General information
16%Tax rate- 5 daysTime of establishment of the company
- 200 RONMinimum capital
Romania was going through a wave of privatisation of enterprises until 2006, when the privatisation of the country’s largest commercial bank (BCR) was completed. After years of economic reform, Romania has reduced inflation and stabilised economic growth between 4 and 8% since 2001.
Types of companies
There are several types of companies available to foreign investors:
- Limited liability company (SRL)
- Joint Stock Company (SA)
- Limited partnership
- Branch or representative office
The limited liability company (SRL) is the most frequently chosen by foreign investors.
Romania enjoys the popularity of investors due to its mild tax system, low tax rates and an efficient banking system.
Company registration procedure
Registration of the company:
- In order to register a company, you must first check if the chosen name is available. If there is one, we pre-book the name and register in the Commercial Register.
- In order to register, you will need documents such as the notarized memorandum of association, the declaration of partners, identity cards and the authorization of the company’s manager, which must also be translated into Romanian.
- It is also necessary to submit a sample of signature of the person managing the company to a notary public.
- The next step is to open a company bank account and deposit capital.
- All documents must be submitted to the Commercial Register at the competent court for the location of the company.
- After registration in the Register, it is published in the Official Newspaper, registered for tax purposes, for statistical purposes and registered for social security.
- It is necessary to present information on: capital, name, owners, management board, address and scope of activity.
- The Register then issues a Registration Certificate and a Court Decision, which confirm the registration of the company.
- The last stage is filing a tax return with the Tax Office.
Shareholders:
The maximum number of shareholders is 50. At least one shareholder may set up a company, but in this case the natural or legal person setting up a company cannot be the sole shareholder in more than one company and the company having one shareholder cannot be the sole shareholder in another company. Foreign shareholders are allowed.
Management Board:
The main governing body is the general meeting of shareholders. Its tasks are: approve annual accounts and distribute profits; appoint directors and censors or internal auditors, dismiss them and decide on audits when not legally required; determine the liability of directors, censors and auditors for damage caused to the company; amend the company’s articles of association. Directors are another body. They manage the company and represent it externally. Usually, this function is carried out by the main shareholder.
Supervision:
The supervisory bodies are censors or auditors. Their appointment is only mandatory in specific cases, e.g. when there are more than 15 shareholders.
Registered office:
The company must have a registration address, which can be provided by a virtual office.
Time to set up a company:
The time to set up a company is about 5 days.
Capital:
The minimum capital is RON 200 and must be paid in full at the time of registration of the company. It is divided into shares where the value of each share is at least RON 10. Shares may be transferred between shareholders and third parties.
Taxes and finances
With a 16 % tax rate for individuals and businesses, Romania has one of the most attractive tax systems among EU members. Under EU law, the free movement of capital is the rule. Foreign investors are offered a wide range of financial and fiscal incentives. These include state subsidies for projects of over 30 million € and job creators, subsidies for energy costs and financial incentives for the development of small and medium businesses.
Accounting
In accordance with standard practices in the EU, companies must register and submit annual accounts to regulatory authorities. Annual audits are mandatory for larger companies.
| Tax rate | •Income tax: 16%. Reduced rate to 3% or 1% for micro-businesses • Tax on capital gains: 16% (1% if listed securities have been held for more than a year) • Tax on interest: 16% • Tax on royalties: 16% • Tax on dividends: 16% • VAT: 19% |
| Minimum capital | 200 RON (47€, fully paid at creation |
| Shareholders | A minimum of 1 partner, and a maximum of 50 |
| Foreign shareholders | Yes |
| Directors | A minimum of one director |
| Foreign holding | Yes |
| Legal obligations | Optional annual financial audit |
| Setting up of the company, opening a bank account, domiciliation service (1 year), VAT registration | The identification number of the company must be the same as the tax number and VAT number |
| Deadline | 5 days from the receipt of all documents |
| Headquarters | Business address, telephone transfer, fax, and mail Possibility to have a physical office (prices vary depending on demand) |
| Accounting | Simplified balance sheet and income statement, explanatory notes to the financial report, based on an estimated number of monthly bills and a forecast of annual sales. |
Other information
Romania is a very popular destination for small investors due to the minimum CIT rate of 1 or 3%. The 1% rate is applied if the entrepreneur employs at least 1 employee. If the company’s turnover exceeds EUR 1 million in a tax year, the company can no longer benefit from the micro tax regime and is obliged to pay 16% CIT. Up to EUR 1 million can benefit from an almost undetectable tax burden.
