Corporate law

Published on Dec 5, 2023 by Cristian MIHAI

The incorporation of a company in romania: key steps

The most common company status in Romania is Limited Liability Company (Societate  cu răspundere limitată - SRL). The main characteristics of the Romanian  LLC are:

  • The number of partners cannot exceed 50;
  • Partners can be Romanian or foreign;
  • It is possible to create a Romanian LLC with a single shareholder;
  • The minimum share capital is 1 RON
  • The transfer of shares is free between the partners, but requires the agreement of three quarters of the partners when transferring to third parties;
  • The appointment of an auditor is only mandatory if the number of partners exceeds 15.

The path to incorporate of the Romanian company

The process of creating a Romanian company such as a LLC must follow the following timeline:

  • Preparation and drafting of the constitutive act (the statutes);
  • Translation and authentication of the documents provided if the partners or the manager are foreign;
  • Obtaining proof of address from the head office;
  • Registration in the Trade Register and obtaining the Unique Registration Code (CUI) in the Trade Register (essential to bind the company legally);
  • Opening of the company's bank account into which the share capital will be paid. Opening an account with a Romanian bank presupposes that the company can demonstrate its effective economic presence on Romanian territory, by means of local infrastructure and personnel.

The process of creating a Romanian company thus takes between 1 to 4 weeks, depending on whether the partners are Romanian or foreign, and whether they are in Romania during the incorporation process.

Registration of the company for VAT purposes 

After the incorporation of the company, a specific formality follows at the Romanian Tax Administration, so that the company should be subject to the payment of VAT.

Certain criteria have to be met, especially at the level of the office where the company operates and a control may be carried out for such purpose by the administration at the registered office of the company.

The registered office

As already said, the registration of a company with the Trade Register is possible only if that company has a registered office.

Providing a registered office is not a common service in Romania, but some business centers offer this service and LPG Romania has both its own business center and partnerships in this area.

Taxation

Company tax:

Corporation tax will take:

  • or the form of a tax on turnover: 3% on turnover and income if the turnover is less than 500,000 EUR and employs at least one employee (or even 1% if the turnover is less than 60 000 EUR).
  • either in the form of a tax on the profit: 16% on the profit when the turnover is greater than 500,000 EUR or if the company achieves a turnover of less than 500,000 EUR and opts for this system

VAT

The current VAT rate is 19%.

Opening a bank account

Romanian banks may accept to open a bank account for new companies as long as they assess their activity can be profitable and their partners and managers are trustworthy.

 

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