12 July 2024
Starting SRL in Romania: Path to Business Success
Setting up a business in Romania can be a strategic move for entrepreneurs looking to tap into the vibrant European market. One of the most popular business structures in Romania is the "Societate cu Raspundere Limitata", called SRL, equivalent to a limited liability company (LLC). This comprehensive guide delves into the process, requirements and benefits of establishing an SRL in Romania, offering valuable insights for both local and international entrepreneurs
Welcome to the hidden gem of Eastern Europe: SRL Romania. Nestled in the heart of the continent, this enchanting country is an economic hub brimming with opportunities. With its flourishing business landscape and dynamic entrepreneurial spirit, Romania has become a magnet for global investors and a booming destination for foreign companies looking to expand their operations. In this article, we embark on a journey into the economic prowess of SRL in Romania, exploring the untapped potential and the myriad benefits the country offers to businesses of all sizes. From its strategic location, well-developed infrastructure, and skilled workforce to a favorable tax system, Romania presents a compelling case for companies seeking growth and prosperity. Join us as we discover the hidden gems that make SRL Romania a thriving economic powerhouse in Eastern Europe, and unlock the untapped potential waiting to be explored.
Overview on Establishing an SRL in Romania
Establishing SRL in Romania offers numerous benefits, including limited liability, flexible management, and a favorable business environment. With a straightforward formation process and support for foreign investors, Romania is an attractive destination for entrepreneurs looking to expand their business operations in Europe. By understanding the key steps and legal requirements, businesses can effectively navigate the process of setting up an SRL and capitalize on the opportunities Romania has to offer.
What is an SRL in Romania?
An SRL (Societate cu Răspundere Limitată) is a type of legal entity in Romania that provides limited liability to its shareholders. This means that the shareholders' personal assets are protected, and they are only liable for the company's debts up to the amount of their investment. The SRL is a favored business structure due to its flexibility, simplicity, and the protection it offers to its owners.
Key Advantages of Setting Up an SRL in Romania
Tax Benefits for Romanian SRL. Romania offers competitive corporate tax rates and various incentives for businesses. Incorporating SRL in Romania bring numerous tax advantages, the main one being that one of the lowest tax rates in Europe. Setting up SRL in Romania shall benefit of the following turnover tax rates:
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1% turnover tax to be paid by Romanian SRL whose turnover does not exceed EUR 60,000 and have at least one employee contracted within a 30 days term since the SRL incorporation in Romania.
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3% - turnover tax to be paid by: a) the SRL with revenues exceeding EUR 60,000 or b) the SRL engaged in activities corresponding to the following NACE codes: 5821 - Computer game editing activities, 5829 – Editing activities of other software products, 6201 - Custom software development (client-oriented software), 6209 - Other information technology service activities, 5510 - Hotels and other accommodation facilities, 5520 - Accommodation facilities for holidays and short stays, 5530 - Caravan parks, campgrounds, and camps, 5590 - Other accommodation services, 5610 - Restaurants, 5621 - Event catering activities, 5629 - Other food service activities not included in other categories, 5630 - Bars and other beverage serving activities, 6910 - Legal activities – only for legal entities not fiscally transparent, established by lawyers according to the law, 8621 - General medical practice, 8622 - Specialized medical practice, 8623 - Dental practice, 8690 - Other human health activities. In order to benefit of this rate SRL must contract at least one employee, within a 30 days term since the SRL setting up in Romania.
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16% corporate tax for SRL whose turnover exceeds EUR 500,000 in a fiscal year or which don't have at least one employee.
You can find out more about the taxation of the SRL in Romania in our blog article Important tax changes for Romanian companies starting with 2024 or related to the turnover tax / corporate tax - What taxes your Romanian company pays? Chapter I and the dividend tax - What taxes your Romanian company pays? Chapter II.
Very rapid setting up proceedings for the SRL in Romania. SRL can be done swiftly, in just two working days.
No need to subscribe a minimum share capital at the SRL in Romania incorporation moment. You can choose to subscribe to the share capital even after the SRL is officially registered in Romania. However, you'll have to pay 30% of the subscribed capital within 3 months from the SRL registration date, but before starting any business activities.
No need for notary to handle your SRL in Romania incorporation. This means that you won't have to go through the hassle of finding a notary and paying their fees.
No need for your presence in Romania for the SRL setting up process. The SRL formation in Romania proceedings does not require the presence of its shareholder / director.
EU Market Access for the SRL incorporated in Romania. This SRL provides access to the European Union market, benefiting from EU trade agreements and regulations.
Limited Liability for Romanian SRL Shareholders. Shareholders are only liable for the SRL debts up to the amount of their share capital, protecting personal assets. Shareholders are only responsible for the amount they have invested in the SRL Romania, ensuring their liability is limited to their capital contribution subscription.
Flexibility of the SRL in Romania: SRLs offer flexibility in management and operations, making them suitable for small to medium-sized enterprises. An SRL can be managed by one or more administrators (individual managers) or a board of directors.
Up to 50 shareholders in the Romania SRL. An SRL can have one to 50 associates (owners). Both individuals and legal entities can be associates.
No need for two shareholders in your SRL in Romania and no requirement for a Romanian shareholder or director in the Romanian SRL.
