Business lawyer assisting foreign company with branch office registration in Romania

How to Register a Branch Office of a Foreign Company in Romania

by Simona Rotaru Company Formation in Romania, Consulting

 

 

 

How to Register a Branch Office of a Foreign Company in Romania

Setting up a branch office in Romania offers foreign companies a strategic foothold in the European market. This comprehensive guide provides an overview of the process to register a branch in Romania, ensuring compliance with Romanian regulations and maximizing your business potential. From understanding the nuances of Romanian law to navigating the National Trade Register Office, we’ll walk you through each step.

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Understanding Branch Offices in Romania

A receptionist welcoming visitors at the front desk of the office.

What is a Branch Office?

A branch office in Romania serves as an extension of the parent company, allowing it to conduct activities in Romania without creating a separate legal personality. Essentially, registering a branch is establishing a physical office in Romania that operates under the umbrella of the existing foreign company. Unlike a Romanian subsidiary, the branch office shares the same legal entity as its parent company, simplifying administrative processes while expanding its reach.

Branch vs. Subsidiary: Key Differences

TypeDescription
Branch OfficeExtension of parent company without separate legal personality; parent is directly liable
SubsidiaryDistinct legal entity with own capital; provides liability protection to parent

Benefits of Establishing a Branch in Romania

  • Test the Romanian market and gain insights before committing to a full-fledged subsidiary
  • Simpler and faster registration process compared to forming a new Romanian legal entity
  • Lower initial setup costs and reduced administrative burden
  • Leverage the established brand and resources of the parent company
  • Direct representation in the European Union market

Legal Framework for Foreign Companies

A close-up of legal documents and a pen on a desk.

Romanian Companies Law 31/1990

The Romanian Companies Law 31/1990 is the cornerstone of corporate governance in Romania, influencing how foreign companies can establish a branch. This law defines the legal entities permitted to operate in Romania and outlines the requirements for company formation, including registering a branch. Understanding this legislation is vital for foreign investors aiming to register a branch in Romania, ensuring compliance with local regulations.

Foreign Branch Legal Requirements

To register a branch in Romania, foreign companies must meet specific legal requirements:

  • Submit parent company’s registration documents, translated and notarized, to the National Trade Register Office (ONRC)
  • Ensure the branch representative has power of attorney to register and legally bind the company
  • Provide a registered office address in Romania with proof of occupancy
  • Define the scope of activities through CAEN codes

Registration with ONRC Romania

The National Trade Register Office (ONRC) is the central authority for registering a branch in Romania. The process involves filing necessary documents, including the parent company’s details, the decision to open a branch, and the appointment of the branch representative. Once approved, the branch office receives a unique registration number and tax identification code, allowing it to operate legally.

Atrium Romanian Law Office is an expert legal services provider based in Romania, specifically in Bucharest. The firm’s team of experienced Romanian lawyers and professionals are equipped to resolve any legal issue in a timely manner. They offer guidance through the branch registration process, ensuring full compliance with Romanian law.

Step-by-Step Registration Process

A checklist with steps for registration is pinned on a bulletin board.

Phase 1: Preparation of Required Documents

  • Parent company’s articles of association and certificate of incorporation
  • Board resolution authorizing the establishment of the branch
  • Proof of legal existence of the parent company
  • Details of the branch representative and their power of attorney
  • Business plan detailing planned activities in Romania

All foreign documents must be officially translated into Romanian and notarized. This preparation is crucial for avoiding delays with ONRC.

Phase 2: Branch Registration with ONRC

  • Submit all prepared registration documents to ONRC (in person or online)
  • Pay the registration fee (typically €50-€100)
  • ONRC reviews documents for compliance with Romanian legal requirements
  • Upon approval, receive registration certificate and unique fiscal code
  • Branch receives official publication in the Commercial Register

Phase 3: Tax Registration with ANAF

Phase 4: Post-Registration Formalities

  • Open business bank account in Romania
  • Register for social security and employment purposes
  • Apply for sector-specific licenses or permits if required
  • Notify relevant authorities of branch operations

Key Responsibilities After Registration

A computer screen displaying a business registration form.

Role of the Branch Representative

The branch representative holds significant responsibilities:

  • Acts on behalf of the parent company in all matters related to the branch
  • Is authorized to make decisions and enter into contracts
  • Must be a resident of Romania or an EU citizen with valid residence permit
  • Ensures compliance with all Romanian legal and regulatory requirements
  • Serves as the main point of contact with Romanian authorities

Parent Company Obligations

The parent company maintains certain obligations:

  • Remains ultimately liable for all activities conducted by the Romanian branch
  • Must ensure the branch adheres to Romanian legal standards
  • Is responsible for financial reporting and tax compliance
  • Must promptly communicate changes to structure or articles of association
  • Must maintain adequate insurance coverage for branch operations

Common Pitfalls & How to Avoid Them

Two people are discussing documents in a meeting room.
  • Incomplete translations — Ensure all documents are properly translated and notarized by qualified professionals
  • Inadequate branch representative — Choose a qualified individual familiar with Romanian business practices
  • Tax compliance issues — Establish robust accounting and tax reporting procedures from the start
  • Incorrect CAEN codes — Define business activities carefully to match registration requirements
  • Delayed bank account opening — Prepare all documentation in advance to expedite the process
  • Missing sector licenses — Identify and obtain all required permits before commencing operations

Useful Resources & Links

Romanian Government Agencies

Atrium Romanian Lawyers Services

FAQ – Branch Registration in Romania

Q: What is a branch office of a foreign company in Romania?

A: A branch office is an extension of the parent company located abroad. It operates under Romanian laws while representing the foreign legal person and can engage in various business activities.

