Doing Business in Romania: Terms and Procedures
Romania is considered one of the fastest-growing economies in Europe and has recently become an attractive destination for foreign investors. However, before setting up a business in Romania, it is essential to understand the terms and procedures involved in doing business in Romania. This article provides comprehensive guidelines on business terms, incorporation, taxation, and other crucial aspects of doing business in Romania.
Business Terms and Procedures
- Company Incorporation: A foreign individual or entity looking to incorporate a business in Romania needs to register the company with the Romanian Trade Register. The registration process includes obtaining a Tax Identification Number, choosing a unique company name, and opening a bank account in Romania.
- Legal Forms of Business: In Romania, the types of legal business forms include sole proprietorship, limited liability company (SRL), joint-stock company (SA), partnership, and branch office. SRLs and SAs are the most popular forms of business for foreign investors.
- Registered Office: A company should have a registered office in Romania, where official documents can be delivered and received. The registered office should be an actual location in Romania, and a virtual or rented office is acceptable.
- Employment Law: Romania has strict employment laws that protect employees’ rights. Employers must adhere to minimum wage laws, overtime regulations, and mandatory social security contributions. It is also essential to have written employment contracts and to comply with health and safety regulations.
Taxation in Romania
- Corporate Tax: The corporate tax rate in Romania is 16% on taxable profits. Companies that generate an annual turnover of less than €1 million are eligible for a reduced corporate tax rate of 1%.
- VAT: The standard VAT rate in Romania is 19%, and companies must register for VAT within ten days of starting their business activities. Businesses with an annual turnover of less than €88,500 can apply for voluntary VAT registration but must also charge VAT on their services or products.
- Personal Income Tax: Individuals in Romania are subject to progressive income tax rates ranging from 10% to 45%, depending on their income level.
Q: What are the requirements for opening a bank account in Romania?
A: To open a bank account in Romania, you will need to provide your passport or other identification document, proof of address, and a Tax Identification Number (TIN) or registration certificate from the Trade Register.
Q: What are the legal requirements for employing staff in Romania?
A: In Romania, employers must have written employment contracts, pay employees minimum wage, adhere to overtime regulations, make mandatory social security contributions, and comply with health and safety regulations.
Q: How long does it take to incorporate a business in Romania?
A: The company incorporation process in Romania can take anywhere between one to two weeks, depending on the complexity of the business structure and the documentation required.
Q: What are the corporate tax rates in Romania?
A: The corporate tax rate in Romania is 16% on taxable profits, and companies that generate an annual turnover of less than €1 million are eligible for a reduced corporate tax rate of 1%.
Q: Can foreigners own a business in Romania?
A: Yes, foreigners can own a business in Romania either independently or through a partnership with Romanian citizens or companies.
Starting a business in Romania can be a rewarding experience, but it is essential to understand the legal aspects and procedures involved in doing business in Romania. By understanding the incorporation process, taxation, and other legal requirements, foreign investors can successfully start and run a profitable business in Romania without any legal complications.