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Company registration in Romania. Micro-enterprise regime

A company in Romania is an alternative to offshore companies. Company registration procedure, corporate structure, collection of necessary documents and annual administration.

Major advantages of doing business in Romania

Attractive conditions for small businesses with annual revenue of up to EUR 500 000;

Positive image of a European jurisdiction;

Not on any offshore blacklists;

Quick company registration;

Local bank account can be opened;

Quick and affordable creation of substance in the country of registration;

1% or 3% corporate tax (for company with annual revenue of up to EUR 500 000 and at least 1 (one) full-time employee) where the employee can also be the same as the director of the company if some requirements are met (see last page);

Large network of double tax treaties.

Budget for setting up business in Romania

Services
Fees (EUR)
Total cost of company incorporation with one shareholder and standard Articles of Association
3 850
Payment of the minimum share capital
50
Local bank account opening
from 3 500
Registered office for the 1st year: physical office lease*
3 960
Total:
11 360

*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.

Time frame for setting up business in Romania

Company registration – within 2 weeks;

Local bank account opening – from 2 weeks.

Romanian company registration procedure

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 overall time to register a Romanian company is 2 weeks, on average.

Structure

Administrator (Director)

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.

Members / Associates

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.

Share capital

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.

Registered office

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.

Micro-enterprise regime. Can a micro-enterprise be regarded an “EU offshore”?

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:

1% for micro enterprises with annual proceeds not exceeding EUR 60 000 that do not conduct business in the below fields;

3% for micro enterprises that have annual proceeds of over EUR 60 000 or conduct business in the following fields: software development, IT services, hotel and restaurant business, medical and some other services.

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.
To identify the company’s tax burden, we recommend seeking tax advice only from an authorized expert accountant (which can be arranged upon request).

Fees*

Services
Fees (EUR)

Company registration in Romania and 1st year of administration

Total cost of a limited liability company incorporation with one shareholder and standard Articles of Association (including preparation and provision of original constitutive documents and a company seal)
3 850
Minimum share capital
50
Local bank account opening
from 3 500
Registered office for the 1st year: physical office lease**
3 960
Preparing and filing financial statements
100 – 400 / hour
(depending on time spent)

Annual renewal of the company

Annual renewal of the company, including registered office for a year: physical office lease**
5 090
Compliance fee
Payable in the cases of:
- incorporation of a company,
- renewal of a company,
- liquidation of a company,
- transfer out of a company,
- issue of a power of attorney to a new attorney,
- change of director / shareholder / beneficial owner, except the change to a nominee director / shareholder),
- signing of documents
350 (standard rate – includes the check of 1 individual)
+ 150 for each additional individual (director, shareholder, or beneficial owner) or legal entity (director or shareholder) if such legal entity is administered by GSL
+ 200 for each additional legal entity (director or shareholder) if such legal entity is not administered by GSL
450 (rate for High Risk companies, including the check of 1 individual)
100 (signing of documents)
Preparing and filing financial statements
100 – 400 / hour
(depending on time spent)

*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.

Regarding changes in the amount of tax for microenterprises

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).

Regrading employment conditions

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.

Requirements to obtain the work permission as an administrator of a Romanian company (from immigration office):

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.

Art.69 al. (3) of OUG 194/2002 says that at the obtaining and extending proceedings of the rights of temporary stay, foreign assigned as administrators shall make proof of support of existence of at least 500 EUR/month from the activity performed as administrator.

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.

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