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31 August 2023

Why should I choose company registration in Romania ?

One of the key advantages of starting a business in Romania as a foreigner is the favorable business environment | The Romanian government has implemented numerous reforms to simplify the process of setting up a company, reducing bureaucracy and income tax, and improving transparency | Additionally, the country offers various incentives and tax breaks to attract foreign investment, making it an ideal destination for entrepreneurs looking to establish their presence in Eastern Europe

 

Ultimate checklist for foreigner starting a business in Romania

 

Unleash your entrepreneurial spirit in Romania as a foreigner and embark on a journey to business success. Romania presents an exceptional opportunity for foreign entrepreneurs due to its favorable business environment. The Romanian government has diligently worked towards simplifying the company registration process, reducing bureaucratic hurdles, and fostering transparency. Furthermore, the nation extends a warm welcome to foreign investors by offering attractive incentives and tax exemptions, making it an irresistible choice for aspiring entrepreneurs seeking a foothold in Europe.

 

Moreover, Romania boasts a highly skilled and educated workforce, with a strong emphasis on technical and scientific education. This provides a competitive advantage for businesses operating in sectors such as IT, engineering, and research and development. Furthermore, the cost of labor in Romania is relatively low compared to other European countries, allowing businesses to maintain a competitive edge while keeping operational costs under control. 

 

Explore 10 valuable insights for foreigners contemplating the idea of setting up a company in Romania as a limited liability company (LLC/SRL):

 

1. No need for two shareholders. No need for a Romanian shareholder for starting a business in Romania as a foreigner. 

 

A foreign entity, irrespective if it is a EU entity or not, may act as the a sole shareholder or a Romanian limited liability company (SRL) or, of course, together with another foreign entity or with a Romanian entity.

 

2. All Romanian companies must be registered with the Romanian Trade Registry Office, directed and managed by the Romanian Ministry of Justice, the date of incorporation being considered the company's date of birth, when its legal existence starts. So, starting a business in Romania as a foreigner will be governed by the Romanian laws and made public

 

3. No minimum share capital subscription necessary at the incorporation date for starting a business in Romania as a foreigner. 

 

With the newly introduced amendments, it is allowed to subscribe the share capital even after the company incorporation, thus saving us additional trips to the bank. The share capital can be subscribed in one installment or transferred in several successive installments, within a maximum period of 12 months from the date of company establishment.

 

According to the provisions of the Companies Law no. 31/1990, the limited liability company (SRL) must pay 30% of the value of the subscribed capital not later than 3 months from the date of registration, but before starting operations in the name of the company, and the difference in capital subscribed will be paid: for the cash contribution, within 12 months as of the registration date; for the contribution in kind (immovable or movable assets), within no more than 2 years from the date of registration.

 

4. Time frame for the company incorporation requested by a foreigner in Romania: 3 business days.  

 

5. Headquarter: it is mandatory a virtual address for headquarter acting as a virtual office. We may provide it upon your request.

 

In order to decide if you opt for a headquarter at the lawyer's premises or one located in a real estate property, please read more info available in our blog article The headquarter of your company in Romania

 

6. No local director is requiredStarting a business in Romania as a foreigner does not require the presence of a local director. This means that you have the freedom to establish and manage your business without the need to find a local partner or director. This flexibility allows you to have full control over your company's operations and decision-making processes.

 

7. No employees are needed for starting a business in Romania as a foreigner. 

 

Not having employees initially when starting a business in Romania as a foreigner allows you to fully immerse yourself in the local business environment. You can dedicate your time and energy to understanding the market dynamics, establishing valuable connections with potential clients and partners, and adapting your business strategy accordingly. This direct involvement in every aspect of your company's operations will not only enhance your understanding of the Romanian market but also enable you to make informed decisions that align with your long-term goals. As your business grows, you can gradually expand your team, ensuring that each new hire is strategically chosen to complement your existing skill set and contribute to the overall success of your company.

 

8. It is necessary minimum a yearly decision of the sole shareholder / shareholders, for the approval of the financial statements.

 

Starting a business in Romania as a foreigner requires an annual decision for the approval of the financial statements. This is not just a mere formality, but a crucial step to ensure transparency and compliance with the local regulations. By approving the financial statements on a yearly basis, you demonstrate your commitment to maintaining accurate records and adhering to the financial reporting standards set by the Romanian authorities.

 

9. Tax regime: 1% / 3% turnover tax on the income, depending on specific conditions or 16% corporate tax rate. VAT: 19% standard rate or 5% and 9% reduced rates for certain goods. Plus certain tax exemptions and incentives, which are subject to certain conditions. 

 

In order to find more about taxation of the LLC in Romania, please read our brief articles, one related to the turnover tax / corporate tax - What taxes your Romanian company pays? Chapter I and the second one related to the dividend tax - What taxes your Romanian company pays? Chapter II.

 

10. Accounting requirements: quarterly tax compliance, and a yearly tax calculation, declaration and payment.

 

In conclusion, starting a business in Romania as a foreigner opens up a world of possibilities. The low rate income tax, country's strategic location, favorable business environment, and skilled workforce make it an attractive destination for entrepreneurs looking to expand their operations. With the right planning, research, and determination, success is within reach in the vibrant and dynamic Romanian market.

 

Navigate the complexities of starting a business in Romania as a foreigner with expert legal guidance and turn your dreams into reality.

 

You may check other info related to starting a business in Romania as a foreigner to the company registration in Romania process here. Also you may read more about the advantages and disadvantages of setting up a company in Romania in our article 10 facts you need to know about the limited liability company in Romania.

 

Finally, it is advisable to seek professional advice and assistance throughout the process of starting a business in Romania. This could include consulting with a lawyer, accountant, or business advisor who can guide you through the legal and administrative procedures, as well as provide valuable insights into the local market and business culture. With careful planning and the right support, starting a business in Romania can be a rewarding and successful endeavor for foreigners.

 

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!

 

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

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