Q: How long does it take to register a branch in Romania?

A: The registration process typically takes 2-4 weeks, depending on the completeness of submitted documents and ONRC processing time.

Q: What are the registration costs?

A: Costs typically range from €500-€1,500, including ONRC fees, translation and notarization services, publication fees, and optional legal advisory services.

Q: Can a foreign company open multiple branches in Romania?

A: Yes, a foreign company can open multiple branches. However, each branch must be registered separately and comply with local laws and regulations.

Q: What is the difference between a branch and a representative office?

A: A branch can engage in commercial activities and generate revenue, while a representative office is limited to promoting the parent company’s interests without engaging in direct business activities.

Q: Is the branch representative required to be Romanian?

A: The branch representative must be a resident of Romania or an EU citizen with a valid residence permit. They don’t need to be Romanian by nationality.

Q: What are the tax implications for a branch?

A: A branch is subject to corporate income tax on income generated within Romania. It must register for VAT if annual turnover exceeds EUR 88,500 and comply with Romanian tax regulations.

Q: What documents are required to register a branch?

A: Required documents include the parent company’s incorporation certificate, articles of association, proof of legal existence, branch representative details, power of attorney, and information about planned activities.

Q: Can changes be made to the branch after registration?

A: Yes, changes such as branch representative, registered office, or scope of activities must be reported to ONRC. The parent company must ensure all modifications are properly documented and filed.

Disclaimer: This article is for general information only and does not constitute legal advice. Please consult with a qualified Romanian corporate lawyer to verify current laws and regulations before proceeding with branch registration. Laws and procedures are subject to change, and individual circumstances may vary.

Finance team reviewing a Romanian RO e-Factura electronic invoice workflow

RO e-Factura Romania 2026: Foreign Company Guide

by Simona Rotaru taxes Romania

RO e-Factura in Romania is no longer only a local accounting issue. A foreign company may be affected because it has a Romanian subsidiary, a fixed establishment, a Romanian VAT registration, domestic transactions or Romanian customers. The correct result depends on the company’s VAT status and the transaction—not simply on the country in which the parent company is incorporated.

Key points for 2026:

  • From 1 January 2026, the statutory transmission deadline is generally five working days, subject to the separate legal deadline for issuing the invoice.
  • A Romanian VAT number alone does not necessarily mean that a foreign company is established in Romania.
  • Domestic B2B clearance, reporting by a non-established supplier and invoices to a foreign Romanian-VAT-registered customer must be classified separately.
  • When RO e-Factura is mandatory, a PDF is not a substitute for the validated structured electronic invoice.
  • The operational record should preserve the XML, the Ministry of Finance electronic seal or validation response, submission evidence and any corrected invoice.

This guide updates the existing Atrium article for the 2026 rules and is intended for foreign investors, finance teams, Romanian subsidiaries and non-resident businesses with Romanian VAT exposure. It should be read together with advice on Romanian tax law and, where a foreign entity needs a local fiscal identifier, the guide to obtaining a Romanian NIF tax identification number.

RO e-Factura compliance in Romania for foreign companies
RO e-Factura compliance workflow for companies operating in Romania. AI-generated illustration.

What changed for RO e-Factura in 2026?

The most important operational change is the move from five calendar days to five working days. The change was introduced through Government Emergency Ordinance no. 89/2025, which amended OUG no. 120/2021 and replaced the previous five-calendar-day transmission deadline with a five-working-day deadline effective from 1 January 2026. See also the explanatory summaries published by Contabilul and VATupdate. The deadline runs from the invoice issue date, but it cannot extend beyond five working days calculated from the statutory deadline for issuing that invoice under the Romanian Fiscal Code. Public holidays and the precise date from which the period is calculated should therefore be built into the company’s controls.

2026 pointPractical meaningControl to implement
Five working daysThe transmission period is counted in working days from 1 January 2026, subject to the invoice-issuance backstop.Use a Romanian working-day calendar and escalate before the final day.
Foreign VAT customersA Romanian-established supplier may have reporting duties for domestic invoices issued to a non-established customer registered for VAT in Romania.Separate establishment, VAT registration and invoice-delivery status in customer master data.
Special B2C exceptionsFrom 1 June 2026, Law 88/2026 introduced optional treatment for certain natural persons and specifically listed categories.Do not treat every individual customer record as identical.
Older guidanceMaterials referring to the calendar-day deadline, future 2025 B2C implementation or obsolete registration forms may be outdated.Version-control procedures and use current ANAF forms and legislation.
Scope selector
Which foreign-company profile are you assessing?

Select the closest profile. The explanation below is a screening result, not a substitute for transaction-level VAT analysis.

Romanian subsidiary

A Romanian company making domestic B2B supplies is ordinarily within the mandatory domestic system. Map invoice types, credentials, software and recipient status before go-live.

Does RO e-Factura apply to a foreign company?

There is no reliable yes-or-no answer based only on the existence of a Romanian VAT number. The analysis should identify the supplier, customer, place of supply, establishment used for the transaction, VAT-registration status and invoice category.

A Romanian subsidiary is a Romanian-established taxable person. A foreign company may also have a Romanian fixed establishment if the relevant VAT tests concerning sufficient permanence and human and technical resources are met. By contrast, a foreign company can be registered for Romanian VAT without being established in Romania.

Particular care is required where a foreign company is not established in Romania but holds a Romanian VAT registration. Such businesses should not automatically be analysed under the same mandatory domestic B2B clearance rules that apply to taxable persons established in Romania. Their obligations must be verified separately under the specific provisions applicable to non-established VAT-registered persons and any optional RO e-Factura registration route.

