How a foreigner can open a company in Romania

Romania is an Eastern European country with significant business potential. Its strategically important geographic location makes it a key trading hub between Eastern and Western Europe.

Romania is a member of the European Union, making it easy for entrepreneurs to access the vast EU market and attract foreign investment. Low living and labor costs, as well as relatively low wages, make the country an attractive location for manufacturing and processing companies. Romania is also actively developing its infrastructure, including transportation links, technology parks, and innovation centers. This creates a favorable environment for business location and the development of innovative projects. Given these factors, the jurisdiction is an excellent location for entrepreneurs and investors seeking to grow their businesses in the Eastern European context. The country also attracts foreigners with the opportunity to obtain a residence permit based on business.

Advantages of Opening a Company in Romania

• The country has developed logistics networks and transportation links, facilitating the convenient delivery of goods and services.
• The Romanian government actively supports entrepreneurship by providing tax incentives, investment assistance, and special programs for startups.
• Operating costs for setting up and running a business are The lowest in Europe.
• Romania has significant growth potential in sectors such as information technology, agriculture, logistics, gambling, tourism, and electric vehicles.
• A Romanian company can be established by a single shareholder, and the registration procedure can be completed remotely by proxy and in a short time.
• More than 89 double tax treaties have been concluded, reducing the tax burden.

Business structures available in Romania for non-residents

• Limited Liability Company (SRL), or Societate cu Răspundere Limitată.

This is the most common choice for both local and foreign entrepreneurs. Shareholders are liable only to the extent of their capital contribution. An SRL can be established with a minimum share capital of 1 Romanian leu and can have up to 50 shareholders. The company can be managed by one or more administrators, who may be non-residents.

• Joint Stock Company (SA) or Societate pe Acțiuni.

Typically used for larger enterprises and companies planning to go public. Minimum share capital: RON 90,000 (approximately EUR 18,000), fully subscribed and paid. Ideal for companies planning an initial public offering (IPO) or seeking significant outside investment.

• Branches and subsidiaries of foreign companies.

A branch operates as a subsidiary of the parent company, without having a separate legal entity. It is subject to Romanian law and taxation. A subsidiary operates as a separate legal entity and provides greater flexibility in terms of local operations. A representative office may only conduct non-commercial activities, such as marketing research and advertising.

• Partnership Structures.

Although less common, partnerships (general and limited) can be established. However, these organizations impose joint and several liability on the partners and may not provide the same protections as a limited liability company.

Eligibility Criteria for Non-Residents

Shareholder Requirements

Romania places no restrictions on foreign ownership, allowing non-residents to fully own and control local companies. A foreigner may act as the sole shareholder or partner with other individuals or legal entities.

Registered Office Requirements

All companies must have a registered office in Romania, which serves as the official address for legal notices and correspondence. Possible options for meeting this requirement:

• Office space rental: Rent an office or coworking space in Romania.
• Virtual office services: Some companies choose a virtual office to establish a legal address.
• Using a law firm address: Many law firms provide temporary hosting for a company's registered office for a period of up to one year.

Legal Compliance

You will need to provide identification documents, proof of address, and other documents, such as certificates of authority of the legal entities that will serve as shareholders or directors/administrators of the Romanian company.

Appointing an administrator

Every company must appoint at least one administrator to manage business operations. There are no residency requirements for administrators, allowing foreign citizens to manage Romanian companies.

Step-by-Step Guide to Registering a Company in Romania

1. Reserving a Company Name.

Start by reserving a unique company name with the Commercial Registry. The chosen name must not be similar to the names of already registered companies. The reservation is valid for one month.

2. Obtaining a Registered Office.

Create a legal address for your company. You will need to provide documents confirming a lease agreement or property ownership, or use a temporary legal address service.

3. Drafting the constituent documents.

This document must include:

• Detailed information about shareholders and capital contributions.
• Company activities: clearly indicating the scope of activities using NACE codes for classification.
• Management structure and roles of administrators.
• Procedure for making decisions at general meetings of shareholders.
• Information about the ultimate beneficiary.
• The duration of the company's activity (if its perpetual activity is not intended).

