DOING BUSINESS IN ROMANIA IN 2019
For over a decade, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Romania business registration ii) business licensing iii) Romania business banking solutions iv) visa options and staff recruitment strategies and v) workspace rental solutions.
Romania is a former Soviet country, which struggled immensely in transition, but since 2000, it has regularly been one of Europe’s fastest growing economies. Romania has had strong growth due to a wealth of natural reserves fueling heavy industry and good investment in infrastructure providing for the financial sector.
Summary table of Romania company registration
|Summary||Tax-resident LLC||Joint stock company||Free zone LLC||Limited liability partnership||Representative office|
|Also known as||SRL||SA||Zona Libera||Partneriat cu raspundere limitata||Reprezentanta a firmelor straine|
|Best use of company?||All products and services||Close a customer deal now||Manufacturing and export trading||Professional services||Marketing & research|
|How soon can you invoice Clients\sign sales contracts?||2 weeks||3 weeks||3 weeks||3 weeks||N/A|
|How soon can you hire staff?||2 weeks||3 weeks||3 weeks||3 weeks||4 weeks|
|How soon can you sign a lease agreement?||2 weeks||3 weeks||3 weeks||3 weeks||N/A|
|How long to supply corporate bank account numbers?||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|How long to supply company registration \ tax numbers?||2 weeks||3 weeks||3 weeks||3 weeks||4 weeks|
|Corporate tax rate on annual net profits?||16%||16%||16%||16%||€4,000|
|Limited liability entity?||Yes||Yes||Yes||No||No|
|Government grants available?||Yes||Yes||Yes||Yes||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/ legal representative required?||No||No||No||No||No|
|Minimum paid up share capital?||€50||€20,000||€50||€45||None|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||No|
|Corporate bank account location?||Alpha Bank||Bank Leumi||Unicredit||BRD – Groupe Société Générale||Raiffeisen Bank|
|Can secure trade finance?||Yes||Yes||Yes||Yes||No|
|VAT payable on sales to local customers?||19%||19%||19%||19%||None|
|Average total business set up engagement costs?||€8,820||€8,820||€14,620||Contact us||€10,120|
|Average total engagement period?||2 months||2 months||2 months||2 months||2 months|
Romania business setup summary
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Advantages and disadvantages
Advantages of Romania company registration
- It is easy to set up a business in Romania:
- A Romanian limited liability company can be registered within 2 weeks, with only 1 director and 1 shareholder, who can be of any nationality;
- The minimum paid up capital required is only €45, and our Client does not need to travel to complete corporate bank account opening and company registration;
- Opening global corporate bank accounts to assist Romania company registration is easy. Healy Consultants works with internationally recognised banks, such as Citibank, to provide corporate bank account services.
- Romania is a developing economy which offers the following advantages:
- Romania currently has a GDP of US$178 billion and is growing at a steady rate of 4.2% year on year. Private consumption and high investment rates of 24.7% of GDP (highest in the EU) are the key drivers of this growth;
- Romania has a growing export sector. Its top export industries are i) vehicle parts, ii) insulated wire, iii) cars, iv) refined petroleum and v) wheat;
- Due to its EU market, a Romanian company will allow our Clients i) access to a massive consumer base of 509 million people ii) free movement of goods and labour and iii) absence of withholding taxes on goods sold within the EU;
- Additionally, the country’s strategic location in Eastern Europe allows our Clients access to Russia’s market of 144 million people. Furthermore, a collaboration agreement between Romania’s and Russia’s Chamber of Commerce and Industry was signed in 2008 to bolster trade between two countries;
- Labour costs in Romania are low. The average hourly labour cost is €6, which is the second lowest figure amongst EU Member states;
- Romania has considerable reserves of iron ore, tungsten, and especially, coal, with over 34 million tonnes being mined annually, making Romania an attractive location for the mining industry.
- Our Clients, setting up a Romania company also enjoys other benefits including:
- The corporate tax rate in Romania is relatively low at only 16%;
- Romania is part of the Single Euro Payments Area (SEPA) where over 20 million businesses can make fast and secured transfer between banks in the Euro zone;
- Romania is positively ranked as the 36th in ease of doing business by the World Bank in their annual Doing Business survey.
- There are 6 free trade zones in Romania that offer numerous attractive incentives to companies belonging to the manufacturing, logistics and export industry in the country. The main incentives are as below:
- All goods that are traded within the free zones are completely exempt from paying VAT and customs duties;
- All companies are subject to a low corporate tax rate of only 5%;
- All the 6 free trade zones are located in geographically favourable areas that enable smooth operation of ships to and from the port areas, thereby making Romania one of the attractive international trading destinations.
Disadvantages of Romania company registration
- The official language in Romania is Romanian. Only a small fraction of people in Romania speak English. English speaking businessman may face communication barriers;
- Romania is negatively ranked as the 62nd most competitive economy in the world in the Global Competitiveness Report 2016 – 2017;
- Romania is negatively ranked as the 58th least corrupt country in the world, according to the 2015 Corruption Perceptions Index by Transparency International, a global measure of inhibiting corruption amongst public officials and politicians;
- Romania has frequent changes in its accounting and taxation legislation in just over a few years’ time. Therefore, foreign entrepreneurs are often required to source local suppliers to keep up with the changing regulations in the country;
- Romania is not a part of the Euro Zone. As a result, all payments are made and received in the local currency RON within the country. However, most of the companies have their i) high-end consumer products as well as ii) debts/loans priced in Euros. This poses administrative and operational challenges for these companies.
- It is easy to set up a business in Romania:
Best uses for a Romanian companyClients who wish to setup a manufacturing company within the EU can take advantage of:
- Romania’s 16% corporate tax rate, one of the lowest in the EU;
- The absence of withholding taxes for goods sold within the EU;
- Romania’s low labor costs;
- Highly skilled employees from all over Europe that can work in the country without an employment visa.
Healy Consultants’ video guide on Romania company registration
- Time to incorporate: Two weeks
- Cost to set up: €8,820
- Minimum capital: €50
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 16%
- Corporate tax base: Territorial
- Shelf companies: No
- Main company type: S.R.L.
Useful links for Romania
Government and public authority websites:
- PWC – Doing business in Romania
- Doing Business in Romania
- PKF – The Romanian Tax Guide
- Romania Highlights 2016
- Commercial Laws of Romania
- Doing Business in Romania
- FRD – Doing business in Romania 2014