Romania has one of the lowest costs of living in the EU and employees in this nation can take advantage of low-cost goods as well as affordable rents. With an evolving tech sector, Romania is an attractive option for many digital nomads and remote workers.
A business in Romania can be registered by both natural persons and legal entities. It is also permitted for local businesses to hold their own assets and to establish a management form in accordance with the provisions of Romanian law.
Reasons to invest in Romania
- A good location: Romania joined the EU in 2007 and it is also a member of NATO. Its geographical location can be reckoned strategic for transportation and import/export purposes. It is an easy gateway to the Middle East and other EU markets are also easily accessible.
- Valuable workforce: Romania has a talented workforce and the costs for employment are reasonably low in comparison to other European countries. Even if the workforce in Romania is economical compared to other countries, this doesn’t mean is not well prepared. Foreign entrepreneurs can benefit from a competent and multilingual labor force available in Romania.
- Important investment areas: although Romania is developing as a whole, there are specific sectors that prove to be more lucrative and attractive. Some of these sectors are infrastructure, industry, agriculture, education, and information technology. Romania is a quickly growing IT market, and Tourism is also an interesting sector.
- Easy company registration: there are no tough formalities for company registration in Romania. The bureaucratic techniques have been simplified in recent years, enabling both local and international entrepreneurs to enjoy a quick start on the market, particularly in the chosen field of interest.
- Tax Benefits: Romania has signed various double taxation agreements through which businesses and particularly their profits are protected against tax evasion. This means that taxes will be paid just once, in the country where the profits are recorded. If the taxes are paid both in the country where the business takes place and also in the country of origin, then a loan can be given to cover the payment of taxes twice.
Company types in Romania
The two most prominent forms of companies in Romania are the:
- limited liability company (Societate cu Raspundere Limitata or SRL), and
- joint stock company (societate comercială pe acțiuni or SA).
Some other common company structures include partnerships, branch companies, and representative offices.
The Limited Liability Company in Romania
The SRL is the Romanian equal of the limited liability company. It is one of the most generally used business structures in the country and it offers distinct advantages, among which are a low minimum share capital and a low taxation regime, particularly when opting for the micro-company taxation regime.
A limited liability company is a business form established by a maximum of 50 associates.
Romanian SRL incorporation steps
Investors who desire to open a Romanian limited liability company need to follow a number of key steps. The steps are summarized below:
- reserve the company name: each company is obliged to have a different name,
- determine the company’s objective,
- the company’s office and capital: each SRL needs to be based at an address in Romania, and it must also have a minimum share capital,
- draw up the constitutive documents: the company is registered based on its Articles of Association – the documents that include all the necessary details,
- register the company: once all the documents are detailed, the company can then be registered with the National Trade Register Office, and it will therefore receive a Trade Register number and a unique registration code.
The Joint Stock Company in Romania
A SA is a limited liability corporation with a registered capital of a minimum of 90.000 RON and with a minimum of two shareholders. Shares could be registered shares or bearer shares and can be wilfully traded. A joint stock company may be registered by full and simultaneous subscription of the registered capital by all signers of the constitutive act or by public subscription.
For the registration of a joint stock company whose shares are allocated through public subscription, a specific document called prospect de emisiune is required. This issue prospectus, signed by founders in authentic form, must be tendered before publication to the local Trade Register. The required judge of the Trade Register shall approve the issue prospectus publication.
Likewise, in order to open a Romanian joint stock company by public subscription, it is crucial that the entire registered capital summarized in the document has been subscribed and each acceptor has paid half of the costs of the subscribed shares. These funds shall be subscribed to the Savings and Consignment Office, to a commercial bank. If the public subscriptions surpass the registered capital, as it was cited in the prospectus, or are less than the sum appointed, a constituent assembly will be called in order to agree on the essential changes of the registered capital.
In order to follow the process to set up SA Company, an official public announcement specifying the setting-up meeting is required within a period of a maximum of 15 days from the subscription closing date.
Tax structure in Romania
The tax structure in Romania is very pleasing to foreign entrepreneurs. A great advantage refers to the corporate income tax of 16% rate, one of the lowest among European countries. Also, the 5% income tax applies to dividend revenues. Concerning fiscal incentives, the reinvested profits in technological equipment in the firm is exempt from taxation. Romania has one of the lowest VAT rates in Europe, set at 19%, depicting a great plus from a tax point of view.
Recruiting staff in Romania
To hire staff in Romania, companies must own a local legal entity in the country or work with an International employment solution. Managing payroll, taxes, and compliance in Romania can get confounded, particularly without established local relationships.
To make it simple for your company to employ workers in Romania quickly and in full compliance with all applicable labor laws, let’s go ahead and contact your Damalion experts now and let us help.
Romania banking system
The Romanian banking area is safe and it is determined to become one of the leading markets in Eastern and Central Europe. Presently, almost all of Romania’s commercial banks have been privatized, and foreign banks now play an important role in the country’s financial area. This has helped to enhance the breadth, quality, and performance of financial services available to the global business community, and investors desiring to start a business in Romania will find an extensive array of services available to them.
Working with your Damalion experts can reduce the time needed to start a bank account and it will help investors know that they are making the important submissions in accordance with the local provisions.
If you wish to start a business in Romania and needed more information about the Romanian legislation on foreign investments and company registration, let’s go ahead and contact your Damalion experts now and let us help.