COMPANY FORMATION ROMANIA

Company Formation in Romania is a complicated bureaucratic process, we are very well aware of that.

For this reason we streamlined the process as much as possible and offer all our experience and talent in dealing with local authorities such as the ONRC (Trade Registry) and ANAF (Tax Man).

In the following text, you will find key data and an executive summary to assess if Romania is the right place for your entrepreneurial aspirations:

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What are the benefits of a Company Formation in Romania?

  • Extremely low corporate income tax rate of 1% / 3% for Micro-Companies (2024)
  • Regular Corporate income tax rate of 16% on corporate profits
  • Very low dividend tax rate of 8% on distributed dividends
  • Limited liability for shareholders
  • Progressive and politically stable EU jurisdiction
  • Very low wage level
  • Very low real estate prices
  • Lightning fast and low cost communication technology
  • A very business friendly environment, including taxation
  • No advance payments of VAT or income tax
  • Low cost accounting and fiscal representation
  • Access to subsidies from Romania and the European Union
 

Under these ideal circumstances, we are not surprised at all, that more and more global players, but also SMEs are setting up branch or shop in Romania.

How much does it cost to form a company in Romania?

We charge 199 € for a streamlined company formation. This does not include the provision of a registered office, registered agent, notary, interpreter, translation or legalization fees. You can find our detailed fee schedule here:

Questions about doing business in Romania

A company in Romania can be formed by any person who exceeds the legal age of 18 years, who can provide a clean track record with the police and who is of mental health. Foreigners with or without residence in Romania can also form a company in Romania, but it is necessary to proof the identity and residence of such an individual.

In order to form a company in Romania it is necessary to file loads and loads of paper work, provide a registered office, name the shareholders and directors, proof their identity and residence, suggest and reserve company names, provide the share capital, describe the nature of business and submit all signed application documents to the trade register.

A notary appointment with a certified interpreter is required and once the company is established, it’s time to register it for tax purpose and to appoint a legal representative for tax affairs, apply for the relevant tax numbers and open a business bank account with a reputable, stable bank.

  • Proof of Identity (Passport Copy)
  • Proof of Residence (Official Document confirming residence)
  • Our filled and signed Order Form
  • Proof of payment of our rendered fees

Many providers will promise you 3 – 7 days, which is technically not possible. Just the name reservation with the trade registry takes about a week, in case they are not refusing the name application which they happen to do from time to time.

Our answer to the question how long a company formation takes, goes as follows:

In case we have received all necessary paperwork from you, we reckon 3 – 4 weeks until we can obtain the original formation documents. You will need the originals in order to open a business bank account, digital copies are not accepted.

Meanwhile we apply for tax numbers and as a consequence, you can open a corporate bank account in Romania.

From filing the documents until your company is fully functional, which means not only formed but also able to receive and send funds from clients or to suppliers, we state a realistic time frame of 4 – 6 weeks.

During the global pandemic we also experienced delays of up to three weeks because of closed or understaffed institutions.

In case of a legal entity such as S.R.L. or S.A. the following tax rates apply:

Corporate Income Tax

  • 1% up to 60.000 € turnover (starting from 1.1.2024)

  • 3% up to 500.000 € turnover (starting from 1.1.2024)

  • 16% on the profit in all other cases

    ** Applies only if the following conditions are met:

    – At least one full-time employee subject to social security with residence in Romania.

    – Business activities with less than 20% share in the field of management consulting

    – Maximum of three companies with 1% / 3% taxation for shareholdings of 25% or more

Withholding Tax

  • The Withholding Tax is 8% on dividends

Value Added Tax

  • The VAT/TVA rate is currently 19% 

The following taxes and contributions are relevant for employers in order to make decisions for wages and the individuals receiving a salary or being self-employed:

Individual Income Tax

  • The income tax for individuals in Romania is 10%

Social Security Contributions

  • The Social Security Contributions amount to 35%

As of 1.10.2023, the minimum wage in Romania will be RON 3,300.

The minimum wage applies for a total working time of 167,33 hours per month.

An employee is entitled to 20 days per year of paid vacation.

Yes, you can be an employee of your own company in Romania. However, only full-time employees subject to social security with residence in Romania count in order to classify the company as a “microcompany”.

Without employees, the company must automatically pay tax on all profits at 16% in Romania.

You will achieve the maximum tax leverage if you emigrate to Romania, have your main residence there and manage the business yourself. Consequently, your Romanian company will pay 1% / 3% on sales or 16% on profits, as well as 8% dividend tax. If you do not distribute profits, there is no dividend tax either.

 

The Romanian tax system is quite a sensation, especially for micro-enterprises with an annual turnover of less than €500,000.