Category Company Formation in Romania

Set up a Limited Liability Company in Romania

The most common forms of companies in Romania are the Limited Liability Company, the Joint Stock Company and Branches.

The Limited Liability Company in Romania has:

• The share capital is divided into equal shares and, according to Law no. 31/1990, it cannot be less than 1 RON.
• A Limited Liability Company in Romania may have between 1 and 50 shareholders.
• The shareholders are liable in the limit of the contribution to the share capital.

Documents requested by the Trade Register for the company formation are:

• Proof of reservation of company name
• Articles of incorporation for the new Romanian company
• Excerpts issued by the Trade Register where the shareholders are incorporated- legal entities (if they are)
• The identity document of the shareholders natural persons (ID, Passport)
• Passport or ID of the future director of the Romanian company
• The document attesting the right of use over the space with destination of registered office ( e.g. lease agreement, property) and the ownership property documents
• standard application.

Taxation of LLC company in Romania 2023

The tax rates used for micro-company income tax are:

• 1% for micro-companies with one or more employees.
• 3% for micro-companies with no employees.

The standard corporate income tax rate is 16%. Taxpayers that are carrying on activities such as gambling and nightclubs are either subject to 5% rate of the revenue obtained from such activities or to 16% of the taxable profit, depending on which is higher.

Romanian micro company tax regime starting with the first fiscal year and will remain under this tax regime if it meets all of the following criteria:

• The maximum threshold of annual turnover is EUR 500.000.
• Income generated from consultancy and management activities is not more than 20% of the annual turnover;
• It does not carry out any banking, insurance and reassurance, capital markets, gambling or upstream oil & gas activities;
• The share capital must be held by entities other than the state or the local authorities.

Moreover, the Romanian company has to pay to the state the imposed social contributions (pensions, health, work contribution) and the income tax for each employee.

There are no citizenship or residency requirements in order to register a Limited Company in Romania.

Our team of Romanian Lawyers can assist you for the set up of a LLC in Romania and our team of Romanian accountants can take on the fiscal set up of your newly formatted company.

Contact us for more info in order to set up a Romanian Limited Liability Company.

Why Romania is a Cost-Effective and Attractive Location to Start a Business

 Low Taxes

Start a Business in Romania and Benefit from a Flat Corporate Tax Rate of Only 16%.

Affordable Labor Costs

Take Advantage of Affordable Labor Costs and a Skilled Workforce When You Start a Business in Romania.

Low Living Expenses

Keep Your Overhead Low with Low Living Expenses in Romania.

 Favorable Business Climate in Romania

Explore Romania’s Pro-Business Environment and Streamlined Business Registration Processes

Tax Incentives

Romania has one of the lowest corporate tax rates in the European Union, and there are also double taxation avoidance treaties in place to help businesses save even more money.

Romania offers various tax incentives to incentivize foreign investment and promote business growth in the country.

Some of the key tax incentives available for businesses in Romania include:

• Reduced corporate tax rate: Romania has one of the lowest corporate tax rates in the European Union at only 16%. This flat tax rate applies to all businesses, regardless of size or industry.
• Tax exemptions: Romania offers tax exemptions for certain types of income, including dividends and interest, which can help businesses reduce their tax burden.
• VAT exemptions: Small businesses with an annual revenue of less than 220,000 EUR are exempt from charging and paying value-added tax (VAT) in Romania.
• Research and development (R&D) incentives: Companies engaged in R&D activities in Romania are eligible for tax credits and exemptions on certain expenses related to research and development.
• Employment incentives: Romania also offers various employment incentives to encourage job creation and workforce development. These incentives include wage subsidies, social security exemptions, and training grants.

Streamlined Business Registration Processes

To register a business in Romania, you’ll need to provide several documents and complete several steps.

Here’s an overview of the registration process and the documents required:

1. Choose a legal entity: The first step in the registration process is to choose a legal entity for your business. Common legal entities in Romania include sole proprietorships, limited liability companies (LLCs), joint-stock companies, and partnerships.
2. Obtain a unique registration code (CUI): Once you’ve chosen a legal entity, you’ll need to obtain a unique registration code (CUI) from the Romanian Trade Register. This code is required for tax and legal purposes and identifies your business in the Romanian business registry.
3. Register with the Trade Register: You’ll need to register your business with the Romanian Trade Register by submitting a registration application and the required documents.
4. Obtain tax registration: Once your business is registered with the Trade Register, you’ll need to obtain tax registration from the National Agency for Fiscal Administration (ANAF). You’ll need to provide your CUI, as well as other documents such as your articles of incorporation and identification documents.
5. Obtain any necessary permits or licenses: Depending on the type of business you’re starting, you may also need to obtain additional permits or licenses from local or national authorities.