Business situationLikely RO e-Factura treatmentQuestion requiring verification
Romanian subsidiary invoices a Romanian businessDomestic B2B clearance is generally mandatory.Are any statutory exclusions or special invoice rules relevant?
Foreign company supplies through a Romanian fixed establishmentThe entity may be treated as established for the relevant transaction.Is the Romanian establishment actually involved in the supply?
Foreign company has only a Romanian VAT registrationVAT registration alone does not create a Romanian establishment. Any reporting obligations should be assessed separately from the mandatory domestic B2B clearance regime applicable to established taxable persons.What is the place of supply and has the company opted into the system?
Romanian supplier invoices a non-established customer registered for Romanian VATReporting obligations should be analysed under the specific rules applicable from 1 January 2026. Additional commercial transmission arrangements may still be required depending on the recipient’s status and access to the system.Is the recipient participating in RO e-Factura or only VAT-registered?
Export, intra-Community supply or service with place of supply abroadGenerally outside the domestic B2B exchange rule, subject to transaction-specific reporting.Is the VAT classification and evidence supporting the cross-border treatment correct?

Important distinction: an obligation to report invoice data is not always identical to full platform exchange between supplier and recipient. A non-established business should confirm whether it is reporting a domestic transaction, voluntarily registered in RO e-Factura or subject to the domestic clearance route because of a Romanian establishment.

How does the electronic invoice flow work?

The invoice is prepared as structured data compliant with the Romanian semantic model, based on the European e-invoicing standard. It is transmitted through the Ministry of Finance infrastructure, commonly through SPV-integrated software or an authorised technical solution. The system validates the file. If validation succeeds, the electronic seal is applied and the validated file becomes the system invoice. If it fails, the issuer receives an error response and must correct and resubmit it.

Invoice flow
From accounting data to defensible archive

Select a control point to see what the finance or IT team should retain.

Create structured XML

Generate the invoice from accurate supplier, customer, VAT and line-item data using the current RO_CIUS technical rules.

The official platform makes files available for download for a limited operational period. This is not a substitute for the company’s own legally compliant archive. The archive should allow the original XML, seal or validation status, readable representation, correction trail and accounting entry to be matched.

Technical specifications, validators and official web applications are published through the Ministry of Finance technical information page and the RO e-Factura web applications page.

Which transactions are in scope?

The Romanian rules cover several legally distinct streams: B2B, B2G and B2C reporting, as well as particular reporting obligations for non-established persons. Companies should not use a single ERP flag called “Romanian customer” as a substitute for the legal analysis.

The B2C reporting regime introduced for suppliers established in Romania should not automatically be assumed to apply to every non-resident supplier. For foreign businesses without a Romanian establishment, the legal position should be verified separately based on the applicable provisions and transaction structure.

Transaction2026 starting positionOperational note
Domestic B2B between persons established in RomaniaMandatory platform exchange, unless a statutory exclusion applies.The validated XML is the legally relevant electronic invoice.
B2G invoice within the statutory regimeMandatory according to the public-procurement and e-invoicing rules.Check public authority identifiers and contract references.
B2C invoice issued by an established supplierReporting is generally mandatory, with specific 2026 exceptions.The consumer does not need SPV access for the commercial invoice.
Domestic transaction by a non-established VAT-registered supplierA reporting obligation may apply; optional system registration changes the mechanics.Confirm current registration form and recipient-delivery channel.
Export or intra-Community supplyGenerally outside the domestic B2B exchange obligation.Retain evidence supporting the VAT treatment and destination.
Simplified invoice or other statutory exceptionTreatment depends on the specific legal exception.Do not infer exclusion merely because the amount is small.

How is the five-working-day deadline calculated?

From 1 January 2026, the invoice must generally be transmitted within five working days from the issue date, but no later than five working days after the last legal date on which the invoice should have been issued. The day of the triggering event, weekends and Romanian public holidays can affect the calculation under the applicable time-computation rules.

A delayed invoice issue date does not automatically postpone the transmission deadline. Where the invoice is issued after the statutory issuance deadline under Article 319 of the Romanian Fiscal Code, the five-working-day transmission period must be assessed by reference to the legal issuance deadline rather than the late issuance date. This backstop is also explained in the 2026 deadline summary.

Deadline control
A working-day clock needs four checks

Select a card to see the control that prevents a false deadline.

Confirm issue date

Use the date actually stated on the invoice and reconcile it with the accounting event. Backdating or delayed batch creation can create an immediate compliance risk.

For example, if an invoice is issued on a Monday and there is no public holiday, Tuesday is ordinarily the first working day and the following Monday is the fifth. This is only an illustration: the statutory invoice-issuance deadline and Romanian public holidays must also be checked.

What happens if an invoice fails validation?

A technically rejected file has not completed the required process. The response should be triaged immediately: identify whether the problem concerns syntax, master data, tax codes, totals or a business-rule conflict; correct the source data; regenerate the XML; resubmit it; and preserve both the failed and successful responses.

A successfully communicated invoice cannot simply be “returned” inside the system. Commercial objections should be handled separately, and corrections should follow Article 330 of the Romanian Fiscal Code. The corrective document must itself be transmitted when the RO e-Factura obligation applies.

What penalties and audit risks should foreign companies consider?

The penalty analysis depends on the legal obligation that has been breached. Late reporting can attract fixed fines by taxpayer category. For mandatory domestic B2B exchange, issuing or accepting an invoice outside the system can trigger a percentage-based sanction. The 15% sanction should not be applied mechanically to every cross-border or non-resident scenario without first confirming that the relevant statutory route covers the transaction and party.

The applicability of the 15% sanction should always be assessed by reference to the specific statutory obligation governing the transaction, including the supplier’s establishment status and the legal route under which the invoice was required to be transmitted.

