Opening a company in Romania
News: 1/02/2016 Optimism for growth: New tax changes in Romania
Romania has staged a small economic miracle in recent years, sweeping away the remnants of socialist planning and transforming itself into a model of free-market reform. Now a full member of the EU and with a GDP growing at over 5% annually, Romania is one of the most promising countries for investors looking to start a new business in Europe. For many, however, the country remains uncharted territory, which is why we should be your first port of call: if you’re thinking of setting up a company in Romania, our experts will guide you safely to success.
How has EU membership changed Romania’s economic climate?
To qualify for EU membership, Romania had to accelerate its economic reform process along the following lines:
- Liberalization of foreign trade
- Private sector development
- Privatization of state-owned enterprises
- Modernization of the banking and tax system
How did international investors react to these changes?
Domestic investment has increased significantly in recent years. In 2005, foreign direct investment inflows totaled €5.2 billion, a 27% increase over the previous year. This growth trend is driven by the country’s economic and political stability, EU membership, and changes to the tax regime.
What is the corporate tax rate in Romania?
The standard corporate tax rate has been reduced to 16%. An exception applies to nightclubs and gambling operations where the tax represents at least 5% of gross revenue. However, the corporate tax rate is much lower for micro-enterprises, meaning companies with annual revenues of less than €100,000 and fewer than ten employees.
What are the most common types of companies in Romania?
The two most popular forms of company in Romania are:
- Limited Liability Company (SRL)
- Joint stock company (SA)
How much share capital is required for a limited liability company (LLC)?
The minimum share capital for an LLC is just €60, provided the company has more than fifty members.
What are the other key features of a limited liability company (LLC)?
- Must have between one and fifty shareholders
- Shareholders can be Romanian or foreign citizens
- Very simple administrative and control formalities
How much share capital is required for a joint stock company (SA)?
The minimum share capital for a limited liability company is €25,000, of which at least 30% must be paid up.
What are the characteristics of a company (SA)?
- The SA corporate form is mandatory if the company is involved in the banking or insurance sector.
- A minimum of five members and one director is required
- Three auditors are required to review the financial documentation
What other types of companies exist in Romania?
The other main types of Romanian companies:
- Partnership
- Branch
- Representative Office
What is the regulatory framework for those wishing to open a company in Romania?
Romania was ranked first in Eastern Europe and second globally in a World Bank report on regulatory reform. The report, Doing Business 2007, praised Romania for making it easier, faster, and cheaper to set up a business in Romania and begin trading. In addition to reducing corporate tax by a flat 16%, the government also reduced regulatory requirements in various areas, from construction permits to customs procedures and labor laws.
Why invest in Romania?
Is it easy to hire staff in Romania?
Boosted by its strong economy, Romania has managed to keep unemployment below 6%. But with a well-educated workforce and relatively low average wages, it shouldn’t be difficult for foreign companies to find staff. The challenge, as always, is to find the highest quality staff and facilitate the hiring process. For advice on staff selection and employment laws in Romania, contact our recruitment team.
Are there financial incentives available for those who want to start a business in Romania?
Romania offers a wide range of financial incentives for foreign investors wishing to open a business in the country. These include tax breaks, affordable loans, and free access to public services, with particular advantages for investors seeking to create employment in disadvantaged areas.
Open a bank account in Romania
What about banking services?
Almost all commercial banks in Romania have been privatized, and foreign banks now play an important role in the country’s financial sector. This has contributed to improving the breadth, quality, and efficiency of financial services available to the international business community, and investors looking to start a business in Romania find a wide range of services available. Our team of experts can help you open a bank account in Romania: contact us and we’ll be happy to assist you.
How can I get more information about company formation in Romania?
Please contact us to open a company in Romania and we will be happy to help you take full advantage of all the opportunities Romania has to offer.