4. Submission of incorporation documents.

Submit the required documentation to the Commercial Register:

• Memorandum of Association.
• Proof of registered office address.
• Identity documents of shareholders and administrators.
• Statements of the activities the company will carry out, the ultimate beneficial owner (UBO), and the financial statements of shareholders and administrators.
• Tax forms and foreign investment forms.

5. Tax registration and VAT compliance.

After registration, a company is automatically assigned a tax identification number. You may also be required to register for VAT if your annual turnover exceeds 395,000 Romanian lei or you plan to carry out activities subject to VAT.

6. Publication in the Official Gazette.

Information about your company's incorporation will be published in the Official Gazette of Romania. This is a standard step in the process of formalizing your company.

Remote Company Registration in Romania

A key condition for successful company registration in Romania, including remote bank account opening, is a power of attorney (POA). This document authorizes your local representative to carry out all registration procedures and interact with the bank on your behalf via video verification. Simply have the power of attorney notarized, and you're ready to launch your business from the comfort of your home.

Furthermore, while some traditional banks still prefer in-person verification, many Romanian banks and fintech providers now offer robust video verification procedures, making it easier for non-residents to open a corporate bank account remotely.

Reporting

All Romanian companies are required to prepare and submit financial statements. The frequency of filing is determined individually with an accountant. In addition, micro-enterprises eligible for taxation at the 1%/3% rate must submit a quarterly declaration of compliance with the tax exemption requirements.

Large companies that meet any two of the following criteria are subject to audit: asset size of €3,650,000; net turnover of €7,300,000/year; and a workforce of 50 people. Mandatory VAT registration occurs when the annual turnover threshold exceeds 395,000 Romanian lei (80,000 euros).

Companies are required to maintain full records of VAT transactions and submit reports monthly, and in some cases quarterly. All companies, including non-residents, are required to use the national electronic invoice system (RO e-Factura) for taxable B2B supplies in Romania and for accounting purposes.

Electronic invoices must be submitted to the system within 5 business days from the invoice date, but no later than 5 business days after the expiration of the generator or prepayment period (the 15th of the month following the month covered by the regulation).

Taxes

• Income tax - 16%/1%.
• Dividend tax: 10%.
• VAT: 21% (preferential 11%).
• Income tax (for individuals): 10%.
• Social contributions: 35%.
• Unemployment insurance: 2.25%.

Income tax in Romania is paid by companies on their worldwide income. The general tax rate is 16% and is paid on net annual profit (i.e., a company's income earned during the calendar year minus all operating expenses).

In addition, preferential corporate tax rates apply: 50% discount on R&D expenses for companies engaged in innovative and scientific-technical activities, including in the IT sector; 10% for profits from cryptocurrency trading, but the standard corporate tax rate of 16% applies to legal entities.

A two-rate tax system has been introduced for microenterprises: 1% for turnover up to €60,000 (for companies not operating in the IT, dentistry, medicine, HoReCa sectors); 3% for turnover between €60,000 and €250,000 and/or for certain activities.

For large companies with an annual turnover of over €50 million (excluding banks and oil and gas companies), a minimum turnover tax of 1% applies if the standard corporate tax is less than the minimum turnover tax.

In turn, for banks and oil and gas companies with an annual turnover of over €50 million, a rate of 2% applies in 2024-2025 and 1% from 2026.

The tax on the repatriation of income/dividends is levied at a rate of 10%, however, in the case of a payment to a European company with a 10% participation in the capital, a full exemption applies.

Romanian employers are also obliged to make monthly social contributions, which include: Pension contribution of 25% (of the employee's salary); Social security contribution of 10% (of the employee's salary); Unemployment insurance of 2.25% (paid by the employer).

Special taxes apply to the oil and gas sector (since 2025) and real estate (the construction tax has been reinstated since 2025). It is important to note that Romania has no local corporate income taxes, simplifying your financial obligations.