RiskPossible consequencePreventive evidence
One or more late invoices in a calendar monthGenerally RON 5,000–10,000 for large taxpayers; RON 2,500–5,000 for medium taxpayers; RON 1,000–2,500 for other legal persons and individuals.Deadline dashboard, submission timestamps and exception log.
Mandatory domestic B2B invoice issued outside the systemA sanction equal to 15% of the total invoice value may apply to the issuer under the relevant rule.ERP block preventing off-system finalisation of in-scope invoices.
Recipient records an in-scope domestic B2B invoice received outside the systemA corresponding 15% sanction may apply to the recipient, subject to the statutory conditions.Accounts-payable validation against the system record.
Validation failure left unresolvedThe invoice may remain untransmitted and become late.Error queue, named owner, retry log and successful response.
Wrong establishment or customer classificationIncorrect platform route, missing report or duplicate delivery.Documented VAT and establishment decision tree.
Control map
Where implementation most often fails

Select a risk to see the corresponding control.

Wrong customer status

Maintain separate fields for country, Romanian VAT number, establishment status, customer type and participation in RO e-Factura. One “foreign” flag is not enough.

Implementation checklist for a foreign company

  1. Map the Romanian footprint. Identify subsidiaries, branches, fixed establishments, VAT registrations and fiscal representatives.
  2. Classify transaction flows. Separate domestic B2B, B2G, B2C, exports, intra-Community supplies, local reverse-charge cases and other cross-border services.
  3. Confirm access and authority. Verify SPV access, qualified certificates, mandates and the persons authorised to submit or retrieve files.
  4. Update master data. Record establishment status, Romanian VAT identifiers, customer type and system-participation status separately.
  5. Test XML generation. Validate tax codes, units, discounts, advance invoices, credit notes, currency and rounding rules.
  6. Build deadline monitoring. Use Romanian working days, identify the statutory issue-date backstop and prevent submission only on the final day.
  7. Create an error workflow. Route rejected files to a named owner and require documented resubmission.
  8. Control incoming invoices. Reconcile accounts payable with RO e-Factura where domestic B2B exchange is mandatory.
  9. Archive the evidence. Preserve XML, seal or response, readable copy, corrections and submission logs under the applicable accounting and tax-retention rules.
  10. Review changes. Monitor the official Ministry of Finance RO e-Factura hub, current legislation and ANAF technical announcements.

Official registration and verification resources

At the time of publication, ANAF documentation refers to Form 081 for the optional register, Form 082 for the mandatory register and Form 083 for certain non-resident operators. Companies should verify the current ANAF form catalogue before implementation, as registration procedures and form numbering may change over time.

At the time of publication, Form 083 is generally used by certain non-established operators wishing to opt into RO e-Factura. Companies should verify the current ANAF requirements before filing because registration procedures may change.

Use the official ANAF forms catalogue and the ANAF online registers. For the governing framework, consult the current consolidated text of Government Emergency Ordinance no. 120/2021, together with subsequent amendments including Law no. 88/2026.

Need a transaction-specific RO e-Factura review?

A focused review can determine whether a foreign company is established, merely VAT-registered or subject to a separate domestic reporting route, and translate that conclusion into an implementable invoice workflow.

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Related guides

Frequently asked questions

Does a Romanian VAT number make a foreign company established in Romania?

No. VAT registration and establishment are separate concepts. A fixed-establishment analysis considers permanence and appropriate human and technical resources, as well as whether that establishment is involved in the transaction. A Romanian VAT registration obtained through direct registration or fiscal representation does not in itself create a Romanian fixed establishment for VAT purposes.

Are all invoices involving a foreign company reported through RO e-Factura?

No. The result depends on the supplier, customer, place of supply, establishment status, Romanian VAT registration and invoice category. Exports and intra-Community supplies are generally outside the domestic B2B exchange rule, although other reporting obligations may apply.

What is the RO e-Factura deadline in 2026?

From 1 January 2026, the general transmission deadline is five working days from issue, but no later than five working days calculated from the statutory deadline for issuing the invoice. Romanian public holidays and the applicable time-computation rules must be included.

Is a PDF invoice sufficient?

Not where mandatory RO e-Factura exchange applies. The structured XML validated through the system and accompanied by the Ministry of Finance electronic seal is the legally relevant electronic invoice. A PDF may remain useful as a readable copy.

Can a recipient reject an invoice in RO e-Factura?

The system invoice cannot simply be returned. The recipient may communicate objections, while any correction should follow Article 330 of the Fiscal Code and be transmitted through RO e-Factura when the obligation applies.

What should a company do after a validation error or platform problem?

Preserve the response and technical logs, identify and correct the error, resubmit promptly and retain the successful confirmation. A company should not assume that a technical issue automatically extends the statutory deadline; any official unavailability procedure should be checked on the facts.

This article provides general information on Romanian electronic invoicing and tax compliance. The result depends on the transaction, place of supply, establishment, VAT status, invoice type, technical implementation and legislation in force. It does not replace legal or tax advice on a specific invoice flow.

AI Notice: AI-assisted content, reviewed and approved by a qualified Romanian lawyer.

Regulations governing foreign investments in Romania

by Simona Rotaru Corporate Law

Regulations governing foreign investments in Romania

In 2023, Romania gave 105 clearances for foreign direct investments.

This shows the growing interest in Eastern Europe’s economy.

Knowing the rules for foreign investments in Romania is key for investors.

foreign investments in Romania

Romania’s rules for foreign investment have changed a lot.

This is to balance economic growth with national security.

Stricter rules for non-EU investors started in April 2022.

These changes follow European trends and change the investment landscape in Romania.

