Company Formation in Romania- An Overview
Romania is located in Eastern Europe and present between the borders of Bulgaria, Ukraine, Hungary and Serbia. The GDP of this country is at a steady rate of 4% which is constantly rising. Company formation in Romania is quite straightforward; however it is important to comply with the requirement of local laws of Romania for company registration process.
A company can be easily incorporated in Romania with minimum ease. A LLC in Romania can be formed within a period of two weeks. Only one director and one shareholder is required for the process of company formation in Romania. The minimum capital required for an LLC is RON 200. An investor going for company formation in Romania does not require to travel to the country to incorporate a company. This can be done through the online process.
The economy of Romania is supported by the export industry. The major products exported from Romania include automobile products, car parts, insulation wires and refined petroleum. Romania is a part of the European Union. Hence the four freedoms are enjoyed by businesses in Romania which include goods, services, capital and people.
Apart from this, Romania also enjoys all the agreements with the EU Block. This would include various forms of customs union and tariffs agreements which are entered into by Romania. Romania is located close to Russia; hence Romanian business can gain advantages from Russian Business houses.
The cost of labour is one of the cheapest in Romania. On average the hourly wage paid to a labourer is EUR 5. Hence an investor going for company formation in Romania can secure different forms of labour benefits.
Corporate tax charged in Romania is quite less when compared to other member states. The corporate tax charged here is 16%. Romania is a member of the Single Euro Payments Area (SEPA). Due to this digital transactions can occur at a fast paced due to this network.
There are many free trade zones present in Romania that offers incentives and subsidies for different manufacturing companies. All goods and products which are traded in this zone are free from VAT and custom duties.
Benefits of Company Formation in Romania
The following are the benefits of company formation in Romania:
- Ease of Doing Business
A Company can be easily incorporated in Romania with minimum ease. A LLC in Romania can be formed within a period of two weeks. Only one director and one shareholder is required for the process of company formation in Romania. The minimum capital required for an LLC is RON 200.
- Manufacturing Industry
Many products are manufactured and exported from Romania. These products would include automobile products, car parts, insulation wires and refined petroleum.
- European Union
Romania is a part of the European Union. Hence the four freedoms are enjoyed by businesses in Romania which include goods, services, capital and people. Apart from this, Romania also enjoys all the agreements with the EU Block. This would include various forms of customs union and tariffs agreements which are entered into by Romania.
- Cheap Labour
The cost of labour is one of the cheapest in Romania. On average the hourly wage paid to a labourer is EUR 5. Hence an investor going for company formation in Romania can secure different forms of labour benefits.
- Corporate Tax
Corporate tax charged in Romania is quite less when compared to other member states. The corporate tax charged here is 16%.
Eligible Business Structures for Company Formation in Romania
The following are eligible business structures for company formation in Romania:
- Joint Stock Company (JSC)
This form of entity is similar to a public limited company, which offers its shares in a public stock exchange. One or more directors are required to form this type of entity. This entity has to have an executive board and a supervisory board. There are special provisions present for joint stock companies in Romania. An applicant going for company formation in Romania can adopt this form of structure.
- Limited Liability Company (LLC)
This form of entity has the principle of limited liability which is distinct from its members and directors. Up to 50 shareholders can be considered to form this type of company. However an individual cannot be a shareholder for more than one Limited Liability Company. An LLC cannot be a member of another LLC.
- Branch Office
A branch office is a mere extension of a foreign parent company. The liability of the branch office would under the foreign parent company. Profit making activities can be carried out by a branch office. The branch office has to file annual returns and corporate tax returns as required by the prescribed regulatory authority.
- Representative Office
A representative office is a mere extension of a foreign parent company. The liability of the representative office would under the foreign parent company. Profit making activities cannot be carried out by the representative office. The representative office does not have to file annual returns and corporate tax returns as required by the prescribed regulatory authority.
Minimum Eligibility Criteria for Company Formation in Romania
The following eligibility criterion has to be satisfied for company formation in Romania:
- Minimum Capital
An applicant going for company formation in Romania has to satisfy the minimum capital requirements. An LLC would require having Minimum share capital of RON 200. The nominal value per share of an LLC is RON 10. A Joint Stock company would also have to satisfy the minimum capital requirement. The minimum share capital by a joint stock company is RON 90,000.
- Minimum Shareholders
The minimum number of shareholders for an LLC is one. An LLC can have up to 50 shareholders (members). A joint stock company must have minimum of two shareholders. However for a joint stock company, there is no upper limit on the number of shareholders.
- Minimum Directors
The minimum directors for company formation in Romania is one. This would be the requirement for a Joint Stock Company. There is no upper limit on the number of directors which have to be appointed in the company. However, the number of directors in a public limited company must be one. For an LLC only one director is required. However, there is no maximum limit on the number of directors to be appointed for an LLC.
Procedure for Company Formation in Romania
The following procedure has to be adopted for company formation in Romania:
LLC Registration- Company Formation in Romania
- Shareholders
First and foremost, the applicant would have to decide the form of products for the business. After considering this, the minimum number of members must be stated for forming the company.
- Register with the Trade Register
The applicant would have to submit all the incorporation documents to the trade registry. The trade registry would set up the company as a Micro enterprise.
- Allotment of Financial Number
The financial number is also known as the fiscal number. This number would only be provided to the LLC once it is incorporated. This would be required for paying the respective tax and other forms of registrations.
- Incorporation Certificate
If all the information submitted to the trade registry is in proper manner, then the trade registry would provide the incorporation certificate.
Joint Stock Company Registration- Company Formation in Romania
- Shareholders
First and foremost, the applicant would have to decide the form of products for the business. After considering this, the minimum number of members must be stated for forming the company.
- Register with the Trade Register
The applicant would have to submit all the incorporation documents to the trade registry. The trade registry would set up the company as a Micro enterprise.
- Allotment of Financial Number
The financial number of the year would only be provided to the LLC once it is incorporated. This would be required for paying the respective tax and other forms of registrations.
- Incorporation Certificate
If all the information submitted to the trade registry is in proper manner, then the trade registry would provide the incorporation certificate.
Compliances for Company Registration in Romania
The following compliances have to be carried out for company formation in Romania:
- Shareholders Meeting
All joint stock companies and LLCs are required to hold an annual general meeting at least once a year. These shareholders meeting can be an ordinary shareholders meeting or an extraordinary shareholders meeting.
- Board Meetings
For a Joint Stock Company Board Meetings have to be held every three months. For an LLC is not mandatory to have a board meeting.
- Tax Returns
Tax returns have to be submitted on quarterly basis that is 25th of the first month following the quarter for which the profits tax liability was computed.
- Annual Profit Tax Return
Annual Profit tax return has to be filed no later than March 25 of the year following the one for which the profits tax is computed if the company. VAT returns have to be filed by the 25th day of the month at the end of the financial year.
- Other registration Requirements
Annual Filings for LLC and Joint Stock Companies have to be carried out as per the required law. This must be filed with the Trade Registry.
Documents Required
The following documents are required for company formation in Romania:
- Articles of association
- Memorandum of association
- Resolutions of the general meeting of shareholders
- Resolutions of the board of directors
- Shareholders' register
- Passport information and Visas of Foreign Directors and Members.
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