Business entities in Romania

Business entities in Romania

Thanks to its attractive tax system, EU membership and low-cost manpower, Romania is often considered for registration or relocation of light manufacturing businesses selling their products to European customers. Most of our Clients are consequently interested to register a limited liability company in one of the country’s industrial parks. Alternatively, other business entities can be used, such as the joint stock company or the branch. Please read the page below for further information available on the different types of business entities available in Romania, and their best uses.

The Romania limited liability company (SRL)

  • The Romania limited liability company can be registered by a single shareholder contributing a minimum of €50 (RON200). The shareholder(s) also have to appoint a director, who is not required to be resident in Romania or in the EU;
  • All Romanian limited liability companies are required to submit financial statements and tax returns to the Romanian tax authority each year. An audit is however required only if the LLC i) has over 15 shareholders or ii) has exceeded at least two of the following three thresholds: a) annual turnover over 7.3 million b) assets over 3.6 million and c) more than 50 employees;
  • Best uses for a Romanian limited liability company: a Romanian LLC is a good entity for most trading and manufacturing activities.

The Romania joint stock company (SA)

  • The Romanian joint stock company requires to have at least two shareholders and a minimum paid-up capital of €25,000. The Board of directors can have a single member, although it is customary to appoint at least three directors. Romanian JSCs also frequently appoint a Board of administrators, to ensure the interests of the shareholders are well served by the management of the business;
  • Like for LLCs, an audit of the financial statements is required by law if the JSC i) has over 15 shareholders or a Board of administrators or ii) has exceeded at least two of the following three thresholds: a) annual turnover over 7.3 million b) assets over 3.6 million and c) more than 50 employees. If no audit is required, the entity is still required to appoint internal censors (corresponding to internal auditors);
  • Best uses for a Romanian joint stock company: a Romanian JSC is the best business entity for projects involving higher amounts of investment or when the shareholders want to be freely able to transfer or sell their shares to third parties, without having to seek prior agreement from the other owners of the business.

The Romania free zone company (IDZ company)

  • Foreigners can register their Romanian business in the industrial parks of Romania. The benefits of doing so include i) exemption from custom duties ii) corporate income tax holidays iii) easier access to transportation infrastructure, manufacturing space and iv) simplified procedures to obtain manufacturing and construction permits;
  • Industrial park registration is only available to businesses running manufacturing and processing activities. The park authority will also require a business plan including financial projections, feasibility study and environmental impact study, and evidence the business will have the resources to cover its initial expenses;
  • Best uses for a Romania free zone company: Romanian companies are usually conducting light manufacturing activities for products then re-exported to France, Germany, the UK, Italy and other Western European markets.

The Romanian branch of a foreign company (branch office)

  • Foreign corporations can register a branch of their company in Romania. The same will require appointment of a resident representative, who can be a foreigner but then must hold a work permit if he is not citizen of one of the EU States. If needed, Healy Consultants can provide nominee services for professional passive resident representatives;
  • Best use for a Romanian branch office: the main advantage of registering a Romanian branch compared to a subsidiary is the ability to prepare consolidated accounts. Otherwise, it is usually better to opt for registration of a subsidiary.

The Romanian representative office of a foreign company (liaison office)

  • Registration of a representative in Romania will require appointment of a resident representative, who can be a non-EU citizen but then must hold a work permit. If needed, Healy Consultants can provide nominee services for passive resident representatives;
  • The representative office will not be legally tax exempt in Romania. Such office is subject to a flat corporate income tax amount of €4,000 per year;
  • Best use for a Romanian representative office: the Romanian representative office is a good option for a first venture in Romania, when our Client is not sure yet of his future expansion plans in this country.

Table of comparison between different entity types

Operations and logisticsLLCJSCFree zoneBranchRO
Locally known asSRLSAIDZ companyBranchRO
Doing business in Romania permitted?YesYesYesYesNo
Allowed to sign contracts with local Clients?YesYesYesYesNo
Allowed to invoice local Clients?YesYesYesYesNo
Can rent local office premises?YesYesYesYesNo
Allowed to import raw materials?YesYesYesYesNo
Allowed to export goods?YesYesYesYesNo
Accounting and tax
Corporate tax rate?16%16%16%16%€4,000
Corporate bank account?Alpha BankBank LeumiUnicreditAlpha BankBank Leumi
Statutory audit required?NoNoNoNoNo
Annual tax return to be submitted?YesYesYesYesNo
Access to DTAAs?YesYesYesYesNo
Company law
Issued capital required?€50€50€50NoneNone
Issued capital recommended?€50€25,000€50,000€50€50
Resident director required?NoNoNoNoNo
Local shareholder required?NoNoNoNoNo
Minimum number of directors?11111
Minimum number of shareholders?121Parent entityParent entity
Individual shareholders allowed?YesYesYesNoNo
Corporate shareholders allowed?YesYesYesYesYes
Public register of shareholders and directorsYesYesYesYesYes
Immigration
Can the entity hire expatriate staff?YesYesYesYesYes
How long to get work permit approved?3 months3 months3 months3 months3 months
Fees€8,820€8,820€14,620€10,120€10,120
Draft invoiceRomania LLC invoiceRomania JSC invoiceRomania JSC invoiceRomania branch invoiceRomania RO invoice

Contact us

For additional information on our business setup services in Romania, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Karen Lee, directly:
client relationship officer - Karen