Understanding Romania’s investment rules is crucial.

You need to know about the new screening process and how it treats EU and non-EU investors differently.

This guide will help you understand Romania’s foreign investment regulations.

It will aid in making smart investment choices in Romania.

Key Takeaways

  • Romania introduced stricter FDI rules in April 2022, particularly for non-EU investors.
  • A minimum investment value of €2 million triggers mandatory screening in sensitive sectors.
  • The FDI Screening Commission (CEISD) oversees the review process for foreign investments.
  • Strategic sectors under scrutiny include critical infrastructure, national security, and financial systems.
  • EU investors generally face a shorter screening period compared to non-EU investors.
  • Significant penalties can be imposed for non-compliance with FDI regulations.
  • Recent amendments have strengthened the enforcement mechanisms for FDI rules.

Overview of Romania’s Foreign Investment Framework

Romania’s foreign investment framework has changed a lot, shaping its economy.

The country works hard to make it easy for businesses to thrive.

It has a strong legal system and regulatory bodies to support this effort.

Current Investment Climate

Romania’s economy has grown steadily, with a 4.1% increase in 2022 and 2.1% in 2023.

It has a big market with 19 million consumers. In 2022, foreign investment reached $11.2 billion, a 6.6% increase from the year before.

The total foreign investment stock is $116 billion, which is 38.4% of its GDP.

Romania's investment incentives

Key Regulatory Bodies

Several groups watch over Romania’s investment rules:

These bodies make sure investments follow national security and public order rules.

They also follow EU laws.

Historical Development of FDI Regulations

Romania’s FDI rules have changed a lot, especially in 2022 and 2023. Important updates include:

  • Introduction of EU investor definitions;
  • New rules for investment screening;
  • A $2.17 million threshold for investment reviews.

These changes show Romania’s effort to attract foreign investment while protecting its interests.

The rules keep getting better, aiming to attract more investment while keeping things in check.

Legal Foundation for Foreign Investments in Romania

Romania’s laws for foreign investments have changed a lot.

This has made the country more welcoming to foreign investors.

The country’s laws and recent updates show its strong desire to attract foreign investment.

Primary Legislative Acts

The main laws for foreign investments in Romania are Law no. 164/2003 and Government Emergency Ordinance (GEO) no. 46/2022.

These laws set the stage for investment opportunities in Romania.

They also outline the rules for investing abroad.

Romania investment climate

Recent Amendments and Updates

In 2023, Romania made important changes to improve its business environment.

These updates include defining “EU Investors” and giving more power to the FDI Screening Commission.

Now, investments over €2 million must be reviewed under GEO no. 46/2022.

EU Regulation Integration

Romania has made its policies match EU standards by adopting FDI Regulation 2019/452.

This step makes the business environment stronger while following EU rules.

It helps attract investments while protecting Romania’s interests.

Foreign investors should know that not following GEO no. 46/2022 can lead to fines up to 10% of their global turnover.

These rules, in effect since April 18, 2022, show Romania’s dedication to responsible foreign investment.

Foreign Investments in Romania: Screening Process

Romania’s rules for foreign investments have changed a lot.

This affects how companies enter the Romanian market.

A new law, starting on July 18, 2024, now checks both EU and non-EU investors.

This changes the business landscape in Romania.

Now, any investment over €2 million in key sectors must be checked.

The FDI Screening Commission (CEISD) and the Romanian Competition Council are key in this.

Investors must give all needed info in 15 days.

CEISD then has 60 days to give an opinion.

Foreign investments screening process Romania

EU and non-EU investors have different timelines.

The Competition Council can clear EU investments in 10 days. For others, it’s 30 days.

This quick process for EU investors helps balance security with economic growth.

Investor TypeScreening FeeClearance Decision Timeline
EU Investors€10,00010 calendar days
Non-EU Investors€10,00030 calendar days

The screening looks at how investments affect national security and order.

Breaking these rules can lead to fines up to 10% of an investor’s global sales.

This shows how crucial following these rules is for entering the Romanian market.

Strategic Sectors Under Government Scrutiny

Romania closely watches certain sectors for foreign investment.

This helps balance business opportunities with national security.

Investments in key areas are carefully checked to match the country’s goals.

Critical Infrastructure

Romania’s infrastructure is a big focus for foreign investment.

The government keeps a close eye on energy, transport, and communications.

These sectors are crucial for growth and security.

Investors in these projects must follow strict rules.

National Security Sectors

Industries linked to national security get extra attention.

This includes weapons, ammunition, and toxic substances.

Workers in these fields need strict security checks.

Investments in these areas are thoroughly reviewed to protect national interests.

Financial and Banking Systems

The financial sector, like banking and insurance, is very important.

Tax incentives draw foreign investors here.

But, the Government watches these investments closely.

This is to keep the economy stable and secure.

Strategic SectorKey Focus AreasInvestment Scrutiny Level
Critical InfrastructureEnergy, Transport, CommunicationsHigh
National SecurityDefense, Weapons ProductionVery High
Financial SystemsBanking, InsuranceModerate to High

Knowing these strategic sectors is key for foreign investors in Romania.

While welcoming international business, Romania balances investment with national security.

Investment Thresholds and Requirements

Romania, a growing market in Eastern Europe and part of the EU, has clear rules for foreign investments.

These rules help attract investors while protecting the country’s interests.

Minimum Investment Values

The Romanian government has set a EUR 2 million minimum for foreign direct investments (FDI) in certain sectors.

Investments over this amount need government approval.

But, even smaller investments might be checked if they could affect national security or public order.

Documentation Requirements

Investors need to gather detailed documents for FDI screening.

These must be in both Romanian and English for the CEISD (Competition Council and Foreign Investments Screening Directorate).

