Due to enhanced anti-money laundering measures and the introduction of CFC rules and other regulatory instruments, the so-called “offshore” business registration zones have lost their relevance. Many countries still retain the ” offshore ” status, thereby repelling potential investors. Therefore, if you are interested in a jurisdiction with a “clean” image and a favorable tax system, you should pay attention to Romania, an Eastern European country.
Advantages of Romania for doing business
Its main advantages are a quick company registration process, ease of compliance when opening an account and making payments, no currency control for transactions in euros and dollars, and low-cost establishment of a subsidiary (economic presence).
The Romanian tax system provides for a corporate tax (income tax) of 16%. Romanian companies and foreign companies operating in the country through a permanent establishment are obliged to pay it. It should be noted that the object of taxation for resident companies is the profit received from all over the world (unless otherwise provided by double taxation treaties), and for non-resident companies, only the profit is received in Romania.
Taxes and legal forms in Romania
In order to attract foreign investors, the Institute of Microenterprise was introduced at the legislative level—one of the types of limited liability companies that can use preferential corporate tax rates. This type of company underwent many transformations before acquiring its current form. Now, a newly established company must register as a microenterprise and apply the simplified taxation system if its annual turnover does not exceed EUR 500,000 and it does not carry out activities subject to licensing in Romania (e.g., banking, insurance).
If the company exceeds the annual turnover limit of EUR 500,000, it loses its micro-enterprise status and is subject to the general taxation of 16% of corporate profits.
The preferential income tax rate is 1% – it is mandatory to have employees in the company, even if it is a director, he must be officially employed. The company must also pay social security contributions and be a so-called tax agent for its employees (to withhold their income tax).
As for other fees, Romania levies an 8% dividend tax and a 19% VAT (or a reduced 9% for certain activities).
SRL and SA in Romania
The most popular legal forms in Romania are the limited liability company (SRL) and the joint-stock company (SA):
- For an SRL, a minimum authorized capital of 200 lei (approximately 45 euros) is required. Both Romanian citizens and foreigners can be shareholders in the number from 1 to 50. This form of business structuring has low administrative and reporting requirements.JSCs are more complicated, as the minimum authorized capital is 25,000 euros, of which at least 30% must be deposited into the account.
- You must register an SA if the company is engaged in specialized activities, such as banking, insurance, etc. Among other requirements, you need to have at least five shareholders, one director, and three independent auditors to control the financial statements.
Romania and it’s business aspects
Romanian government agencies have not introduced any electronic program for registering a company remotely. Therefore, this process takes place through the client’s power of attorney. The result is a certificate of company registration, after which you can apply to the state authorities for the status of a VAT payer (if necessary). If your company is engaged in trade, export, or import, you must also obtain an international customs number.
Opening a bank account in Romania
It is worth emphasizing that this process has no problems in Romania.
The procedure is somewhat simplified compared to other European banks, as Romanian financial institutions have not yet had time to accumulate the necessary experience opening accounts for non-residents. The bottom line is that Romanian banks treat them as full-fledged residents when opening accounts for local companies. Even though the compliance procedure is based on generally accepted European standards, Romanian banks will not refuse to open a corporate account. The only aspect is the physical presence of the founder of the legal entity, which generally takes several days.
Thus, the Romanian jurisdiction offers your business many advantages and comfortable conditions for development. Finevolution will help you open a business in Romania and provide financial, legal, and accounting support.
Our team is ready to provide consultation on these issues. Our business hours: Monday to Friday, 9:00 AM — 7:00 PM. Contact us via WhatsApp, Telegram, or Viber, or submit an inquiry through our online form.
