Set up a company in Romania

Setting up a company in Romania is permitted to all foreign persons, under the Romanian corporate law regulation, for private persons or for companies. All companies founded in Romania – independent company or branch of a foreign company – are subject to the Romanian law regulation. All the corporate responsibilities and taxes are under the Romanian law.
Romanian Company Law
Romanian company law provides 6 different types of companies, tailored in accordance with the specific operating needs. The differences among them are related with type or property for the company and its assets, tax and liability. Basically, there are corporate and non-corporate legal forms.

Corporations (most used):

• Company with limited liability (GmbH, Ltd.)
• Stock corporation (AG)

Non-corporate forms:

• Nongovernmental organization (NGO)

The most common used by private persons or even by companies when first came to Romania, and the most recommended is the Company with limited liability (GmbH, Ltd.), due to the flexibility in getting started, managing, developing, accessing structural funds.
Starting an GmbH (Ltd.)
When setting up a GmbH (Ltd.) in Romania you have to adhere to the following rules and regulations:

Shareholders’ Agreement

• Name registration for the company
• Drawing up and signing of the shareholders’ agreement, in case of a one-man company a “declaration of establishment” (notarial deed)
• Appointment of managing director(s) (shareholders’ resolution with notarised signature(s))
• Cash contribution – capital contribution (minimum nominal capital € 50 to be deposed in a bank, in the name of the company until formation)
• Opening of the company’s bank account and payment of the cash contribution
• Payment of legal register taxes (around 150 Euro)

Taxes. Notice of Authorities for Registration of Employees

• A private limited company is subject to corporate income tax and value added tax. After registration in the Companies Register, the company has to apply for a tax identification number.
• Corporate tax payable by a private limited company: 25% on taxable profits, regardless of whether the profit is distributed to the shareholders
• In the absence of profits, a minimum corporate income tax of € 437.50 per quarter has to be paid
• Taxation at shareholders’ level: total taxation of profits distributed to shareholders up to 16%

Social security
Registration of the employees with the competent social insurance institution is required prior to the commencement of their work.
Managing the company
Legal adviser – lawyer
In order to operate a foreign company in Romania it is recommended to have a contract with a lawyer office which is specialized in trade law and corporate law. In order to have a good compliance with this requirements, a lawyer under the Romanian legal system need a double university degree, both law and economics.

This offices will provide you with legal counseling and guidance under the Romanian law system and will represent your company interests in front of Romanian authorities as well as in front of local suppliers or local customers of your company.

All contracts in Romania are composed in Romanian language and are subject to the Romanian legal system unless you underline the following:

• The contract will be realized only in English language and this will be the official language of the contract, under which all the contract will be interpreted;
• The law which will be applied to the contract will be under the legal system decided by the both parties;
• The Court of Justice to settle the arguments will be assign by the law of the contract;
• The companies could decide to go to the referees court under their own call, and it is not mandatory under the Romania law;

In Romania commercial contracts are not comprehensive and not very clear. This is why you will need a lot of time to be settled in the Court of Justice. Since there is no clear written contract, each company involved in a dispute will argue and will try to prove a commercial settlement with witnesses. This usually takes a couple of year to fulfill, since the proverbial long term of justice under the Romanian law.

All contracts under the Romanian law should have specific terms incorporated which will protect your business, in accordance with your position on the market.

This will be subject to clarification with each private investor.

Tax adviser – accounting company
Each company in Romanian is complied to keep a daily accounting for its operation. This is recommended to be made by a Romanian specialized accountant.

The foreign investor should realize a contract for keeping the accountancy with a private company specialized in this field. It is imperative that the company which keep the accounting for investor will take all the risks and will take all the penalties resulted from a poor accounting keeping. This requirements will be mandatory to be inserted in the consultancy contract by the foreign investor, since it is very difficult to keep up with the Romanian accounting system which is constantly changed through the laws.