Important sectors include energy, transport, critical infrastructure, and financial systems.

Compliance Standards

Romania’s FDI rules follow EU standards but also consider national security.

Investors from outside the EU or EU entities controlled by non-EU interests are checked more closely.

It’s important to provide accurate information to avoid big fines.

AspectRequirement
Investment ThresholdEUR 2 million
Application LanguagesRomanian and English
Review TimelineUp to 135 calendar days
Non-compliance FineUp to 10% of worldwide turnover

Review and Approval Procedures

Foreign investors looking to invest in Romania must go through a detailed review process.

This is key for FDI in Romania and helps shape the investment climate.

The review process has three main stages:

  1. Initial filing;
  2. CEISD review;
  3. RCC decision-making.

For simple cases, the timeline depends on where the investor is from.

Non-EU investors might wait up to 135 days, while EU investors could wait 70 days.

More complex cases, like those involving national security, might need extra review by the Romanian Government.

A standstill rule means investors can’t start their projects until they get approval.

As of December 2023, a €10,000 filing fee was introduced.

This fee is refundable if the investment doesn’t fall under the law’s scope.

Investor TypeReview TimelineInvestment Threshold
Non-EUUp to 135 days€2 million+
EUUp to 70 days€2 million+

The review process is for investments over €2 million in sensitive sectors.

These include energy, transport, critical infrastructure, IT, and finance.

Investors get benefits like a quick process for simple cases and clear rules to follow.

Sanctions and Enforcement Measures

Romania’s foreign investment scene has changed, affecting joint ventures and mergers.

The country has put in place strict rules to follow its investment laws.

Penalties for Non-compliance

Investors who break Romania’s investment rules face big penalties.

They can be fined up to 10% of their global sales.

These fines are for breaking rules like finishing deals too early or giving wrong info.

Regulatory Oversight

The FDI Screening Commission watches over foreign investments.

They can suggest canceling deals that might harm national security.

The Romanian Competition Council also checks to make sure the market is fair.

Appeal Procedures

Investors can appeal if they disagree with a decision.

This lets them challenge fines or bad rulings.

It tries to balance what’s good for investors with what’s good for Romania.

InfractionPenalty
Premature deal completionUp to 10% of worldwide turnover
Providing inaccurate informationFines and potential deal nullification
Failing to file for FDI clearanceAgreement considered null and void

Romania’s privatization program has drawn a lot of foreign interest.

But, investing in Romanian businesses means you have to know the rules.

It’s key for doing well in joint ventures and acquisitions in Romania’s changing market.

Special Provisions for EU vs Non-EU Investors

Romania has set up special rules for foreign investors.

These rules differ for EU and non-EU investors.

The goal is to attract more money from abroad while protecting Romania’s interests.

EU Investor Benefits

EU investors get a quick review in Romania.

This is for EU citizens and companies based in EU countries.

It makes it easier for them to invest in Romania.

Non-EU Investor Requirements

Non-EU investors have to go through a tougher check.

Any investment over €2 million in key areas needs a review.

This includes new projects, changes to current investments, and deals in critical areas.

Differential Treatment Aspects

The rules show clear differences in how investors are treated.

EU investors get a quicker review, while non-EU investors face longer waits.

For big investments in key sectors by non-EU investors, the EU Commission must agree first.

AspectEU InvestorsNon-EU Investors
Screening ProcessFast-trackMore stringent
Review PeriodShorterLonger
Investment ThresholdLower scrutiny€2 million in sensitive sectors
Strategic Sector InvestmentLess restrictivePrior consent for €2 billion+

Romania wants to draw in foreign investment but also keep control over important areas.

The rules aim to balance foreign money with national security.

They follow EU rules but also protect Romania’s interests.

Conclusion

Romania’s business climate has seen big changes, affecting its investment policies and chances.

Despite the COVID-19 pandemic, Romania’s economy has bounced back.

In 2021, its real GDP grew by 5.9% after a 3.9% drop in 2020.

This shows Romania’s strong potential for investors looking for new markets.

Romania’s investor relations have improved lately.

The creation of the Romanian Agency for Investment and Foreign Trade (ARICE) in 2023 shows the country’s effort to draw in foreign capital. In 2022, U.S.

Foreign Direct Investment in Romania reached $2.9 billion.

This makes Romania a great choice for international investors.

Romania also gets a lot of EU funding. It’s set to get up to $83.5 billion in EU funds by 2030.

A big part of this will go to green projects and digitalization.

This funding makes it easier for investors to find opportunities in sustainable and tech sectors.

When exploring Romania’s investment scene, keep up with new rules.

Now, investments over $2.17 million need to go through screening reviews.

These rules help protect national interests and ensure clear investor resources.

By staying updated and following the rules, you can make the most of Romania’s growing economy.

 

Our team of lawyers in Romania has a longstanding history of providing commercial legal services to both companies and individuals.

Our Romanian lawyers boast a robust and successful history of resolving a wide range of commercial legal issues and fulfilling various needs.

Our Romanian Law Office provide guidance to businesses of all sizes, from small and medium enterprises to large corporations.

Whether you require legal support for commercial transactions, dispute resolution, compliance issues, or personal matters, we are here to confidently guide you through the process. Please contact us, directly, for further information.

FAQ

What are the recent changes in Romania’s foreign investment regulations?

Romania made stricter rules for non-EU investors on April 18, 2022.

They introduced a new review process.

This process now covers more types of investments, including new projects and changes to existing ones.

In 2023, they also defined “EU Investors” more clearly.

They gave the FDI Screening Commission more power to review investments.

What are the key regulatory bodies overseeing foreign investments in Romania?

