave: 5 days;
• Blood Donation Leave: 1 day;
• Bereavement Leave: 3 days.

paid by the employer;

• Parental leave: available for both parents – 2 years (3 years in case of a child’s disability);
• Maternal risk leave: up to 120 days before and after maternity leave (in special cases);
• Adoption leave: 1 year;
• Care leave: 45 days for taking care of a sick child up to 7 y.o.

paid by the National Health Insurance House.

Public holidays in Romania include 17 paid days, as per the annual leave entitlements for the year 2025. 

When a US-based tech company hires software developers in Romania, it should consider visa requirements. To travel on a business trip to the United States, a Romanian programmer should obtain a B1/B2 visa, which permits a stay of up to 6 months. It allows business-related activities, such as attending conferences and meetings, participating in short-term training or team-building, and exploring partnerships, but not permanent work in the United States.

To get it, a Romanian citizen should 

• Complete Form DS-160, 
• Pay the application fee of $185,
• Schedule and pass the interview at the nearest U.S. embassy/consulate,
• Prepare the necessary documents, including a valid passport, proof of corporate ties, and financial documentation (such as bank statements and a sponsor letter).

But no need to stress over these visa challenges. Alcor, your Employer of Record service provider in Romania, can seamlessly handle all aspects of visas for your software engineers, just like we did for US tech company ThredUP.

The termination of an employee in Romania is governed by the labor code, which establishes strict guidelines for the termination process, thereby protecting workers’ rights and posing risks for employers. Luckily, there are EOR companies in Romania like Alcor that serve as your compliance buffer, ensuring a smooth employee offboarding process.

General termination rules:

Notice Period is 20 working days. No prior notice is required for disciplinary terminations or if the employee is under arrest for over 30 days.

Local requirements: Employment is typically concluded for an unlimited period and can only be terminated through specific procedures. Dismissal may be for cause (medical issues, professional unfitness, disciplinary reasons) or without cause (redundancy, collective layoff).

Termination payments: 

• Compensation for all unused paid vacation days accrued, bonuses, or other benefits owed. 
• Severance payments are not mandatory, except in cases of medical unfitness, then they are paid as per the employment contract or collective agreement.

Pregnant employees, those on maternity, paternity, or childcare leave, employees using the insertion incentive, on annual leave or medical leave, and union leaders are protected from termination. 

Expanding your development team abroad often means establishing a local legal entity, which varies from country to country based on the local laws of business incorporation. Generally, you would need to navigate complex legal requirements, including selecting the type of entity, registering with relevant authorities, opening bank accounts, and ensuring compliance with local tax and social security laws.

The business incorporation process can drag on for months, draining tens of thousands of dollars in legal fees, registration, and insurance. What is even worse, failing to comply with local laws and practices can expose your tech company to hefty fines or even legal actions, putting your expansion plans at risk.

The EOR solution in Romania allows you to bypass the lengthy and expensive route of setting up your own entity abroad. For instance, with Alcor EOR for tech, you can hire developers through our readily established legal entities in LATAM or Eastern Europe, saving an average of 3.5 months on business incorporation. Plus, manage admin and legal complexities hassle-free. It’s a faster, safer way to expand your business compliantly without the financial burden.

Alcor’s Employer of Record for Tech is a 360-degree solution devised for the compliant and seamless hiring of software engineers in Latin America and Eastern Europe. With no need to open a legal entity, it saves tech companies an average of 3.5 months and tens of thousands of dollars in setup costs. This means you can skip the red tape and build your own team of 30+ developers in just three months, accelerating your software development and unlocking faster growth.

With our Employer of Record solution in geo, you get more than just HR & payroll:

• Tech-focused services: from FTE or B2B employment options and tax incentives to R&D deductions and tailored benefits for developers.
• 100% compliance: get shielded with guidance from our lawyers, who have expertise in IT law.
• Customized pricing: volume discounts, no hidden costs or pre-payment.
• Ongoing in-country support: our Dedicated Customer Success Managers go above and beyond to simplify your business expansion.
• All-in-one place: manage everything in one place, no need for multiple vendors.

But EOR is just the beginning…

You can upgrade it to our software R&D center solution, which includes:

• In-house tech hiring is handled by our 40 recruiters, who headhunt the top 10% of the market developers across LATAM and EE. With our 80% CV pass rate and 2-6 weeks to fill a vacancy, you can scale your team from 0 to 100 engineers in a year.
• Operational support encompasses additional services, including leasing office or co-working space, procuring equipment, setting up IT infrastructure, and employer branding.

The result? A fully backed tech R&D center with a software development team that’s 100% yours from day one.