Required documents for Romania company formation
To ensure a smooth incorporation of your SRL in Romania will be crucial to prepare all the required documents requested by the Romanian laws and regulation, as follows:
1. Company name for your SRL in Romania. Let your imagination run wild and pick the most authentic name for your SRL.
2. Passport or ID card for the shareholders and directors in the Romanian SRL.
3. Domicile of the shareholders and directors in SRL.
4. Brief description which shall be carried out by the SRL in Romania.
5. Headquarter. If you don't have a physical premise yet for your SRL in Romania, no worries! We can set up a virtual headquarters at our law office for all correspondence.
Rest assured that the entire SRL setting up process in Romania will be expertly handled by our lawyers from Romanian Advocacy, taking care that your company is completed successfully within the given timeframe.
Step-by-Step Guide to Establishing an SRL in Romania
1. Choose an Unique SRL Name. The first step in setting up a SRL in Romania is selecting a unique name for your company. The name must not be similar to any existing company names in Romania.
2. Gather the Necessary Documentation to establish an SRL in Romania, as we mentioned in the previous section.
3. Prepare the necessary documentation for SRL in Romania, including the Articles of Association, identification documents of shareholders and directors, and proof of address for the registered office.
4. Register the SRL with the Romanian Trade Register. The next step is to register the SRL with the Romanian Trade Register Office where the headquarter is located. You will need to submit the prepared documentation along with the registration application. The ONRC will review the application and, if everything is in order, will issue the company’s registration certificate within a 2 working days.
5. Obtain the SRL incorporation documents. These step is necessary to ensure compliance with Romanian tax regulations.
5. Obtain Necessary Licenses and Permits. Depending on the nature of your business, you may need to obtain additional licenses and permits. These can vary by industry and locality, so it is essential to check with local authorities and regulatory bodies.
6. Register for Tax Purposes. Once the SRL is registered in Romania, you must obtain a tax identification number from the National Agency for Fiscal Administration (ANAF). The SRL must also register for VAT if its annual turnover exceeds the threshold set by Romanian law (currently 300,000 RON).
By following these steps, you can successfully register your SRL in Romania and begin your entrepreneurial journey in this vibrant market.
Compliance and Post Incorporation Requirements for SRL in Romania
Annual Financial Statements drafting and filing: SRL in Romania is required to prepare and submit annual financial statements to the Ministry of Public Finance.
Corporate Governance: Ensure that the SRL adheres to corporate governance standards, including holding annual general meetings and maintaining accurate records.
Tax Statements for SRL in Romania: Regularly file tax returns and ensure compliance with all tax obligations, including corporate tax, VAT, and social security contributions.
Opening the bank account after the Romania SRL formation process ends. After successfully SRL incorporation, the next step is to open a current bank account in Romania under your company's name. It is crucial to ensure that all transactions related to your company are conducted solely through this dedicated bank account.
Subscribe the share capital within 3 months since the Romania SRL formation process is finished. After successfully opening the SRL bank account, it's time to deposit the subscription share capital. The number of shares allocated to each shareholder will be determined by the amount they have contributed, as specified in the constitutive deed. It is essential to finalize the deposit of the share capital within three months after incorporating the company.
Contract accounting services after successfully Romania SRL formation. Maintaining accurate books of accounts is perhaps the most crucial legal obligation for your company. It is imperative that these books provide an accurate and unbiased representation of your company's affairs. We may provide you accounting services for your SRL, depending on your specific needs.
Hire at least one employee within a 30 days term from the Romania SRL formation. To reduce your tax burden (paying only 1% income tax on the company's turnover instead of the standard 16% corporate tax on the company's profit), the company must enter into a labor agreement.
Practical Tips for Managing an SRL in Romania
Hire Local Expertise for your SRL in Romania: Consider hiring local legal and accounting experts to navigate the Romanian legal and regulatory environment effectively.
Stay Informed: Keep abreast of changes in Romanian business laws and regulations to ensure ongoing compliance for your SRL.
Network: Build relationships with local business communities for your Romania SRL and chambers of commerce to stay connected and informed about opportunities and challenges in the market.
Conclusion: SRL in Romania is the Path to Success
Establishing an SRL in Romania is a strategic move that offers numerous benefits, including limited liability, flexibility, and access to the EU market. By following the outlined steps and staying compliant with Romanian laws and regulations, entrepreneurs can successfully set up and manage an SRL, positioning their business for growth and success in the dynamic Romanian market.
Navigating the legal landscape of setting up an SRL in Romania can be complex, but with the right guidance and resources, it becomes a manageable and rewarding process. Whether you are a local entrepreneur or an international investor, understanding the intricacies of Romanian law is crucial for making informed decisions and achieving business success.
For any question regarding the SRL in Romania, feel free to reach out to us at tudor@roadvocacy.ro or give us a call at +40 723 77 37 59. Alternatively, you can also use the contact form on our website at www.roadvocacy.ro. We're here to assist you in any way we can!
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The Lawyer's corner is nothing else but a legal blog dedicated only for entrepreneurs and investors in Romania
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Romanian Advocacy
| Your Business | Our Mission |
Romanian Advocacy
| Your Business | Our Mission |
Romanian Advocacy
| Your business | Our mission |
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