Registering a company in Romania
Setting up a company in Romania involves certain steps related to the legal incorporation at the Trade Registry, as well as to the fiscal registration with the tax authorities. The same rules and procedures apply for domestic and foreign investors who decide to set up a company in Romania.
Registration at the Trade Registry
This usually happens with the support of a legal advisor who gathers all the documents and information required, prepares the Constitutive Deed and registers the documentation with the Trade Registry. The documentation covers the following necessary information: type of company, share capital structure, company activity according to NACE code (activity classification codes), company name, company premises, identification documents from shareholders and appointed administrators, proof of share capital deposit at bank, specimen signatures.
Entities with legal personality can take on one of the five legal forms provided by Romanian Company Law 31/1990, the most common being an LLC (limited liability company) and an SA (joint stock company).
A company can be set up in about 10 working days once in possession of all the supporting documents required.
Registration at the fiscal authorities
After the incorporation at the Trade Registry, the company must also register at the Romanian fiscal authorities for the direct and indirect taxes related to its activity. Also, documentation for obtaining the electronic signature allowing the registration of tax returns must be prepared and registered with the authorities.
Tax on micro-company revenues versus corporate income tax
Newly established Romanian entities are required to pay a micro-company tax from the first fiscal year. Micro-companies pay 1% or 3% tax on revenues, while corporate taxpayers pay 16% on taxable profits. The tax rates applicable for micro-company revenues are:
→ 1% for micro-companies with at least one employee
→ 3% for micro-companies with no employees.
If a micro-company generates revenues exceeding EUR 1,000,000 during the fiscal year, it becomes a corporate taxpayer starting from the quarter in which this threshold is exceeded. Micro-companies with share capital of at least RON 45,000 (roughly EUR 9,700) may opt to pay corporate income tax from their registration.
Registration for VAT purposes
VAT registration is mandatory once an annual turnover threshold of RON 300,000 (roughly EUR 88,500) is exceeded. However, any taxable person can optionally apply for VAT registration.
New companies voluntarily registering for VAT before the turnover threshold is exceeded will have to prove their capacity to perform economic activities. The VAT registration involves a risk analysis by the tax authorities based on predefined criteria (declared premises, level of share capital, number of employees, activity type, good conduct certificates of administrators, etc.). In some cases, the VAT registration process also includes interviews with the company administrator as required by the tax authorities, to clarify if the taxable person qualifies for VAT. Following this analysis, the VAT registration can be granted or rejected. The deadline for settling VAT registration requests is 45 days from the submission date.
Registration with Territorial Labour Inspectorate
Once the company is set up, personnel can be hired. Each labour contract must be notified to the Labour Inspectorate at least one day before the labour contract takes effect, via an online electronic ledger of employees (REVISAL).
The article is signed by Alexandra Săvulescu, Senior Tax Consultant Ensight Finance.