Tag National Agency for Fiscal Administration

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.

If you run a business in Romania, you might be wondering whether you need to register for VAT (value-added tax) and how to do it. VAT is a type of consumption tax that is added to the price of goods and services sold by businesses. It is collected by the businesses on behalf of the government and paid to the tax authority.

Registering for VAT is not only a legal obligation for some businesses, but also a smart move that can boost your credibility, expand your market, and save you money. In this article, we will explain everything you need to know about getting a VAT number in Romania, from the eligibility criteria to the registration process, and from the obligations to the advantages of being a VAT payer.

As an experienced accountant office in VAT procedures, we have helped many small and medium-sized businesses obtain a VAT number in Romania and navigate the complex tax system. We will share with you some tips and tricks that will make your life easier and your business more successful.

Who needs to register for VAT in Romania?

The first question you need to ask yourself is whether you need to register for VAT in Romania at all. The answer depends on several factors, such as:

• Your turnover: If your turnover exceeds 300,000 RON (about 62,000 EUR) in a calendar year, you are obliged to register for VAT in Romania. If your turnover is below this threshold, you can choose to register voluntarily or opt for a simplified tax regime that exempts you from VAT.
• Your intra-community transactions: If you perform intra-community acquisitions or supplies of goods or services, meaning that you buy or sell goods or services from or to other EU countries, you are obliged to register for VAT in Romania, regardless of your turnover. This also applies if you provide electronic services (such as software, e-books, online courses, etc.) to non-VAT payers (such as individuals or non-profit organizations) in other EU countries.
• Your location: If you are established in another EU country and only perform occasional transactions in Romania, you are not obliged to register for VAT in Romania, but you might need to appoint a fiscal representative who will handle your VAT obligations on your behalf.

Of course, there are some exceptions and exemptions that apply to certain types of businesses or activities.

For example, if you only perform exempt supplies of goods or services, such as education, health care, financial services, etc., you are not obliged to register for VAT in Romania. However, this also means that you cannot deduct or reclaim any VAT paid on your purchases or expenses related to your business activity.

How to register for VAT in Romania?

If you have determined that you need to register for VAT in Romania, the next step is to follow the registration process. The good news is that the process is mostly online and relatively straightforward.

The bad news is that it can take up to 30 days for your registration request to be approved or rejected by the competent tax authority.

Here are the steps involved:

• Fill out and submit the online form 088 (Declaration on the intention and ability to carry out economic activities involving operations within the scope of VAT) on the ANAF website (National Agency for Fiscal Administration). This form is mandatory for all businesses that want to get a VAT number in Romania and aims to verify their economic substance and credibility. You will need to provide information about your business activity, your associates, your bank account, your premises, your suppliers and customers, etc. You will also need to attach some supporting documents, such as the certificate of incorporation or registration of your business, the identity documents of the legal representative and the associates, the lease contract or proof of ownership of the business premises, etc.
• Fill out and submit the online form 010 (Declaration on tax registration / Statement for amending tax registration data) on the ANAF website. This form is used to request the issuance of a VAT number in Romania and certificate. You will need to provide information about your business name, address, legal form, fiscal regime, etc. You will also need to attach some supporting documents, such as the contracts or invoices related to the intra-community transactions or electronic services.
• Wait for the approval or rejection of your registration request by the competent tax authority. This can take up to 30 days from the date of submission of the forms and documents. You will receive a notification by email or post informing you about the outcome of your request. If your request is approved, you will receive your VAT number in Romania and certificate. If your request is rejected, you will receive an explanation of the reasons for rejection and instructions on how to appeal or resubmit your request.

Start charging and collecting VAT from your customers at the applicable rate (19%, 9%, or 5%, depending on the type of goods or services) and issuing invoices compliant with the legal requirements.

What are the obligations and advantages of being a VAT payer in Romania?

Once you have your VAT number in Romania, you will have some obligations and advantages that you need to be aware of. Here are the main ones:

• You will need to file monthly or quarterly VAT returns and pay any VAT due to the tax authority by the 25th day of the following month or quarter. The VAT returns are submitted online on the ANAF website and contain information about your VAT-related transactions, such as the total value of your sales and purchases, the amount of VAT charged and collected, the amount of VAT paid and deducted, etc. You will also need to submit recapitulative statements for your intra-community transactions and electronic services.
• You will need to keep accurate and complete records of all your VAT-related transactions and store them for at least 10 years. You will also need to issue invoices compliant with the legal requirements, such as including your VAT number in Romania, the date and number of the invoice, the name and address of the customer, the description and quantity of the goods or services, the unit price and the total price, the VAT rate and the amount of VAT, etc.
• You will be able to deduct and reclaim any VAT paid on your purchases or expenses related to your business activity from the VAT collected from your customers. This means that you will only pay the difference between the input and output VAT to the tax authority. If the input VAT is higher than the output VAT, you will be entitled to a refund of the excess amount. However, you will need to prove that your purchases or expenses are necessary and justified for your business activity and that you have valid invoices from your suppliers.
• You will benefit from simplified procedures and lower costs when trading with other EU countries or applying for EU funds. For example, you will not need to pay customs duties or import VAT when importing goods from other EU countries, you will not need to register for VAT in other EU countries where you perform occasional transactions, you will not need to charge VAT to your customers in other EU countries (except for electronic services), you will be able to use the reverse charge mechanism for certain transactions, etc.

Getting a VAT number in Romania is not as complicated as it might seem at first glance. If you follow this step-by-step guide, you will be able to complete the registration process smoothly and efficiently. However, if you encounter any difficulties or have any doubts, we recommend that you consult a professional accountant specializing in VAT procedures who can assist you with your specific situation.

Being a VAT payer in Romania can bring you many benefits for your business, such as increased credibility, access to EU markets, and tax savings. However, it also comes with some responsibilities that you need to fulfill diligently and accurately. By doing so, you will avoid any penalties or audits from the tax authority and ensure that your business complies with the tax regulations in Romania.

If you have any questions or feedback, please feel free to contact our specialized VAT accountants.