The main bodies are the FDI Screening Commission (CEISD), Romanian Competition Council (RCC), and the Romanian Government.

They work together to check and approve foreign investments, especially in key sectors.

What is the minimum investment value that triggers mandatory screening in Romania?

Investments worth at least €2 million need to be reviewed.

But, even smaller investments might be checked if they could affect national security or public order.

Which sectors are considered strategic and under government scrutiny in Romania?

Key sectors include critical infrastructure, energy, transport, communications, financial services, and national security.

The CSAT Decision lists 13 sensitive areas, like security, border security, and energy security.

How long does the review process typically take for foreign investments in Romania?

For simple cases, it takes up to 135 days for non-EU investors and 70 days for EU investors.

But, if there are national security concerns, it could take longer.

What are the penalties for non-compliance with Romania’s foreign investment regulations?

Breaking the rules can lead to fines up to 10% of the investor’s worldwide turnover.

Penalties apply for several reasons, including providing wrong information.

From July 2024, not filing for FDI clearance makes agreements null and void.

Are there different provisions for EU and non-EU investors in Romania?

Yes, EU investors get a quicker review process.

The definition of EU investors includes EU nationals and companies in EU Member States.

Non-EU investors face stricter checks and longer review times.

What documentation is required for the foreign investment screening process in Romania?

You need to provide detailed info about the investor, the investment, and its impact on sensitive sectors.

Giving accurate and complete information is crucial to avoid fines.

Is there a filing fee for the foreign investment screening process in Romania?

Yes, a €10,000 fee was introduced in December 2023.

This fee is returned if the investment doesn’t need to be reviewed.

How does Romania’s foreign investment framework align with EU regulations?

Romania’s rules now follow EU FDI Regulation 2019/452.

This ensures Romania’s policies match EU standards.

The goal is to attract foreign investment while protecting national interests and following EU directives.

Romanian Legal System

Romanian Law: An Overview of the Legal System in Romania

by Simona Rotaru Consulting

Romanian Law: An Overview of the Legal System in Romania

In the Romanian Law, the legal system in Romania is based on the civil law system.

The main sources of law are the Constitution, treaties, and legislation.

The Constitution of Romania is the supreme law of the country and it determines the structure of the government and the rights of the citizens.

The Romanian legal system is divided into four main branches: administrative law, civil law, criminal law, and constitutional law.

Administrative law deals with the relations between the state and the individuals.

Civil law deals with the relations between individuals.

Criminal law deals with crimes and punishment. Constitutional law deals with the interpretation of the Constitution.

The judiciary in Romania is independent of the executive and legislative branches of government.

The highest court in Romania is the Supreme Court, which consists of nine judges appointed by the President for a six-year term.

There are three types of courts in Romania: criminal courts, civil courts, and administrative courts.

Criminal courts deal with crimes punishable by imprisonment for more than one year.

Civil courts deal with disputes between individuals or legal entities.

Administrative courts deal with disputes between individuals and the state.

Constitutional Law in Romania

​If you are thinking about doing business in Romania, it is important to understand the country’s constitutional law.

This area of law governs the relationships between the state and individuals, as well as the rights and duties of Romanian citizens.

The Constitution of Romania is the supreme law of the country and it is the foundation of the legal system.

All other laws must be in line with the Constitution and any law that goes against it is void.

The Constitution guarantees equality before the law for all citizens, regardless of their race, ethnicity, religion, or gender.

It also protects the right to life, liberty, and security of the person.

Everyone has the right to freedom of expression, assembly, and association. Romania is a secular state and everyone is free to practice their religion.

The Constitution provides for a separation of powers between the executive, legislative, and judicial branches of government.

The Constitution requires that the judiciary be independent from the other branches of government.

Judges are appointed by the President on the proposal of the Superior Council of Magistrates, a body that is itself appointed by Parliament.

Romanian lawyers must have a law degree from a Romanian university and must pass a bar exam in order to be licensed to practice law.

Foreign lawyers may be admitted to practice law in Romania if they have a law degree from a foreign university and pass a Romanian language proficiency exam.

Criminal Law in Romania

The Romanian criminal justice system is based on the continental law system, and its procedures are regulated by the Romanian Code of Criminal Procedure.

The main body of criminal law is codified in the Penal Code.

The Penal Code sets out the general principles of criminal law, as well as the specific offenses that are defined as crimes.

The Code of Criminal Procedure regulates the procedures that are to be followed in a criminal trial.

In Romania, there are two types of courts that hear criminal cases:

  • the Courts of First Instance and
  • the Courts of Appeal.

The Courts of First Instance are competent to hear cases involving less serious offenses, while the Courts of Appeal are competent to hear cases involving more serious offenses.

A criminal case is initiated by the Prosecution Office, which is responsible for investigating crimes and bringing charges against suspected criminals.

The Prosecution Office is headed by the Prosecutor General, who is appointed by the President of Romania.

Once a criminal case has been initiated, the suspected offender is entitled to a fair trial.

This includes the right to a public trial, the right to be represented by a Romanian lawyer, and the right to appeal the decision of the court.

The sentence that is imposed on a convicted offender depends on the severity of the offence. For less serious offences, the offender may be given a suspended sentence or a fine.

For more serious offences, the offender may be given a prison sentence.

In addition to the criminal penalties that can be imposed, offenders may also be required to pay compensation to the victims of their crimes.

This can be ordered by the court as part of the sentence, or it can be agreed to by the parties in a civil settlement.

Compensation may be ordered for physical or psychological injuries that have been suffered by the victim, as well as for financial losses that have been incurred.

In some cases, the court may also order the offender to pay restitution to the victim.

This is an order to return property that has been stolen or damaged as a result of the crime.

