Whatever we refer to foreign or domestic investors, the most common form of doing business in Romania is through a Limited Liability Company (SRL). Benefits speak for themselves: quick registration with low administrative obligation, low cost of registration, a minimum social capital of 200 RON, shareholders cannot be held personally liable for the debts or actions of the corporation.
The procedure of incorporation is formalistic and it is carried out at the Trade Register attached to the Tribunal where the future headquarters of the company will be. The procedure has an administrative part performed by officials from the Trade Register and a decisional part carried out by the Director of the Trade Register or by a delegated person. If the applicant’s file is complete the company is incorporated in about 10 days.
After the company is incorporated, certain administrative procedures at tax administration and by case at the Territorial Labor Inspectorate are following.
Steps and Documents required for SRL:
I. Name Reservation
- The applicant must reserve his company name by filling a request at the Trade Register in order to check the availability of the name he wants. He must give 2 seconds options if the desired name is not available. The applicant can also reserve also an emblem for his company.
- Proof of payment of the registers fees: 45 RON register fees; 27 RON Liquidation Fund and bulletin Fund provided by Law. 85/2014.
- Reservation of the name is valid for a period of 3 months from the date of filing and can be prolonged. Important! It is prohibited to use the word “ştiinţific”, “academie”, “academic”, “universitate”, “universitar”, “şcoală”, “şcolar” (“scientific”, “academy”, “academic”, “university”, “school”), or derivatives thereof in the company name. Using the words “roman”, “national”, “institut” (“romanian”, “national”, “institute”) requires a special approval from the Government General Secretariat. Names of the companies previous deleted from the Trade Register cannot be used for 2 years, except as provided in Art. 41 of Law 26/1990, republished. The Firm cannot be estranged separately from trade fund.
- The applicant must fill a standard form – registration request
- Annex 1 of the tax registration – form and, where applicable, Annex 2 on foreign investment – form;
- Declaration on own responsibility signed by the shareholders or administrators showing, as applicable, that: – the company will not carry at the registered office, or at the secondary offices their declared activities, for a maximum of three years; – the company fulfills the conditions required by the legislation specified in healthcare, veterinary, environmental protection and labor protection for their declared activities;
- Statement that the applicant has the status of sole shareholder in a single limited liability company or the limited liability company with sole shareholder is not the sole shareholder in another limited liability company (original) ;
- Incorporation act in original.
- Document certifying the right to use a certain space as headquarters; Note: If the company won’t have any activity at first, for a limited period (no more than 1 year), the applicant can choose to have his headquarters at a lawyer’s office. In this case, the proof of the headquarters is the legal assistance contract. Note: If the headquarters are in an apartment building, the consent of neighbors is necessary; Certificate from tax administration certificating that the space is not used as headquarters for another company. Note: A building can be used as headquarters for more companies if the structure of the building allows operation of several companies in different rooms;
- Proof that the minimum social capital (200 RON) was subscribed and paid; Note: The bank account for the social capital can be opened at any bank. The applicant must provide a copy of the incorporation act, id copy, proof of the name reservation, power of attorney;
- Property documents for contributions in nature subscribed and paid;
- Declaration on own responsibility signed by the shareholders and administrators that they fulfill all the legal obligation in order to hold their position (authentic);
- IDs of the founders, administrators, auditors;
- Specimen signatures of the representatives of the company (original);
- Declaration on own responsibility of the foreign shareholders/administrators that they are not tax registered in Romania and that they have no unpaid tax obligation in Romania, that they are no subject of criminal economic offences;
- If the shareholders are legal entities – a copy of the incorporation act, resolution of the shareholders, trade register excerpt of the company.
- If the shareholders are foreign legal entities – a certificate of creditworthiness from a bank or from a Commerce Chamber;
- If case, power of attorney.
- The costs to incorporate a company are variable, usually depending on number of activities the company performs (numbers of CAEN codes), and the average costs are about 200 EUR.
IV. Tax Registration
- Within 30 days companies must register at the Tax Administration;
- The taxes which are to be paid at the Tax Administration depend on type of activity, dimension of the company, number of employs and other factors.
- Usually a company must pay 16% on dividends or 16% from profit. If the company is a microenterprise the income tax is 3% and 16% on dividends.
- For companies who have to pay VAT, depending on the type of activity the VAT is between 24% – 9% – 5%. Starting from 1st of January the VAT will drop to 20%.
- The taxes which are to be paid for every employee are about 23% of the salary, the employer contribution to which we should add approximately 16% of the employee’s contribution.
Good to know: Persons who incorporate for the first time a Limited Liability Company (SRL) can opt for “debutant SRL” (SRL-D). SRL-D can be incorporated by a maximum of 5 debutants shareholders in specific areas of activity and it is mandatory that the administrator is named from the shareholders. In order to get the fiscal advantages, the company must be classified as microenterprise.
- The advantages:
- exemption from social security contributions paid by employers for a maximal number of 4 employees,
- The possibility to obtain a grant of 50% of the project investment but no more than 10.000 EUR,
- The possibility to obtain bank credits guaranteed by the State for maximum 80.000 EUR,
- Tax free registration at the Trade Register.
Author: Mag. Mihaila Raluca, firstname.lastname@example.org
For further information on this aspect and any other questions please feel free to contact: Mag. Raluca Mihaila L.L.M. email@example.com.