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The largest of the Balkan countries, Romania has a dramatic mountain scenery and a coastline on the Black Sea. Romania has a population of 19.8 million people (2019), capital and largest city is Bucharest. Spoken language is Romanian (official).
The economy of Romania has a fast developing, upper middle income mixed economy format with a very high Human Development Index number and a skilled labour force, ranked 15th in the European Union by total nominal GDP and 10th largest when adjusted by purchasing power parity.
Strategic Location
Located on the western shore of the Black Sea, and bordered by Bulgaria, Ukraine, Hungary, Serbia, and Moldova, company registration in Romania offers geographic advantages and details for businesses wishing to gain foothold in eastern Europe and beyond. Romania’s trade connections stretch out into central Europe, the Commonwealth of Independent States (CIS), Russia, and the Middle East – collectively representing a market of tens of millions of consumers.
Skilled Workforce
The Romanian labor force is young, educated, literate, and embodies a culture of commitment and integrity. Enrollment in university education has been increasing across Romania since 2011, with the most popular educational disciplines being business, administration and law, construction, and engineering.
Communication Networks
Organisations doing business in Romania benefit from a well-developed communication infrastructure, which includes both a reliable telephone network, and country-wide high-speed fiber internet connections.
Romania’s internet speed is the best in the region (around 85.Mbps) – facilitated by a range of providers, and a healthy level of competition. 3G and 4G internet connection penetration in Romania reached of 87% in 2019.
Business Processes & Culture
Romania was ranked 45 on the World Bank’s Ease of Doing Business Survey 2018 – out of a possible 190. While the country’s business-language is English, the wider environment accommodates a wide range of eastern and western social and professional influences, and the foreign company registration landscape is welcoming to outsiders and expats alike.
What is the legal system based on (details like civil law, common law and the mixture of both)?
The law of Romania is civil law.
What are the key recent developments affecting company registration in your jurisdiction?
The new Civil Procedure Code of Romania became effective on 15 February 2013.
The new Civil Code of Romania entered into force on 1 October 2011, but there is a lack of consistent case law details relating to this. The new Civil Code introduced many new company registration concepts (for example, trust companies, specific regulation of standard clauses, special protection of legal entities under adherence contracts, freedom to agree contractually on prescription terms, and so on).
Are there any restrictions on foreign company registrations format (including authorisations required by central or local government)?
There are no longer any major format restrictions regarding foreign investment. A major restriction existed for foreign nationals to acquire agricultural land in Romania (as agreed under the Accession Treaty in 2005). On 1 January 2014, this restriction will be lifted and citizens of the EU or states belonging to the European Economic Area Agreement (EEAA) will be able to freely acquire agricultural lands in Romania. However, they will need to comply with the conditions of a pre-emption right, the detail consists in the fact that the acquisition of land must initially be refused by certain categories of people as defined by law.
Reporting requirements
The accounting format requires Limited Liability Companies registered in Romania to present documents like company registration proof, accounting records and financial statements in accordance with the Romanian Accounting Standards. For example, required documents must be prepared in Romanian and amounts stated in RON. In Romania, the financial year is the same as the calendar year. However certain companies and branches of foreign entities can opt for a financial year that is different to the calendar year, in order to reflect the financial year used by the parent company.
Most Romanian businesses follow the company registration process that leads to the formation of a Limited Liability Company (LLC) – which, from a tax perspective, pays the same flat 16% corporate rate, as all other business structures. This means company registration in Romania benefits from certain structural details and advantages, including the possibility of 100% foreign ownership, relatively low starting capital requirements (RON 200/ 45 EURO), and, of course, the assurance that shareholder liabilities are limited to only their capital contributions.
Seemingly, company registration in Romania doesn't look like a very good idea with its 16% corporation tax rate. Although this rate is lower than that of Western European countries, it is somewhat higher than that of other countries in Eastern Europe.
In Romania, there was a special detail for small company formation entrepreneurs a few years ago. According to it, you only had to pay 3% of taxes on a turnover of up to €100,000 (but this was with regards to the total volume of sales made and not profits).
In 2018 the amount was extended considerably making the programme even more attractive. The turnover limit to qualify for this programme is now €1,000,000 and makes Romania an attractive option for company registration, even for online entrepreneurs with a higher income.
Taking into account the low salary costs and the fact that many Romanians have a good knowledge of English, hiring some type of assistant (virtual or not) in Romania could be a good option, including for digital nomads or micro-entrepreneurs.
The Romanian government has introduced a range of tax incentives for businesses operating in the country. These incentives include:
