Romania Limited Liability Company in 2023
Since 2003, Healy Consultants Group PLC assists our multinational Clients with global business set up. Thanks to its ‘micro company tax regime’, Romania is an attractive low tax location for entrepreneurs looking to start a business in the European Union (EU). Romania is an EU member but does not use the euro currency, and is not part of the Schengen Area.
Benefits of a Romania LLC
- Companies with a turnover below €1 million benefit from a reduced corporation tax rate of i) only 1% when at least one full time employee is in Romania or ii) 3% if there is no employee in the country.
- Companies exceeding the turnover threshold of €1 million for a single year can still benefit from the above tax regime by maintaining i) a minimum paid up capital of US$10,715 and ii) two employees in Romania.
- For the first ten years, Romanian R&D companies are legally exempt from corporation tax if they engage solely in innovation and scientific research and technology development.
- All other Romanian companies not eligible for the above tax benefits will suffer corporation tax 16% on their annual net profits.
How multi-national Clients can best use a Romania LLC
- Clients interested in doing business within the EU and registering for an EU VAT number to easily trade with other European Union members. These companies can also take advantage of multiple EU directives.
- Our multi-national Clients can use a Romania LLC to set up an EU holding company. The low tax on dividends and Intellectual Property Rights, at 5% and 10% respectively, is also attractive attribute;
- Clients who wish to set up a low tax manufacturing and distribution company within the EU.
- Clients who are interested is a reputable low tax trading entity.
- Clients who wish to avail of a pool of local low-cost employees and physical office or warehouse facilities.
- Because Romania has low labour costs and no withholding taxes for goods sold within the EU, a Romanian LLC is an ideal entity to use for manufacturing within the EU.
- Because Romania is one of Europe’s fastest-growing economies, and because of the country’s Micro Tax Regime, an LLC is ideal for small and medium-sized entities.
- Romania currently has double taxation treaties with 86 countries worldwide. A Romanian LLC has access to, and full use of, these treaties. To apply the provisions of the relevant double taxation treaty, the non-resident recipient of the income should provide to the Romanian payer a tax residence certificate attesting its tax residency.
- There are no foreign currency controls in Romania. The Romanian currency is fully convertible. Foreign investors may freely repatriate profits and dividends in hard currency. Romanian LLCs may make payments in foreign currency to non-residents without prior approval. Transactions include imports of goods and services, dividend payments and profit repatriation.
- A Romanian LLC will receive VAT refunds from the Romanian Government when i) they conduct cross border transactions in another EU member state where they are not VAT registered and ii) conducting business with non-EU member states where they are not VAT registered.
Problems with a Romanian LLC
- The official language in Romania is Romanian. Only a small fraction of people in Romania speak English. English speaking businessmen will face communication barriers.
- Romania frequently changes accounting and taxation legislation. Annually, multi-national Clients need to keep up to date with changing regulations in the country.
- Because Romania does not use euros, all local transactions are made and received in the local currency. For example, Romanian employees and suppliers must be paid in leu.
- Romania is negatively ranked as the world’s 69th least corrupt country, according to the 2020 Corruption Perceptions Index, a global measure of corruption among public officials and politicians. Consequently, multi-national Clients cannot rely on Romanian laws and courts to protect their investments.
- Romania has a low-tech economy with low wages and is therefore not very attractive and highly skilled employees are not easily available.
- The Romanian government requires monthly and quarterly reporting on sales tax and payroll.
Multi-currency bank account opening
Healy Consultants Group PLC assists our multinational Clients open a Romanian multi-currency corporate bank account with a top-tier international bank in Romania including i) HSBC and ii) Standard Chartered Bank and iii) Raiffeisen Bank and iv) UniCredit Bank and v) Alpha Bank. Our multi-currency corporate bank account strategy is:
- We agree the optimum corporate structure and local bank solution. A quality business plan is prepared for the bank;
- Our Client deposits a minimum paid up share capital of €11,000 to a temporary cumulative corporate bank account; a certificate of deposit is issued.
- After the Romanian LLC is incorporated, the cumulative account is transferred to an active multi-currency corporate bank account;
- If required, our team will attend bank interviews or meetings on behalf of our Client to secure timely corporate bank account approval;
- Once the corporate bank account is approved, Healy Consultants Group PLC couriers bank account details and the internet banking device to our Client.
Accounting and tax and legal considerations
- Romanian VAT is 22%. Companies with annual revenue of more than €65,000 must register for VAT. Vat payments are filed and submitted on a monthly basis;
- Tax returns are filed monthly and quarterly. There is also one final year-end submission. Payments are made by the 25th day following the tax period.
- A Romanian LLC can be set up remotely, without the need for the director or shareholder to travel to Romania.
- The Romanian Trade Register allows users to view information about Romanian companies including i) company’s name and business address ii) details of the managing body and ownership iii) contact details and iv) subscribed capital and business activity.
- There is no requirement to appoint a local director or shareholder for an LLC.
Business set up fees and timelines
- Healy Consultants Group PLC’s fees to incorporate a Romanian LLC amount to €3,850. Average engagement fees amount to €8,820 including i) Romanian LLC formation and ii) corporate banking account opening.
- Refer to Romania LLC invoice below.
Setting up a Romanian LLC is easy if you know how. Contact Healy Consultants Group PLC to determine how we can assist with your business strategy.