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25 December 2023

Unlock the gateway to success with Romania company formation

Navigating the maze: Romania company formation explained. Embarking on the journey of company formation can be daunting, but fear not! This section will guide you through the steps involved in establishing your business in Romania. From choosing the right legal structure to understanding documentation requirements, we've got you covered. Discover the secrets to a smooth and efficient company formation process

 

Start your business in Romania with ease. Expert company formation legal services

 

Welcome to a world of unlimited business possibilities in Romania. As the economy continues to grow rapidly, Romania has become an attractive destination for entrepreneurs and investors looking to expand their horizons. However, navigating the process of company formation can be complex and time-consuming for those unfamiliar with the local business landscape. That's where we come in. Our expert team specializes in streamlining Romania company formation, providing you with a hassle-free experience from start to finish. Whether you're interested in setting up a limited liability company or a joint-stock company, we have the knowledge and expertise to guide you through the process, ensuring that you meet all the necessary legal requirements. By choosing our services, you can save valuable time and energy, allowing you to focus on what matters most – growing your business. Contact us today and let's make your vision a reality.

 

In the heart of Eastern Europe lies a land of rich history, breathtaking landscapes, and a burgeoning economy that beckons entrepreneurs and visionaries. Romania, often overlooked, is emerging as a hotbed for business opportunities. In this article, we'll dive into the art of Romania company formation, exploring the benefits, the process, and why this vibrant nation is becoming the business destination of choice.

 

Benefits of company formation in Romania

 

Setting up a company in Romania can bring numerous advantages. Firstly, Romania boasts the lowest tax rates in Europe. When you establish a Romanian company, it is automatically categorized as a micro enterprise. As a result, you'll only be required to pay a 1% or 3% income tax:

 

  • 1% turnover tax to be paid by Romanian companies whose turnover does not exceed EUR 60,000 and have at least one employee.

 

  • 3% - turnover tax to be paid by: a) the companies with revenues exceeding EUR 60,000 or b) the companies 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. 

 

  • 16% corporate tax for companies whose turnover exceeds EUR 500,000 in a fiscal year.

 

You can find out more about the taxation of the Romanian micro-enterprise companies in 2024 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.

 

Secondly, company formation in Romania can be done swiftly and efficiently, with the entire process completed in just two working days. Romania offers a streamlined procedure for company formation, ensuring that entrepreneurs can establish their businesses in no time. 

 

Why wait? Get your business up and running in no time! Our streamlined process guarantees that your company will be registered with the Romanian Trade Registry in just three days. Don't miss out on this opportunity!

 

Thirdly, when it comes to registering your company, you can breathe easy knowing that there's no need to subscribe to a minimum share capital. This means that you have the flexibility to determine the amount of capital you want to invest in your business, without any restrictions or obligations. You can focus on other aspects of the registration process without worrying about meeting any financial requirements.

 

You can choose to subscribe to the share capital even after the company is officially registered. But remember, if it's an SRL, you'll have to pay 30% of the subscribed capital within 3 months from the registration date, but before commencing any business activities under the company's name.

 

Fourthly, no more hassle of searching for a notary public to handle your limited liability company registration process. You don't need a notary public to take care of the registration process for your limited liability company. This means that you won't have to go through the hassle of finding a notary and paying their fees. Moreover, the company formation in Romania process does not require even your presence - as the shareholder / director of the company. We take care of everything.

 

Also, Romania offers a favorable business environment with a growing economy and a strategic location in Eastern Europe. The country has a large and skilled workforce, which can be a valuable asset for any company. Additionally, Romania has a competitive cost structure, including lower labor costs compared to other European countries, making it an attractive destination for businesses looking to optimize their expenses.

 

Another benefit of company formation in Romania is access to a large consumer market. With a population of over 19 million people, Romania provides a significant customer base for businesses to tap into. Moreover, Romania is a member of the European Union, which grants companies access to the EU's single market of over 450 million consumers. This opens up opportunities for companies to expand their reach and increase their market share.

 

Furthermore, Romania offers various incentives and support programs for foreign investors. The government has implemented measures to attract foreign direct investment, such as tax incentives, grants, and subsidies. These incentives aim to stimulate economic growth and create a favorable investment climate. Additionally, Romania has a simplified and efficient company registration process, making it easier for entrepreneurs to establish their businesses. Overall, the benefits of company formation in Romania include a favorable business environment, access to a large consumer market, and government support for foreign investors.

