Company registration in Romania. Micro-enterprise regime

*This fee is not inclusive of physical placement of any employees in the office. However, such placement is possible; the terms, cost and format should be agreed with the consultants of GSL Law & Consulting.

Step-by-step description of incorporation of a limited liability company in Romania (RO, SOCIETATE CU RĂSPUNDERE LIMITATĂ – SRL):

1. You need to decide on:

1. Company name to be checked for its availability (at least two names), such name:

• must not be identical to the name of an existing company;
• must end with a suffix denoting the type of entity (S.R.L.);

2. Сompany structure (administrator, members / associates known also as share-holders); The director of the company can also be a shareholder in the same company. If the director wants also to be legally employed in Romania to meet the microenterprise requirements, not being a shareholder is a condition and must apply for a long term stay visa for other purposes (commercial management of a company). The director must be a physical person even if the director is another legal entity. Shareholders can be either physical persons or companies, Romanian or foreign ones;

3. Registered office address;

4. Share capital and distribution of shares between members (RON 200, or ~ EUR 50);

5. Activity and geography of business. Indication of the main activity and also secondary activities.

2. Payment of fees

3. You need to provide documents for administrators / associates / attorneys:

• internal and international passports;
• proof of address (unless the internal passport contains an address stamp);
• if the shareholders are other legal entities, we need to collect the full corporate set. Since the documents are not drafted in Romanian language, in order to be recognized they will have to be translated in Romanian by an authorized translator and after certified by a public notary. Also, a trade register business extract (in Romanian) will be requested by the Registry.

4. Payment of share capital

Showing proof of payment of the share capital during the company incorporation process is not required. However, the law requires that at least 30% of the share equity capital must be deposited into the account of the company not later than 3 months after the date of company incorporation, but before* making any operations in and on behalf of the company and the rest of the capital can be deposited within 12 months after date of company registration (if the intake is in cash) and within 2 years (if the intake is in nature with immobile goods like terrains, buildings etc).

The amount in cash can be withdrawn after the company has been incorporated and registered.

*This means that the company must deposit 30% of the share equity capital (even before those 3 months) if there is needed to do any kind of operation in and on behalf of the company. If the company is just wanted to be incorporated and registered, but there is expected to be 0 effective activity then the deposit of 30% can wait up to 3 months.

5. Preparing a package of documents for company registration, having the documents signed by directors and members.

To prepare the constitutive documents, it is necessary to provide the following:

• Proof of the company name reservation availability confirmed by the Trade Register (valid 1 month);
• 2 forms which signed by the director of the company;
• Transfer of the company name agreement;
• Constitutive document (Act Constitutiv) signed by all the associates(members / shareholders);
• Declaration of compliance by administrator and members;
• Proof of company having an office to conduct business (lease agreement);
• Declaration stating the company’s business activities (Declaration model 2);
• Real beneficiary declaration duly signed;
• Due Diligence documents: administration contract, questionnaire, AML declaration.

If a member of the company is a legal entity, then additional documents will be necessary to disclose the entity’s structure and individuals within it:

• Extract from the trade register specifying the entity’s structure;
• Resolution of the shareholders in order to form a subsidiary / branch in Romania;
• Power of attorney authorizing to sign the constitutive documents and make necessary filings;
• Reference letter from a bank where the entity holds an account.

Company registration documents in Romania are filed in the Romanian language only. The fees for translation, notarization, legalization and apostille are charged additionally.

6. Filing a company registration application with the Trade Register. After receiving and successfully processing the application, the Registry issues a Certificate of Incorporation. The share capital is now deemed to be unlocked.

The affairs of a limited liability company in Romania are managed by the administrator which is the director of the company. The shareholders are the ones who take decisions regarding the company, but the director is going to execute them.

The director is able to represent the company in front of anyone else including authorities and institutions (Romanian or foreign ones). Only the director of the company is able to sign documents in and on behalf of the company which will bear their signature.

Documents signed in and on behalf of the company by a third-party / person which does not own the quality are considered nulled and are able to be revoked by the actual director and at express request of the director, that person might be even asked in justice to cover all the prejudices done to the company.

However, the director can legally empower other persons to represent the company and sign documents on his behalf through a power-of-attorney, but this aspect, according to provisions of art. 71 from Law of companies 31/1990 updated; shall be mandatory mentioned right from the beginning and expressly included in the Articles of Incorporation.

According to provisions of art.1913 al. (2), Civil Code of Romanian, administrators can be shareholders (or not), physical or even legal entities (including other companies) either they are Romanian or foreigners, but even in this last case, a physical person which is representing that legal entity is still required to be named as director and it requires a more complicated procedure, but it is still possible.

