INTRODUCTION TO REGISTERING A COMPANY IN ROMANIA
Romania is one of Europe’s most promising locations for foreign investors wishing to set up a new company in the European Union. A company formation in Romania has many benefits such as a uniform tax rate of 16% which can be reduced to as low as 1% for small companies. Romanian company incorporation and maintenance costs are very reasonable and the minimum share capital for a limited liability capital (SRL) is only €50.
What is the rate of Corporation Tax in Romania?
The standard rate of corporation tax remains 16% with the exception of applying to nightclubs and gambling operations where it is at least 5% of gross revenue. However, registering a company in Romania that has an annual revenue of less than €1,000,000 will be considered a micro-company with a much lower Corporation Tax rate.
Romanian micro-company tax regime:
- 1% Corporate Tax for micro-companies with one or more employees
- 3% Corporate Tax for micro-companies with no employees
What are the most common company types in Romania?
The two most popular forms of companies in Romania are:
- Limited liability company (SRL)
- Joint stock company (SA)
Some common company structures include partnerships, branch companies and representative offices.
Key features of a Romanian Limited Liability Company (SRL)?
- Must have between one and fifty shareholders
- The minimum share capital is just €50, provided the business has no more than fifty shareholders
- Shareholders may be Romanians or foreign nationals
- Low administrative and reporting requirements
Key features of a Romanian Joint Stock Company (SA)?
- An SA structure is mandatory for companies involved in banking or insurance
- Minimum of five shareholders and one director
- The minimum share capital is €25,000 of which at least 30% has to be paid up
- Three ‘censors’ to oversee financial reporting
Reasons to invest in Romania
Romania is one of the most fast-growing countries in the European Union from the past few years, regarding the economic environment, therefore being a strategic choice for new foreign investors. The main reason to invest in Romania is the dynamic and competitive economy with a rich history in trade and businesses sector. Romania’s evolution in terms of technology is another good reason, together the taxation system which offers a lot of advantages to start-ups and small businesses compared to other EU member states. Additionally, Bucharest, the capital of Romania, has developed a lot in the past years – modernization, constructions of new buildings for homes and offices and legislations improvements for supporting businesses developed on the territory.
The real estate sector has increased tremendously the marketing becoming more mature. The office market has evolved fast, developers are starting to relocate their building projects to other areas of the town, besides the office area from the North. Alongside the striving real estate sector, geopolitical factors are also favourable, another reason to invest in Romania, next to the local economic indicators showing solid premises for positive evolution on the short-term and long-term perspective.
How has EU membership changed Romania’s business climate?
In order to qualify for EU accession, Romania has had to speed up its economic reform process along the following lines:
- liberalisation of foreign trade
- development of the private sector
- privatisation of state-owned companies
- modernisation of the banking and tax systems
How have international investors responded to these changes?
Inward investment has risen sharply over the past few years. In March 2017 the net inflow of foreign direct investment was increased by €340 million. New Company Formations in Romania have increased substantially. The trend is being driven by Romania’s economic and political stability, EU accession, and changes to the tax regime.
What is the regulatory environment like?
Romania has been ranked first in Eastern Europe and second globally in a World Bank report on regulatory reform. The report, Doing Business 2016, praised Romania for making it simpler, faster and cheaper to set up a new business and start trading. As well as reducing corporation tax to a flat rate of 16%, the government has eased regulatory requirements across the board, ranging from building permits to customs procedures and labour laws.
How easy is it to recruit staff in Romania?
Spurred by the continued strength of the economy, Romania has been able to keep unemployment below the 6% level. But with a large, well-educated workforce and low average salaries, there should be little difficulty for foreign companies when it comes to recruitment. The challenge, as always, is to ensure that applicants are of the highest quality and that the recruitment process is efficient. For advice on this, and on Romania’s labour laws, contact our recruitment team.
Are there financial incentives available?
Romania offers a wide range of financial incentives to foreign investors. These include tax breaks, cheap loans and free access to public utilities, with particular benefits for investors seeking to create employment in disadvantaged areas.
What about banking facilities?
Almost all of Romania’s commercial banks have been privatised, and foreign banks now play a major role in the country’s financial sector. This has helped to improve the breadth, quality and efficiency of financial services available to the international business community, and investors wishing to start a business in Romania will find a comprehensive array of services available to them. We can guide you through the process of opening a bank account in Romania: just get in touch and we’ll get it sorted.
How can I get more information about opening a Romanian company?
Please contact us and we will be delighted to help you take full advantage of all the opportunities that Romania has to offer. Our professional service ensures you can register a company in Romania in the quickest possible timeframe!Contact US