 

Discover more about the reasons why to invest in Romania in our blog article Why other investors have already decided to start a business in Romania?

 

Steps to streamline the company formation process in Romania

 

Setting up a company in Romania can be an exciting venture with numerous opportunities. The process of Romania company formation involves several steps that need to be followed diligently. It's advisable to seek professional assistance from lawyers or business consultants who are familiar with the local regulations and can guide you through the process. By following the necessary steps and ensuring compliance, you can successfully finalize your company formation process in Romania and embark on a rewarding entrepreneurial journey.

 

Once you have determined the appropriate business structure, it's time to start the formation process of your company in Romania. The registration process involves several steps, which we will outline below:

 

1. Choose a unique name for your company that complies with Romanian legislation. You can check the availability of the name on the National Trade Register Office's website.

 

2. Prepare the necessary documentation, including the Articles of Association, identification documents of shareholders and directors, and proof of address for the registered office.

 

3. Submit the formation file to the Romanian Trade Registry and the company will be ready incorporated within a 2 working days.

 

4. Pay the registration fee and submit the application for registration to the Trade Register Office. The office will review your application and supporting documents, and if everything is in order, your company will be registered.

 

5. Obtain the incorporation documents, tax identification number (CIF) and register for VAT if applicable. These steps are necessary to ensure compliance with Romanian tax regulations.

 

By following these steps, you can successfully register your company in Romania and begin your entrepreneurial journey in this vibrant market.

 

Understanding the legal requirements for Romania company formation

 

It's important to familiarize yourself with the legal requirements before you decide the Romania company formation process and start your business in Romania. The initial step involves selecting a distinctive name for your company that adheres to the Romanian legislation. Make sure the name is not misleading or similar to any existing trademarks or company names.

 

Afterward, it is essential to identify the business structure that perfectly fits your requirements. In Romania, you have various choices such as sole proprietorship, limited liability company (LLC), joint-stock company (JSC), and branch offices. Each structure comes with its own set of benefits and factors to consider, hence it is crucial to thoroughly assess your business objectives and select the one that aligns best with your goals.

 

When thinking about expanding your business in Romania, the most commonly used corporate vehicle to start your business is the limited liability company (LLC), known as SRL (societate cu răspundere limitată) in Romanian. It is considered the safest option for shareholders and directors. Moreover, the Romanian LLC is highly cost-efficient, with minimal incorporation costs and no significant share capital contribution required for company setup. 

 

Once you've made a decision regarding your business structure, the next step is to register your company with the relevant authorities. This involves gathering all the necessary paperwork, including the company's constitutive deed, identification documents for shareholders and directors, and proof of address for your registered office. Once you have everything in order, you can submit these documents along with your registration application to the Romanian Trade Registry.

 

Required documents for Romania company formation

 

To ensure a smooth incorporation process for your company in Romania, it is crucial to gather the required documents that align with the legal regulations. The specific documents needed may differ based on the type of business structure you opt for. We kindly ask you to provide us with the necessary documents to facilitate the successful Romania company formation process, as follows:

 

1. Choose the company name you've always dreamed of! Let your imagination run wild and pick the perfect name for your company.

 

2. Get ready with your ID card or passport for the shareholders and directors.

 

3. Provide a brief overview of the main activity your company will engage in. Tell us a little about the main activity your company will focus on.

 

4. If you don't have a physical location yet, no worries! We can set up a virtual headquarters at our law office for all correspondence.

 

Rest assured that your entire setup process will be expertly handled by a coordinator lawyer from Romanian Advocacy. They will take charge and ensure that your project is completed successfully within the given timeframe.

 

Opening the bank account after the Romania company formation process is done 

 

After successfully company formation process, 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.

 

Opening a dedicated business account is crucial to guarantee seamless financial operations and maintain a clear distinction between your personal finances and your company's funds. With a dedicated account, you can efficiently handle all your company's financial transactions, receive payments from clients, and make timely payments to suppliers and employees.

 

When choosing a bank for your company's current account, it's crucial to take into account various factors like the bank's reputation, accessibility, fees, and the range of services they provide. Take the time to research different banks in Romania and compare what they offer to find the perfect fit for your business requirements. Moreover, certain banks may offer extra advantages such as online banking facilities, business credit cards, and specialized financial services designed specifically for businesses. By making a thoughtful decision and selecting the right bank, you can guarantee a smooth banking experience and establish a strong foundation for your company's financial prosperity.