The minimum number of administrators is 1. The same individual can be both administrator and shareholder (associate). After there are over 15 shareholders, naming a financial auditory is mandatory.

The minimum number of shareholders / associates in a company is 1; they can be individuals or legal entities; there are no statutory requirements as to their residency. The maximum number of members is 50.

The minimum share capital is RON 200 (~ EUR 50) divided into shares of min. RON 10 (~ EUR 3) each. It must be paid up by the time of filing the company for registration.

Every company in Romania must have a registered office in the country of incorpora-tion. We also assist with setting up an office and establishing substance in Romania.

Romania has the most attractive tax regime for small businesses in the EU. A company is regarded a micro-enterprise if its revenue in the past years did not exceed EUR 500 000 .

The corporate tax rate will be:

Starting on 1 January 2024, micro enterprises are enterprises that meet the following criteria:

• have at least 1 staff member;
• have turnover of < EUR 500 000;
• have shareholders that hold over 25% of the total share capital or voting rights, and the company is the only micro enterprise established by these shareholders (earlier shareholders could own 3 micro enterprises at most);
• have other sources of income, besides management and consulting, that make up over 80% of the total income.

*The fees do not include 19% VAT, which may arise under certain conditions. Please refer to the consultants of GSL Law & Consulting for details.

**This fee is not inclusive of physical placement of any employees in the office. However, such placement is possible; the terms, cost and format should be agreed with the consultants of GSL Law & Consulting.

In 2023, the tax system allowed one rate for microenterprises - 1%. From 2024, it became possible to apply two rates - 1% and 3% (see conditions above).

Points to also take into consideration:

• It is possible either to hire a local Romanian* (easier and fastest way) or if the employee is not a Romanian citizen then it is necessary to follow up with a complex set of legal proceedings in order to obtain the permit of working and staying in Romania, in order to be able to pay contributions as an employee in Romania.
• If the foreign clients would like to avoid going with the usual employment proceedings it is also possible to meet the criteria of 1 full-time employee (to keep the microenterprise status) through concluding a mandate contract. This involves the same costs and payments to the Romanian government as would be for an usual employee hiring process. The main difference there is that is not required to meet the basic immigration requirements mentioned above since the mandate contract is more kind of a commercial contract rather than a labor contract. Also, the mandate contract does not have to be registered within the national electronical platform of employees (Revisal).
• As for the specified maximum number of companies, a shareholder must own no more than 25% of the authorized capital of a single company (previously it was no more than three companies). If this condition is not met, the following companies will automatically be considered as income tax payers.
• Consulting and management activities which receives income of over 20% will require in the first quarter to switch to profit tax system after this limit was reached.

*Employers should be aware that the hired employees are preferred not to work also in other places because the work schedule cannot interfere with others (i.e. the employee can not be registered in two different work places schedules at the same time like from 9-5).

It is possible either to hire a local Romanian (easier way) or if the employee is not a Romanian citizen then in order to legally be employed here it is necessary to proceed with usual procedures to obtain the permit for working and staying in Romania, in order to be able to pay contribution as an employee since it is required to own a NIF/CNP (personal identification code) which is used to be an identifiable person in Romania.

Long term stay visa for other purposes is provided at request by consular offices and diplomatic missions of Romania from the country where the directors has their residence or domicile; if they meet the following criteria’s:

a) The applicant has the quality of director of the Romanian company at the date of request;

b) The applicant is not a shareholder of the company or to other Romanian companies and did not had this quality in the last 2 years.

c) In the company it does not exists any other foreign citizen which obtained a staying permit for this specific purpose.

d) The company has realized a social capital intake or a technology transfer of at least EUR 50 000.

To those foreigners it is possible to obtain visa if they own proof of medical insurance to all visa availability, own proof of staying conditions (rent contract), owns a good/clear criminal record or other similar document with same legal power issued by country of origin.

If the clients would like to avoid going with the usual employment proceedings (which are rigorous) it is also possible to meet the criteria of 1 full-time employee through concluding a mandate (management) contract between the company and director, but this involves the same costs and payments to the Romanian government as an employee. The difference is that is not required to meet the basic immigration requirements since the mandate contract is more sort of a commercial contract rather than a labor contract. Presence of the director is not really required to be effectively in Romania, to work like an usual daily employee since these aspects will be determined in the contract; taxes must be covered though and it will be required to obtain NIF codes for them from Fiscal Authorities in order to declare the income realized as directors in Romania.