Civil Law in Romania

​If you are thinking of expanding your business into Romania, it is important to have a basic understanding of the Romanian civil law system.

This system is based on the German civil law system and shares many similarities with other civil law systems in Europe.

However, there are also some important differences that you should be aware of.

The Romanian civil law system is codified, which means that the majority of laws are written down in a single code.

The code is divided into a number of different sections, each dealing with a different area of law.

The most important section for businesses is the one dealing with contract law.

Overall, the Romanian civil law system is relatively favorable to businesses.

However, there are some important differences that you should be aware of before expanding your business into Romania.

Corporate Law in Romania

​Since Romania joined the European Union in 2007, the corporate law landscape has been rapidly evolving.

The overall regulatory framework is still in the process of being harmonized with EU standards and best practices.

This can be seen as both an opportunity and a challenge for businesses operating in Romania.

One of the key areas of corporate law in Romania is labor law.

The Romanian Labor Code sets forth the rules and regulations governing the employer-employee relationship.

Some of the key areas regulated by the Labor Code include hiring, wages, working hours, and termination of employment.

Another important area of corporate law in Romania is tax law.

Romania has a variety of taxes that businesses must comply with, ranging from income tax to value added tax (VAT). businesses must carefully navigate the Romanian tax system in order to avoid penalties and ensure compliance.

Last but not least, businesses operating in Romania must also comply with EU and Romanian competition law.

This area of law regulates anti-competitive practices such as cartels and monopolies. businesses operating in Romania must be aware of these rules in order to avoid fines and other penalties.

Overall, the corporate law landscape in Romania is still evolving.

However, businesses operating in Romania can take advantage of this by staying up-to-date on the latest legal developments and ensuring compliance with all applicable laws and regulations.

Tax Law in Romania

​In Romania, the tax law is complex and ever-changing, which can make it difficult for businesses to comply.

One area that is particularly confusing is the rules around foreign businesses.

If you are a foreign business with employees in Romania, you need to be aware of the various tax and social security obligations that you have.

This includes withholding taxes from your employees’ salaries and paying into the Romanian social security system.

Failure to comply with these obligations can result in heavy fines, so it is important to make sure you are up-to-date with the latest changes.

Keeping track of the constantly changing law can be a challenge, so it is a good idea to hire a specialist tax advisor to help you ensure compliance.

If you are an employee in Romania, you should be aware that your employer is required to withhold taxes from your salary.

These taxes go towards your social security contributions and income tax.

The amount of tax you pay will depend on your salary and where you live in Romania.

In general, the tax rates are lower than in many other countries, which makes Romania an attractive place to work for foreigners.

However, it is important to remember that you are still required to pay taxes on any income you earn in Romania, even if it is from a foreign source.

This includes things like interest from a bank account or dividends from stocks.

If you are self-employed in Romania, you are responsible for paying your own taxes and social security contributions.

The good news is that there are a number of deductions and exemptions that you can claim to reduce your tax liability.

Keeping track of all the different tax rules and regulations can be a challenge, but it is important to make sure you are compliant. Non-compliance can result in heavy fines, so it is always better to be safe than sorry.

If you are thinking of doing business in Romania, or are already doing business in Romania, make sure you are up-to-date with the latest tax law changes.

This way you can avoid any penalties and make sure you are complying with all the relevant rules and regulations.

Labor and Employment Law in Romania

The Romanian labor law system is based on the Constitution of Romania, international labor conventions, and domestic legislation.

The Constitution of Romania provides for the right to work, the right to choose a job, the right to just and favorable working conditions, the right to rest and leisure, and the right to protection against unemployment.

The Labor Code is the main source of Romanian labor law.

The Code regulates the relations between employers and employees, including hiring, wages, working hours, safety and health, and termination of employment.

The Code also establishes the rights and obligations of trade unions and employers’ organizations. Trade unions have the right to negotiate collective agreements with employers and to represent employees in disputes before labor courts.

Employers’ organizations have the right to represent employers in collective bargaining and to provide assistance and advice to employers.

The Ministry of Labor and Social Protection is the government body responsible for labor law enforcement. The Ministry has inspectors who investigate complaints of violations of labor law and can impose penalties on employers who violate the law.

The labor courts are responsible for resolving disputes between employees and employers.

The courts have the power to order employers to pay back wages, reinstate employees who have been wrongfully terminated, and impose other remedies.

Romanian employee may be employed under an individual labor contract or a collective labor contract.

  • Individual labor contracts are between an employer and an individual employee and are the most common type of contract.
  • Collective labor contracts are between an employer and a trade union and cover all employees of a particular company or sector.

Employees have the right to receive a written copy of their labor contract.

The contract must be in the Romanian language and must contain certain information, such as the names of the parties, the duration of the contract, the nature of the work, the place of work, the wage, and the working hours.

Employees can only be required to work overtime if it is provided for in their contract or if they give their consent.

Overtime work must be compensated at a rate of at least 1.5 times the regular wage.

Employees are entitled to paid annual leave of 20 days. Employees who have worked for more than 10 years are entitled to 30 days of annual leave.

Regulatory and Compliance Law in Romania

​Much like in any other country, businesses in Romania must comply with a variety of regulatory and compliance laws.

Depending on the type of business, there may be different laws that apply.

For example, businesses that deal with food must comply with food safety laws, while businesses that manufacture products must comply with product safety laws.

There are also general business laws that all businesses must comply with, such as labor laws, tax laws, and environmental laws.

Failure to comply with any of these laws can result in costly fines or even jail time.

That’s why it’s so important for businesses in Romania to have a strong compliance program in place.

A good compliance program will help ensure that all employees are aware of the laws that apply to the business and the proper procedures for following those laws.