INCORPORATION OF A COMPANY IN ROMANIA
The incorporation of a company in Romania has many advantages, both in terms of the abundance of skilled labour offered by the country and for its fiscal attractiveness, with one of the lowest rates of profit tax in Europe, at a rate of 16% from the profit (or 1% of income, as appropriate).
CHOOSING THE COMPANY STATUS
The joint-stock company (Societate pe acțiuni - SA) and the limited liability company (Societate cu răspundere limitată -SRL) are the two statuses usually chosen by entrepreneurs who want to incorporate a company in Romania.
The process of incorporating a company in Romania begins with choosing the name, identifying a registered office and opening a bank account with a Romanian bank to deposit the capital. Once the capital is deposited with the bank, the associates (or shareholders) must have the incorporation documents of their Romanian company (SA or SRL) submitted with the Trade Register and thus obtain their registration with the Romanian Trade Register. Then, it will be necessary to proceed with the tax registrations and the recording with the Labour Inspectorate if the employment of salaried staff is planned.
The share capital of a Romanian joint-stock company (SA) is of at least RON 90,000 (approximately EURO 21,000) and can be paid up to 30% only at the time of incorporation, provided that the remaining 70% is paid within 12 months after the registration with the Trade Register.
The share capital of a limited liability company in Romania (SRL) is of only RON 200 (approximately EURO 45).
The statistical observation of the incorporation of companies in Romania shows that entrepreneurs clearly prefer the SRL status than such of a SA, probably because:
- The joint-stock company (SA) requires the appointment of three auditors (and 1 deputy), whereas the Romanian SRL does not require in principle the presence of an auditor.
- The joint-stock company (SA) requires the presence of at least two shareholders, whereas a SRL can consist in principle of one sole partner.
TAX REGIME OF ROMANIAN COMPANIES
Romanian companies with an annual turnover of less than EURO 1,000,000 are not subject to profit tax, but instead pay income tax as micro-enterprises amounting to:
- 3% of their income if they do not hire any employees;
- 1% of their income if they hire at least one employee;
On the other hand, if the turnover is higher than EURO 1,000,000 or if they chose this regime, companies no longer pay income tax as micro-enterprises, but a tax equal to 16% of their profit (note that IS is paid in advance each quarter).
REGISTRATION FOR VAT PURPOSES
The registration for VAT purposes of Romanian companies is mandatory for all companies with an annual turnover of over RON 300,000 (approximately EURO 65,000) and remains optional for all such with a turnover of less than EURO 65,000 per year.
When optional, VAT registration enables companies to deduct VAT on the purchases they make, but requires them to charge VAT on the products or services they invoice.
Romanian companies carrying out intra-community transactions (acquisition, deliveries, services) have also to apply for a Romanian intra-community VAT number. A company which has an intra-Community VAT number and which is not registered for VAT purposes shall pay 19% VAT on invoices from its suppliers (services and/or goods) from the EU.
Update: 2018