Romania is one of the fastest developing countries in the European Union for the past few years respecting the economical environment, therefore being an ideal choice for new foreign investors looking to start a company in the EU.
Company formation in Romania has many advantages such as a uniform tax rate of 16% which can be decreased to as low as 1% for small companies. Romanian company incorporation and maintenance costs are quite reasonable and the minimum share capital for a limited liability capital in Romania is quite low.
Benefits of setting up a company in Romania
• A good location: Romania‘s geographical location can be considered strategic for transportation and import/export purposes. It is also an easy gateway toward the Middle East. Also, other European Union markets are easily accessible.
• Ease of Doing Business: a Company can be easily established in Romania with minimum ease. An LLC in Romania can be established within two weeks.
• European Union: Romania is a part of the European Union, thus, the four freedoms are enjoyed by businesses in Romania which comprise goods, services, capital, and people.
• Cheap Labour: the cost of labor in Romania is very reasonable.
• Corporate Tax: the corporate tax charged in Romania is quite less when compared to other member states.
Business Structures to open your company in Romania
• Joint Stock Company (Societate pe actiuni – S.A.): this form of entity is similar to a public limited company, which offers its shares in a public stock exchange. One or more directors are obliged to form this type of entity. This entity has to have an executive board and a supervisory board. There are unique provisions present for joint stock companies in Romania.
• Limited Liability Company (Societate cu răspundere limitată – SRL): this form of entity has the principle of limited liability which is different from its members and directors. Up to 50 shareholders can be allowed to form this type of company. But an individual cannot be a shareholder in more than one LLC.
• Branch (Sucursala): a branch office is just an extension of a foreign parent company. Profit-making activities can be conducted by a branch office and the branch office must file yearly returns and corporate tax returns as required by the applicable regulatory authority.
Incorporation Process of a company in Romania
The most popular company status in Romania is Limited Liability Company and its main features in Romanian are:
• the number of partners must not surpass 50
• it’s Partners may be Romanian or foreigners
• It is possible to create a Romanian LLC with a sole partner
• the transfer of shares is free of charge among partners but employs the consent of three-quarters of the partners when transferring to third parties
• the assignment of an auditor is necessary if the number of partners is more than fifteen
Documents needed to form a company in Romania
• Articles and Memorandum of association
• Resolutions of the board of directors
• Resolutions of the general meeting of shareholders
• Shareholders’ register
• Passport information and Visas of Foreign Directors and Members.
Steps to register a company in Romanian
The process of incorporating a company in Romanian with the status of an LLC involves the following:
• Preparation and drafting of the articles of association
• Obtaining proof of domicile for the registered office
• Depositing the share capital with a bank
• Registration with the Trade Register and obtaining the sole registration code from the Trade Register.
• Opening a separate bank account for the company
Note that the provided documents must be translated and authenticated if the partners or the director are foreign citizens.
Romanian VAT Registration
After the incorporation of the company, in order for business owners to be able to create their activities securely and legally, there are a few factors related to VAT registration that must be clarified. Holders of companies must get well informed and they must meet specific conditions if they decide to register for VAT, as provided by the VAT registration procedure.
The current VAT rate in Romania is 19%.
Registration with the Register of Intra-Community Operators (ROI)
Romanian companies who are considering carrying out intra-community operations must request their registration with the Register of Intra-community Operators to collect an intra-community VAT number, before carrying out the applicable transactions.
Corporate income Tax in Romania
The standard rate of corporation tax in Romania remains 16%. But, registering a company in Romania that has an annual revenue of less than €1,000,000 will be considered a micro-company with a lower Corporation Tax rate of 1% for micro-companies with one or more employees and 3% for micro-companies with no employees.
Do you require additional information or needed help with your company formation in Romania? – Let’s go ahead and contact your Damalion expert now.