 

Here are the typical documents and information needed to open a current bank account:

 

  • Certificate of incorporation of the company;

 

  • Constitutive deed / articles of association of your company;

 

  • General meeting of the shareholders or board of directors resolution for opening and operation of bank account;

 

  • Ultimate beneficial owner (UBO) statement issued by the company's director.

 

In this respect, kindly note that you need to personally be present  at the bank headquarters in order to sign all the necessary documents.

 

Remember to subscribe the share capital within 3 months since the Romania company formation process is finished

 

After successfully opening the company bank account, it's time for the individuals who have signed the constitutive deed or articles of association to deposit the subscription money. This money will serve as the 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. This timeframe is crucial as it allows the company to quickly secure the necessary funds to initiate its operations and establish financial stability. By meeting this requirement, the company showcases its dedication to responsible financial management and sets a solid groundwork for future growth and success. Additionally, it ensures compliance with legal and regulatory obligations, promoting transparency and accountability in its financial matters. Hence, timely deposit of the share capital is a pivotal step in the early stages of a company's journey towards attaining its goals and objectives.

 

Contract accounting services after successfully Romania company 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.

 

Tax registration and reporting are essential compliance requirements. Once you establish a company in Romania, it becomes vital to register for different taxes, including corporate income tax, value-added tax (VAT), and social security contributions. Moreover, it is crucial to fulfill regular tax filings and reporting obligations to steer clear of penalties or legal complications. This involves submitting annual tax returns, VAT declarations, and payroll reports.

 

It is essential for every company to prepare and maintain accurate financial records in accordance with the Companies Law no. 31/1990 and other relevant laws. These records, including the books of accounts and financial statements, should provide a clear and honest representation of your company's financial position. The process of bookkeeping and accounting begins with recording all financial transactions, such as receipts and payments.

 

We may provide you accounting services for your company, depending on your specific needs. 

 

Hire at least one employee within a 30 days term from the Romania company 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.

 

Maximize your tax savings by employing just one staff member! By adding at least one employee to your team, you can enjoy an amazing 1% income tax rate. Consider the endless opportunities to decrease your tax burden while simultaneously expanding your workforce. It's a wise move that brings numerous advantages!

 

Conclusion: Unlocking business opportunities through successful company formation in Romania

 

Expanding your business to Romania can bring great rewards, but it's important to approach it with the right knowledge and preparation. As you move forward with registering your company in Romania, make sure to seek advice from professionals like lawyers, accountants, and HR specialists. They can offer expert guidance that is tailored to your unique requirements.

 

Embarking on the journey of Romania company formation is not just a business move; it's an investment in a vibrant economy, a rich cultural tapestry, and a gateway to endless opportunities. As you navigate the process of establishing your presence in this dynamic European hub, remember that success is not merely a destination but a continuous evolution. Romania, with its progressive business landscape, is ready to witness the chapters of growth and innovation that your company will script. So, seize the moment, embrace the challenges, and let the allure of Romania's entrepreneurial spirit propel your venture to new heights. Your business story is about to unfold against the backdrop of a country that inspires dreams and fosters success. Here's to the exciting journey ahead – may it be filled with triumphs, growth, and the sweet taste of accomplishment in the heart of Romania!

 

Don't hesitate to get in touch with us! You can send us an email 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. We're always here to help and answer any questions you may have.

 

The blog of the Romanian lawyer

 

 

 

The Lawyer's corner is nothing else but a legal blog dedicated only for entrepreneurs and investors in Romania 

 

Weekly usefull posts about the investors' first steps in Romania, from the perspective of practicing business law, servicing our clients' needs and litigation, written and published by a Romanian litigation lawyer with over 15 years experience

 

 

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Romanian Advocacy

 

| Your Business | Our Mission |

Romanian Advocacy

 

| Your Business | Our Mission |

Romanian Advocacy

| Your business | Our mission |

 

Full range of legal services for businesses, companies and individuals. Your lawyers in Romania.

 

Romanian Advocacy

| Your business | Our mission |

 

Full range of legal services for businesses, companies and individuals.

 

Visit us at our headquarters:

 

Romanian Advocacy

4th Știrbei Vodă St., entrance D, apt. 127, 010111, Bucharest, Romania

 tudor@roadvocacy.ro

 +40 723 773 759