BUSINESS IN ROMANIA

Romania is a former communist country located in the south-eastern part of Europe, washed by the Black Sea and bordered by Bulgaria, Serbia, Moldova, Hungary and Ukraine. The Romanian communists were finally removed from power in the mid-1990s, and since then the country has been actively transforming its economy and increasing trade ties.

Romania joined the European Union in 2007. Today, foreign investors can find a lot of advantages for doing business on Romanian territory, besides, local authorities do not implement any special administrative obstacles for foreigners. The main condition is the creation of jobs and substantial investment in the local economy.

Business immigration to Romania is a good opportunity for foreigners to enter the international market of goods and services, access to European loans and guarantee of private property rights. The population of Romania in 2024 is about 19.8 million people, all of them potential buyers, and in total, more than 500 million citizens live in the EU countries.

Of course, the Romanian business environment is not perfect, corruption, bureaucracy, tax evasion and some other issues are still unresolved. Nevertheless, business in Romania will allow a foreigner to immigrate to the EU and take close family members with him, who can find jobs in Romanian companies or be educated in local universities.

How to start a business in Romania

Romania's economy has shown stable growth rates in recent years. The country's main trading partners are Germany, Italy and France. Unemployment in Romania does not exceed 5-6%, and inflation is about 7%.

Among the promising areas for investment are tourism, agriculture, automobile industry, services, trade and construction. Local laws do not provide any restrictions for foreign businessmen.

Business culture in Romania is not much different from most European countries. Punctuality, respect for elders, dress code is conservative, small gifts are welcome. The overwhelming majority of locals speak Romanian, but in business environment English, French and German are quite common. In principle, Romanians are quite polite and friendly people who treat foreigners favourably.

To move to Romania for business purposes for a period exceeding 90 days, foreigners from third countries (from outside the EU) must apply for a long-term visa (type D) at the Romanian Consulate in their country (see below). After that, at the Immigration Department of the local Ministry of Interior, the entrepreneur receives a temporary residence permit in Romania valid for up to one year, with the right to renew it. After 5 years, permanent residence is allowed, and after 8 years of uninterrupted residence in the country you can obtain Romanian citizenship.

Conditions for doing business and granting residence permit in Romania to foreigners

1. When applying for a long-term business visa to Romania, it is required to obtain permission from the local centre for trade promotion and foreign investment. For this purpose it is necessary to submit a competent business plan and fulfil the following conditions:

   • When establishing an LLC. The amount of investment is not less than 100 thousand euros and the creation of 10 jobs.

   • When establishing a JSC. The amount of investment is not less than 150 thousand euros and the creation of 15 jobs.

2. Obtain approval from the Immigration Directorate of the Romanian Ministry of Interior.

3. Provide economic benefit for the Romanian economy. Very often, in order to extend the residence permit, Romanian authorities require from foreign businessmen specific indicators from business activities, for example:

   • The residence permit is extended for three years if the investment amount is at least 500 thousand euros or more than 50 jobs have been created.

   • The residence permit is extended for one year if the amount of investment is at least 150-200 thousand euros or more than 25 jobs are created.

In each individual case, in order to choose the most suitable option of business immigration to Romania, it is better to consult with specialists, including employees of the Romanian Consulate.

Cost, terms and procedure of company registration in Romania

In the annual ranking of the DOING BUSINESS agency out of 190 countries of the world on the accessibility of opening and running a business, Romania ranks 55th. It is not the best indicator among European countries, but the country ranks higher than Bulgaria and Italy. Let's consider the main stages of business (company) registration in Romania.

1. Verification and registration of the unique name of the company through the Trade Register Office. The procedure is carried out during the day online, the cost is 72 Romanian lei..

2. The use of words such as ‘Romanian’, ‘Academic’, ‘University’, ‘National’ and so on in the company name requires special authorisation from the General Secretariat of the Romanian Government.

3. Opening a deposit account in a Romanian bank and depositing the required amount of funds. The procedure is usually free of charge and takes no more than one day.

4. Registration in the commercial register at the location of the company's head office. For this purpose, all documents must be prepared, including the articles of association, memorandum of association and so on. The process takes up to 3 days and costs about 700 lei, depending on the city. After that, a special certificate of incorporation is issued to the owners.

5. Registration as a VAT payer with the tax authorities. It is done free of charge within 3 days.

6. Registration of the company's employees with the Romanian Territorial Labour Inspectorate. It is done online and free of charge.

On average, the period of business registration in Romania takes 1-2 weeks.

Forms of ownership for business in Romania

From the choice of the right form of ownership for a company in Romania, based on the amount of planned investments, the number of owners, the type of activity and other factors, will depend on the effectiveness and prospects of business development. Let's consider the most popular types of companies in Romania.

Limited Liability Company (Societate cu raspundere limitata). Most foreign entrepreneurs choose this form of ownership to run small and medium-sized businesses in Romania. The minimum requirements for the authorised capital are 200 lei. The number of shareholders can be from 1 to 50 both natural persons (including foreigners) and legal entities. The nominal value of one share must be at least 10 lei. Management is carried out by the board of directors or one director. The liability of the owners is limited to contributions to the authorised capital.

Joint Stock Company (Societate re actiuni). Suitable for large businesses in Romania. Requires a minimum of two shareholders. The amount of the authorised capital must be at least 90 thousand lei. The company's shares can be freely traded on the stock market. The most important decisions in the company's activity are taken by the general meeting of shareholders. The general management is carried out by the board of directors, supervisory board and manager.

Very often foreigners open in Romania branches of their own companies, which do not have the status of a legal entity, and the responsibility for the activities of the parent company.

Taxes in Romania

The Romanian government tries to make the country's tax system liberal and as efficient as possible. In many areas it succeeds, for example, some tax rates remain unchanged for more than 10 years or are reduced at all (VAT). Tax optimisation is the basis for running a profitable and successful business. However, one of the main problems in Romania is considered to be tax evasion, so the fiscal control by the state is quite strict, this also applies to foreigners.

Rates of main taxes in Romania in 2024

• Corporate income tax – 16%. Small companies, with annual income not exceeding 100 thousand euros, and the number of employees up to 9 people, enjoy benefits. It is also possible to choose a special regime where the corporate tax rate is only 3%.

• VAT. In 2016, the basic tax rate was reduced from 24% to 20% and in 2017 to 19%. Preferential rates are 9% (groceries, medicines, equipment for the disabled), 5% (social housing, periodicals) and 0% (domestic and international passenger transport).

• Income tax – 10% (from 1 January 2018. The previous rate was 16%)

• Dividends, royalties, interest – 16%. For non-residents, the tax on dividends has been reduced to 5% since 2017.

The calendar year in Romania starts on 1 January and ends on 31 December. Double taxation agreements have been signed with many countries.

Business visa to Romania

Doing business in Romania with permanent stay on the territory of the country implies preliminary registration of a long-term visa (type D/AC) at the Romanian Consulate. For this purpose, the foreigner must personally apply to the diplomatic office and provide a list of necessary documents.

Documents for a business visa to Romania

1. Completed visa application form.

2. A valid passport.

3. Positive decision issued by the Romanian Centre for Trade and Foreign Investment Promotion (the document is valid for 6 months).

4. Certificate of no criminal record.

5. Health insurance for the whole period of validity of the visa.

6. Documentary proof of a place to live in Romania (rent or ownership).

7. Receipt of payment of the state duty (120 euros).

The period of issuing a business visa to Romania may take from 30 to 45 days, depending on the circumstances.

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