Set up your company in Romania. Company formation in Romania

 

Why set up a company in Romania? Company formation in Romania is one of the best decision for your business

 

Romania’s dynamic economy, combined with its membership in the EU, makes it a prime location for businesses looking to establish a presence in Europe. Here are some reasons why entrepreneurs are increasingly interested in company formation in Romania:

 

• Low corporate tax rates: Romania has one of the lowest corporate tax rates in the EU, set at 16% and just 1%/3% turnover tax for micro-enterprises.

• Skilled workforce: Romania is known for its talented workforce, particularly in sectors like IT, engineering, and finance.

• Strategic location: Situated at the crossroads of Europe and Asia, Romania offers a strategic position for companies looking to expand in both directions.

• EU benefits: As an EU member state, Romania provides businesses with access to the European single market, allowing companies to trade freely across member countries.

 

What company to set up in Romania? Types of entities in Romania

 

Before you set up a company in Romania, it’s essential to choose the right legal structure for your business. The most common types of companies are usually in formation in Romania include:

 

• Limited Liability Company (SRL): This is the most popular type of company formation in Romania. It requires at least one shareholder and has limited liability, making it suitable for small and medium-sized businesses. Requires a minimum share capital of 200 RON (approximately 50 EUR). Offers limited liability protection for shareholders.

• Joint-Stock Company (SA): More appropriate for larger companies, the SA requires a minimum share capital of EUR 25,000 and at least two shareholders. Suitable for large-scale businesses with a significant number of shareholders. Offers a more complex corporate structure.

• Branch or Subsidiary: Foreign companies can choose to establish a branch or subsidiary in Romania. A branch has no separate legal personality, whereas a subsidiary operates as a distinct Romanian company.

• Sole Trader (PFA): Suitable for individuals looking to conduct business under their name, with unlimited liability.

 

Each structure has its own requirements and implications, so it’s advisable to consult with a local business advisor to choose the one that best fits your business needs.

 

Steps to set up a company in Romania. Required documents for company formation in Romania

 

Setting up a company in Romania involves a series of steps and legal processes. Here’s a step-by-step guide to help you navigate the company formation process:

 

1. Choose an unique company name for setting up in Romania

 

The first step in company formation in Romania is selecting a unique company name. You can check the availability of your chosen name with the Romanian Trade Register (ONRC). Once approved, you can reserve it for free.

 

2. Necessary documents from the client for company formation

 

In order to start the company formation in Romania process, it will be needed the following document and information from the client:

• identity cards / passports of the shareholders and the directors; in case the shareholders are legal persons, we will need an updated excerpt from the Trade Registry where the company is incorporated;

• domicile of the shareholders and the directors;

• contact details of the shareholders and of the directors: email and phone number;

• brief description of the company activity; what will company do?

• the tax regime: if the company will be subject to the micro-company tax rates (1%/3% turnover tax) or to the corporate income tax (16% on the profit). In order to benefit of these 1%/3% tax rates the company must contract at least one employee, within a 30 days term since the company is set up in Romania.

 

3. Prepare the required documents for setting up

 

To set up a company in Romania, we will need to prepare several documents, including:

 

• Articles of Association: This document outlines the company’s structure, business activities, and the responsibilities of its shareholders.

• Statements and affidavits from shareholders and directors;

• Identification documents: Passports or national IDs of all shareholders and directors.

• Proof of registered office: Evidence that the company has a physical address in Romania, which is often required for company registration.

 

4. Registration of the incorporation file with the Trade Register

 

With all the documentation in place, we can now apply for your company formation with the Romanian Trade Register (ONRC). This process includes:

• Submitting the application: Submit the completed application form and supporting documents, including the Articles of Association, bank deposit certificate, and proof of registered office.

• Paying registration fees: There are several administrative fees involved in company registration, which vary depending on the company structure.

• Receiving the certificate of incorporation: Once approved, you will receive a certificate of incorporation, which formally establishes your company.

 

Taxation for set up company in Romania

 

Romania offers a competitive tax environment for businesses set up. Here’s a brief overview of the tax rates why to choose company formation in Romania:

 

• Corporate Income Tax: 16% flat rate, with reduced rates for micro-enterprises (1%/3% if the company has employees).

