THE INCORPORATION OF A COMPANY IN ROMANIA: KEY STEPS
The most common company status in Romania is Limited Liability Company (Societate cu răspundere limitată - SRL). The main characteristics of the Romanian LLC are:
1. The number of partners may not exceed 50; 2. Partners may be Romanian or foreign citizens; 3. It is possible to create a Romanian LLC with a sole partner; 4. The minimum share capital is of RON 200 (i.e. approximately euro 45); 5. The transfer of shares is free of charge among partners, but requires the consent of three quarters of the partners when transferring such to third parties; 6. The appointment of an auditor is mandatory only if the number of partners is higher than 15.
The phase of incorporating the Romanian company
The process of incorporating a Romanian company with the status of a LLC must follow the following chronology:
• Preparation and drafting of the articles of association; • Translation and authentication of the provided documents if the partners or the director are/is (a) foreign citizen(s); • 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 (CUI) from the Trade Register (essential in order to engage the legal liability of the company) • Opening the bank account of the company (it is an account separate from the capital deposit account).
The process of incorporating a Romanian company varies thus between 2 and 5 weeks, according to the citizenship of the partners, Romanian or foreign.
Registration of the company for VAT purposes
After the incorporation of the company, a specific formality follows at the Romanian Tax Administration, so that the company should be subject to the payment of VAT.
Certain criteria have to be met, especially at the level of the office where the company operates and a control shall be carried out for such purpose by the administration at the registered office of the company.
Registration with the Register of Intra - Community Operators
Romanian companies (whether or not they are registered for VAT purposes in Romania) contemplating to carry out intra-community operations (intra-community acquisitions / deliveries / services) have to request their registration with the Register of Intra-community Operators (ROI) in order to obtain an intra-community VAT number, before carrying out the concerned transactions.
In order to prepare the registration file with ROI, several steps have to be taken, particularly involving the procurement of the criminal record certificate for all partners and directors of the company. The duration of the ROI registration process is theoretically of 2 to 4 weeks.
Domiciliation of the registered office
As we have just seen, the registration of a company with the Trade Register is possible only if that company has a registered office.
Hosting the registered office is not a common service in Romania, but certain business centres offer this service and LPG România has partnerships in this field as well.
Taxation
Company tax:
Corporate taxation will take:
- either the form of a turnover tax: 1% of turnover and income if the turnover is less than EUR 1,00,000 and it has at least one employee, or 3% if the company has a turnover of less than EURO 1,000,000, but has no employees;
- or the form of a profit tax: 16% of the profit when the turnover is over EUR 1,000,000 or if the company chooses this system and has a capital of more than EUR 10,000 and hires at least two employees.
VAT
The current VAT rate is of 19%.