Company Formation in Romania
Updated on Monday 23rd August 2021
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Romania is a very attractive country located in the southeast Europe, and, from the point of view of investors looking to expand their businesses in an area with a low tax system and many economical advantages, Romania provides plenty of business opportunities. Our company formation agents can help you open a company in Romania.
If you need offshore incorporation services you can always rely on our consultants, who can put you in contact with our specialists in offshore company setup. For those who want to open a company in Romania, in this article, we will present the main aspects that can be of interest for investors, such as the most suitable business forms, the process of registration or taxation aspects.
Steps for company formation in Romania
A SRL (limited liability company – societate cu raspundere limitata) is the most frequent type of legal entity in Romania. This kind of business structure can be easily set up in Romania, as long as a set of steps are considered. First of all, once the decision to establish a company in Romania has been taken, the client must check the availability and reserve the company’s name and logo. This procedure is done through the Romanian State Office for Inventions and Trademarks.
The second step is to provide the necessary documents for the company formation in Romania. SRL companies are registered through the local Trade Register Office and will require a series of documents from the shareholders and administrators (directors) such as: Articles of Association (required to contain certain information), Affidavits and Specimen Signatures.
Provided that the company’s shareholders are represented by foreign companies, then those registering the company will need to submit to the Romanian Trade Register the foreign companies’ registration documents issued by the institutions of the countries where they are registered.
Please mind that the procedure for company formation in Romania does not require foreign investors to be physically in the country during the registration formalities, although they can handle the procedure in person if they want to. The Romanian law allows the right to be represented, and this can be done through the power of attorney.
A bank account has to be opened and the minimum share capital subscribed (around EUR 40). This service refers to both the initial share capital account as well as an additional current account for on-going operations. The bank accounts that can be set up in Romania can be registered without the investors being physically in country.
Our team can provide a company office for registration purposes only (virtual office provided by Bridgewest). From a legal point of view, a company is considered to have legal personality and be recognized as an entity (and thus, has the right of developing various commercial operations) only after these steps are concluded.
The last step when starting a company in Romania is to submit the file with the Trade Register and appear before the Trade Register judge for the Romanian company formation process. The usual time frame for opening a company in Romania is 5 business days from the date the entire documentation is provided to the authorities to register the Romanian company.
Requirements for company formation in Romania
A SRL can to have from 1 to 50 shareholders. There aren’t any special requirements with regards to the shareholding structure of the company or to its management structure. The law in Romania allows the shareholders of the company to be individuals or other companies.
A company opened in Romania must hold a local registered office (a service provided by BridgeWest). An accountant is also recommended when setting up a company in Romania, in order to keep the “Accounting Registries” up to date. The minimum capital for establishing a limited liability company in Romania (SRL) amounts to RON 200, approximately 40 EUR. Law No. 31/1990 stipulates that Romanian SRL companies must maintain, through the care of the administrator, a “Shareholder Registry”.
Services provided for company incorporation in Romania
Our team can help you in the process of drafting the Articles of Association (necessary for the company incorporation in Romania); the Articles of Association of the Romanian company can be signed through a Power of Attorney; our team can help in drafting all other documents required for the incorporation of the Romanian company; these documents include Affidavits and Specimen Signatures.
Arranging translations of relevant documents (all documents will have to be filed in Romanian with the Romanian Trade Registry) and offering a registered office in Romania for your company can also be done with the assistance of our team; the registered office may be any address where the Romanian company declares to have its headquarters. At this address you will be able to receive correspondence from authorities and business partners.
Our consultants can assist in the process of opening a corporate bank account for the company in Romania. Here, the investors will first have to open the bank account with the purpose of depositing the minimum share capital, but then the account can also be used as a current bank account, through which the company’s financial transactions are intermediated. You can also receive information on the procedure of opening an offshore bank account, used for those interested in offshore incorporation.
Our consultants can recommend an accountant in Romania; accountancy services are recommended for any new business registration in Romania. Once the company becomes operational, the company must have an accountant that will handle all the accounting documents of the company and will prepare various documents that have to be submitted for tax purposes.
Romania - key facts
In Romania, corporations are subject to a corporate tax of 16%. Romania's individual income tax rates for 2021 are flat at 10%, reduced from 16%. VAT in Romania has undergone significant changes during the past years. VAT is payable by all legal entities and individual entrepreneurs; the VAT rate has been constantly modified and reduced – for instance, the previous standard rate of 24% is now charged at a rate of 19% (in 2021).
Nevertheless, there are reduced VAT rates of 9% (hotel services, books, newspapers and medicines) and 5% (buildings supply). Companies working in the insurance industry, the banking industry and the financial services are exempt from this tax. If your company will become liable for the payment of the VAT, you can address to our team of consultants in company registration in Romania for more details on the VAT procedures applicable here.
Non-resident companies pay the dividend tax on their income of 15%. To sum up, the Romanian government encourages foreign investments, and there are plenty attractions for investors such as a skilled and productive workforce, a resourceful territory unexploited and a welcoming environment without any discrimination between foreign and local investors. With regards to the taxation of Romanian companies, we mention the following:
- a special tax regime is charged to those opening a company in Romania operating in the gambling industry – such companies can be charged with 5% tax rate on the revenue or 16% on the profit;
- the fiscal year is generally the calendar year, but companies can also opt for a different fiscal year, in which case they will need to submit their financial statements by the 25th of the 3rd month following the end of the financial year;
- for specific types of activities, such as non-profit organizations and educational units, the submission of the financial statements has to be done by 25th of February of the next year after the end of the fiscal year;
- dividends paid by a Romanian company to another Romanian company are charged with a withholding tax on dividends imposed at a rate of 5%;
- the withholding tax charged on dividends paid to a non-resident company are charged at a rate of 5%, while revenues from interest and royalties are charged at a rate of 10%.
Certain types of investments beneficiate from state incentives, for example: agro-industrial processing, producing of electrical and thermal energy, production of equipment for raising the energy efficiency, information and communication, research, water distribution, activities related to labor force etc. Non-residents companies and individuals pay tax only on Romanian source income.
Companies can also benefit from various tax exemptions of deductions. Here, it is important to know that companies operating as limited liability companies can benefit from reduced corporate taxes if they qualify for the micro-company regime. In this particular case, the corporate tax can be charged at a rate of 1% of 3%, and the rate will be applied based on the number of employees the company has.
Our team of consultants in company registration in Romania can provide more details on other tax benefits and deductions that are prescribed here under the national law; Romania generally has a low tax regime charged on companies (compared to other countries in its region), but investors have to be aware that the taxes associated with employment are rather large, but still attractive for large, international corporations that set up their operations here.
A low corporate tax regime can also apply for those interested in offshore company set up, given that the laws of offshore jurisdictions provide numerous exemptions on most of the taxes that are generally charged in other countries, such as the European countries.
Tax regulations applicable here are supervised by the National Fiscal Administration, the institution where all companies have to be registered for tax purposes, once all the previous steps for company formation in Romania are completed. If you need legal assistance on the procedures imposed in this particular case, our consultants remain at your disposal. You an also contact our team in the case you need tax advice as natural person relocating here.
A foreign business is considered to be a resident in Romania if its management is located here. A person is considered to be a resident in Romania if he or she has his or her residency here, or in the situation in which the person lives in Romania for more than 183 days in a calendar year.
Bridgewest.eu offers to assist their clients throughout all the steps required for company formation in Romania: drafting the Articles of Association, drafting all other documents required for the incorporation of the Romanian company, arranging public notary procedures, setting up a bank account for your Romanian company, recommending an accountant in Romania. Do not hesitate to contact us.