• VAT: Standard VAT rate is 19%, with reduced rates of 9% and 5% for certain products and services.

• Dividend Tax: 8% on dividends distributed to shareholders.

• Social Contributions: Employers are responsible for social security contributions, typically around 2.25% of the employee’s gross salary.

 

The main advantages of proceeding to a company formation in Romania with Romanian Advocacy lawyers are:

 

1. No notary public required during your company formation. We will take care of everything.

 

2. Your presence in Romania is not necessary for the full company formation process. 

 

3. We shall provide you the headquarter of the company, at our premises, so your mail correspondence will be on our side and it will be immediately forwarded to you.

 

4. The formation process shall be carried out only via e-mail and the incorporation documents will be delivered to your once the company is ready.

 

We shall draft and submit you all the necessary documents, in bilingual English and Romanian form, so that you can have the control of everything.

 

5. We provide also other necessary services for your company management and compliance with the Romanian legislation, such as company address and headquarter, accounting services, legal services and many others.

 

Milestones of your company formation in Romania process are:

 

1. Reservation of the company's name;

 

2. Drafting of the Articles of Association and statements of the shareholders and directors;

 

3. Setting up the headquarter of your company.

 

4. Registration of the setting up application form and submitting it to the Romanian Trade Registry

 

5. Obtaining the company certificate of incorporation and the VAT registration number.

 

Establishing a business in Romania can lead to significant financial benefits. With the income tax rate of just 1% on the company turnover, companies can save a substantial amount of their profits. This favorable tax environment provides an excellent opportunity to boost your business's financial growth and increase your overall profitability.

 

Save on taxes and maximize your profits by set up a company in Romania, where the income tax rate is only 1%.

 

For more info, please see the section here ”Why should I choose company registration in Romania?”, where we expose 10 quick facts useful info for you to consider formation a company in Romania. 

 

Our lawyers provide all your necessary support for the proceedings in Romania regarding set up and formation of your company.

 

Advantages and Challenges of Company Formation in Romania. Why to set up a company in Romania?

 

Advantages

• Cost-effective: Lower operational costs compared to Western Europe.

• Tax incentives: Romania offers attractive tax incentives for foreign investors.

• Growing economy: Romania has one of the fastest-growing economies in the EU.

• EU access: Companies in Romania enjoy access to the EU market.

 

Challenges

• Bureaucracy: Administrative processes can sometimes be slow and complex.

• Language barriers: Although many professionals speak English, knowledge of Romanian can be beneficial.

• Infrastructure: While improving, some areas still lag in terms of infrastructure.

 

Additional Tips for Successful Company Formation in Romania:

 

• Hire a Lawyer: Consider hiring a lawyer to assist with the registration process and navigate Romanian bureaucracy.

• Open a Local Bank Account: Open a bank account in Romania to facilitate financial transactions.

• Obtain Necessary Permits and Licenses: Depending on your business activity, you may need to obtain specific permits and licenses.

• Comply with Labor Laws: Adhere to Romanian labor laws, including minimum wage, working hours, and social security contributions.

• Stay Updated on Regulations: Keep up-to-date with changes in Romanian regulations and tax laws.

 

By following these guidelines and seeking professional advice, you can successfully set up and operate a company in Romania.

 

Conclusion on company formation in Romania process: Your business will thank you for set up a company in Romania

 

Setting up a company in Romania can be a rewarding experience for entrepreneurs looking to expand into the European market. The process of company formation in Romania is straightforward, though it requires attention to legal and administrative details. By following this guide, you’ll have a solid understanding of the steps needed to start your business in Romania, from selecting the right business structure to registering with the Trade Register and obtaining the necessary licenses. With its strategic location, favorable tax policies, and supportive business environment, Romania is a compelling choice for international companies looking to grow in Europe.

 

Feel free to reach out to us at tudor@roadvocacy.ro or give us a call at +40 723 77 37 59. You can also use the contact form on our website at www.roadvocacy.ro. Remember, your business, our mission.