Stable Political and Economic Climate

Access to Skilled Labor

In Romania, you’ll find a highly skilled and educated workforce, particularly in fields such as IT, engineering, and manufacturing. This skilled labor pool is due in part to Romania’s strong education system, which emphasizes science, technology, engineering, and mathematics (STEM) fields. Additionally, many Romanians are fluent in multiple languages, including English, French, German, and Spanish, making them valuable assets for businesses with international operations.

When you start a business in Romania, you’ll have access to this highly skilled labor pool at a fraction of the cost of other European countries. Labor costs in Romania are among the lowest in the EU, which can help you reduce your overhead and increase your profit margins. Moreover, the Romanian government has implemented various programs and initiatives to support workforce development and training, ensuring that the labor force remains skilled and competitive.

Investment Opportunities

Nevertheless, Romania offers a wide range of investment opportunities across various industries. Some of the most promising industries for investment in Romania include:

• IT and software development: Romania has a rapidly growing IT sector with a highly skilled and educated workforce. The country is home to numerous tech startups and multinational companies, making it an attractive destination for businesses in the industry.
• Manufacturing: With a strong tradition in manufacturing and a location at the crossroads of major European markets, Romania offers favorable conditions for businesses in the manufacturing sector. The country’s low labor costs and skilled workforce make it an ideal location for companies looking to manufacture and export products.
• Agriculture and food processing: Romania has a favorable climate and fertile soil, making it an ideal location for agriculture and food processing businesses. The country is a major producer of wheat, corn, and other crops, as well as wine and other food products.
• Renewable energy: Romania has made significant investments in renewable energy in recent years, particularly in wind and solar power. The country’s favorable regulatory environment and abundant natural resources make it an attractive destination for businesses in the renewable energy sector.
• Tourism and hospitality: With a rich history, diverse culture, and beautiful landscapes, Romania has significant potential for growth in the tourism and hospitality industry. The country is home to numerous historic sites, natural landmarks, and cultural attractions, making it an ideal destination for travelers.

 Legal Considerations

Ensure Compliance with Local Laws and Regulations with the Help of an Experienced Commercial Lawyer When You Start a Business in Romania.

The most common forms of companies in Romania are the Limited Liability Company, the Joint Stock Company and Branches.

                                     The Limited Liability Company in Romania has:

• The share capital is divided into equal shares and, according to Law no. 31/1990, it cannot be less than 1 RON.
• A Limited Liability Company in Romania may have between 1 and 50 shareholders.
• The shareholders are liable in the limit of the contribution to the share capital.

       Documents requested by the Trade Register for the company formation are:

• Proof of reservation of company name
• Articles of incorporation for the new Romanian company
• Excerpts issued by the Trade Register where the shareholders are incorporated- legal entities (if they are)
• The identity document of the shareholders natural persons (ID, Passport)
• Passport or ID of the future director of the Romanian company
• The document attesting the right of use over the space with destination of registered office ( e.g. lease agreement, property) and the ownership property documents
• standard application.

                                    Taxation of LLC company in Romania 2023

The tax rates used for micro-company income tax are:

• 1% for micro-companies with one or more employees.
• 3% for micro-companies with no employees.

The standard corporate income tax rate is 16%. Taxpayers that are carrying on activities such as gambling and nightclubs are either subject to 5% rate of the revenue obtained from such activities or to 16% of the taxable profit, depending on which is higher.

Romanian micro company tax regime starting with the first fiscal year and will remain under this tax regime if it meets all of the following criteria:

• The maximum threshold of annual turnover is EUR 500.000.
• Income generated from consultancy and management activities is not more than 20% of the annual turnover;
• It does not carry out any banking, insurance and reassurance, capital markets, gambling or upstream oil & gas activities;
• The share capital must be held by entities other than the state or the local authorities.

Moreover, the Romanian company has to pay to the state the imposed social contributions (pensions, health, work contribution) and the income tax for each employee.

There are no citizenship or residency requirements in order to register a Limited Company in Romania.

Our team of Romanian Lawyers can assist you for the set up of a LLC in Romania and our team of Romanian accountants can take on the fiscal set up of your newly formatted company.

Contact us for more info in order to set up a Romanian Limited Liability Company.