In the variety of legal and organisational forms of companies permitted to be established in Romania, we would like to highlight only one, which is the most effective for a foreign investor, namely:

SRL - Limited Liability Company (LLC)

LLC minimum charter capital is RON200 (approximately, €60). Capital needs to be paid up in cash before establishing the company. Capital is divided into equal shares of no less than RON10 each. Each share entitles its holder to one vote.

LLC can be established by one shareholder (physical or legal person), and they may not be more than 50. If there are more than 15 shareholders in a company, it has to set up internal controls in respect of shareholders’ interests (a so-called "censors committee").

LLC with the sole shareholder may be established by a limited liability company (Romanian or foreign) but the founder may not be a company established by one founder. A physical person who is the sole shareholder in another Romanian company may not be the sole founder of the LLC either.

LLC directors may be any physical persons, residents and non-residents of Romania. Directors are appointed and dismissed by shareholders. Directors may take only the decisions approved by shareholders. Directors’ identification documents as well as their specimen signatures are registered in the Romanian Trade Register.

Organisational formalities related to LLC registration in Romania are performed within the following stages:

1. verifying the company’s name in the Commercial Register of Romania. The name is required to have at least one Romanian word. Such words as “Romania”, “National”, “Institute”, “University”, “Scientific & Academic” or other similar words may be used only provided that the Romanian Government Secretariat’s or the Prefecture Administration’s prior approval is obtained. The procedure takes approximately 10 days;
2. preparing the Office Premises Lease Contract. A temporary address to be changed with a permanent one after registration may be used as registered address. From the practical perspective, the address should not be changed frequently in order to avoid bureaucratic procedures related to amending the registration certificate, the license or the authorisations already obtained;
3. preparing the Memorandum of Association. Under Romanian law, a company may not just indicate that it will carry out any legitimate activity but its constituent documents should refer to specific activities in accordance with the codes of Romanian Nomenclature of Economic Activities (CAEN codes);
4. opening an account in Romania to deposit the charter capital;
5. preparing a statement regarding legitimacy of the proposed activity;
6. filing an application for registration in the Trade Register.

In order to duly perform the above registration formalities, the foreign founder has to provide the following documents:

• founders’ constituent documents;
• founders’ certificate of good standing and evidence of the absence of debts and obligations in their country and in Romania;
• minutes of the resolution on establishing the LLC in Romania specifying the name, types of activities and the charter capital;
• reference letters from banks to the local Trade Register confirming the founders’ good standing status;
• copies of the latest tax returns from the founders - physical persons or copies of the latest audit reports from the founders - legal entities, confirming that the founders have no current tax liabilities;
• power of attorney issued by the founders to a Romanian lawyer for registration of the company;
• copies of identity cards or passports of all future LLC managers and their specimen signatures certified by notary;
• founders’ and managers’ declarations that they will act pursuant to all requirements of the Romanian Companies Law and will comply with all environmental, sanitary, veterinary, fire and occupational safety regulations.

All documents have to be certified by notary, legalised and have official translation into Romanian.

LLC should hire an accountant by that time since it needs to file the financial statements immediately after registration.

Romanian companies pay standard income tax but under certain conditions, LLC may be qualified as a small enterprise ("Microenterprise") with preferential taxation.
For that, LLC income should not exceed €100’000 per year, and the staff number should not exceed 9.

Pursuant to the Tax Code of Romania, only companies engaged in goods manufacturing, services provision or marketing activity are subject to preferential taxation. Therefore, the preferential tax rate is not applicable to banking services, insurance, etc.

Romania is not a tax heaven or offshore jurisdiction, and a concept of Romania tax exempt company (and/or Romania offshore company, International Business Company, trust, foundation etc. registration) does not exist in Romania as such. A company formation in Romania could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Romania. To set up a company in Romania is possible by correspondence, but to open a bank account in Romania will, most probably, require a personal visit.

Romania Double Taxation Agreements

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