Foreign Ownership Rules and Restrictions for Companies in Romania

Introduction

Romania has emerged as an attractive destination for foreign investors seeking company formation in Central and Eastern Europe. Competitive labor costs, an EU member-state business environment, strategic location, and sectoral growth opportunities (IT, manufacturing, logistics, renewable energy) make Romania appealing for new foreign-owned entities. This article outlines foreign ownership rules and restrictions for companies in Romania, practical steps for business registration, corporate structure options, typical costs and timelines, and the documents you’ll need to incorporate and operate legally.

Why Romania is attractive for business

• EU membership and access to the Single Market provide regulatory predictability and market access across Europe.
• Skilled, cost-competitive workforce—particularly in IT, engineering and multilingual services.
• Competitive tax regime: corporate tax rates vary depending on company type and turnover (see Taxation section below).
• Low minimum capital requirements for common corporate forms (e.g., SRL).
• Developed infrastructure and growing investment incentives in certain regions and sectors.

Despite these advantages, some sectors remain regulated or subject to special approval and certain administrative requirements must be observed by foreign investors.

Overview: Can foreigners own Romanian companies?

Foreign natural persons and foreign legal entities can fully own Romanian companies. Romania imposes no general national prohibition on foreign ownership: majority or 100% foreign ownership is allowed in most business activities. However, restrictions and licensing requirements apply in specific, regulated sectors (see Restrictions and screening below). Also, corporate governance and reporting obligations (including beneficial ownership disclosure) apply equally to domestic and foreign owners.

Common corporate structures for foreign investors

Societate cu Răspundere Limitată (SRL — Limited Liability Company)

• The most commonly used vehicle for small and medium enterprises and foreign investors.
• Requires at least one shareholder (natural person or legal entity) and one manager.
• Share capital: minimum of 1 RON (practically negligible for formation).
• Liability limited to share capital contributions.
• Flexible corporate governance and simpler compliance than an SA.

Societate pe Acțiuni (SA — Joint-Stock Company)

• Suited for larger enterprises, companies planning public offerings, or activities requiring minimum capital.
• Minimum share capital is significantly higher (commonly 90,000 RON—confirm current level with local counsel).
• More formal governance, mandatory auditor in many cases, stricter disclosure.

Branch Office or Representative Office

• Branches (sucursale) of foreign companies can operate in Romania; they are not separate legal entities, so the parent company retains liability.
• Representative offices can only perform marketing/research activities and cannot generate revenue.

Sole Proprietorship (PFA) and Other Forms

• Available for individuals (including foreign residents with an appropriate permit).
• Simpler to form but not always appropriate for foreign-owned business models.

Restricted sectors and approvals

While most activities allow full foreign ownership, particular sectors have restrictions or require licenses and approvals:

• Financial services (banking, insurance, brokerage): licensing and capital requirements from the National Bank of Romania or Financial Supervisory Authority.
• Telecommunications, energy, transport and infrastructure: sector-specific licenses, sometimes national-interest reviews.
• Defense, national security and certain strategic industries: acquisitions may be subject to state screening for national security reasons.
• Media and publishing: ownership rules and transparency obligations, including foreign media ownership scrutiny.
• Agricultural land ownership: historically complex—land purchase by non-EU natural persons is restricted; corporate acquisitions and ownership require checking current reciprocal rules and registration. EU/EEA companies generally have more favorable conditions than non-EU entities.
• Real estate and property transactions can be subject to additional checks.

Before investing, seek local legal advice to confirm if sector-specific limitations or governmental approvals apply.

Beneficial ownership, AML and reporting

Romania maintains a beneficial ownership (UBO) registry; all companies must disclose ultimate beneficial owners during registration and keep the registry up to date. Anti-money laundering (AML) and Know Your Customer (KYC) requirements apply to banks, corporate service providers and regulated entities. Foreign owners should expect to provide certified and translated identity documents, proof of residence, and sources of funds in certain transactions.

Step-by-step company formation process

Typical setup time: 4–6 weeks for a straightforward SRL and standard business registration (subject to complexity and sectoral approvals).

1. Pre-incorporation planning

   • Choose corporate structure (most foreign investors opt for an SRL).
   • Check name availability at the Trade Registry (Registrul Comerțului).
   • Identify authorized representative and company secretary (if needed).

2. Prepare documents

   • Articles of association (Statute) or incorporation documents.
   • Shareholders’ identification: passports for individuals; registration documents for legal entities.
   • Proof of registered office (lease agreement or property title).
   • Specimen signature(s) for directors/managers.
   • If foreign documents are used: notarization, apostille and Romanian translation may be required.

3. Deposit share capital

   • For SRL, open a company bank account (or use escrow) and deposit share capital where required (minimum 1 RON for SRL, but banks may request a higher amount for practical reasons).
   • For SA or regulated activities, deposit may be higher as required by law.

4. File with the Trade Registry

   • Submit incorporation package, proof of capital deposit and other required documents.
   • Register for tax identification number (CUI) at the Trade Registry or Tax Office.

5. Obtain tax and social registrations

   • Register with the National Agency for Fiscal Administration (ANAF) for corporate tax and payroll.
   • If thresholds are exceeded or activities require, register for VAT (standard threshold and rules apply).
   • Register employees for social security and health insurance.

6. Sectoral licenses and permits

   • Apply for any industry-specific licenses (banking, energy, telecoms, etc.)—these may extend timelines beyond the 4–6 week baseline.

7. Ongoing compliance

   • Maintain accounting records according to Romanian GAAP or IFRS where applicable.
   • Submit annual financial statements, tax returns and update UBO data as required.

Documents typically required from foreign owners

• Valid passport copies (certified and, if required, apostilled).
• Proof of address (utility bill or bank statement).
• For legal entity shareholders: certificate of incorporation, memorandum/statute, and current extract from company registry (translated and apostilled/notarized as required).
• Director/manager appointment documents and specimen signatures.
• Lease agreement or property title for registered office.
• Proof of share capital deposit (bank statement).
• Power of attorney if representatives sign on behalf of foreign owners (notarized and apostilled).

Always confirm document notarization and apostille requirements—these vary by the document type and country of origin.

Costs and fees (approximate)

• Trade Registry filing fee: modest state fee (typically under a few hundred RON/EUR). Exact amount depends on service level and nature of the filings.
• Notary and legalization costs: vary by number and origin of documents (expect several hundred euros for apostilles, translations and notarizations).
• Bank fees: opening an account, capital deposit and account maintenance—vary between banks.
• Professional fees: legal and accounting assistance for company formation typically ranges from €500 to €2,500+ depending on complexity, language services and ongoing support.
• Sectoral license fees: for regulated industries, licensing fees and capital requirements can be significant—confirm sector specifics in advance.
• Accounting and payroll: monthly costs depend on employee numbers and complexity; small SRLs often budget €100–€500/month for outsourced accounting.

These costs are indicative; consult local advisors for up-to-date quotes and bank requirements.

Taxation and payroll — practical notes

• Corporate tax rate: corporate tax rates vary depending on company type and turnover. Standard corporate profit tax is typically applied at a set rate, whereas micro-enterprise regimes and sector-specific rules may apply different rates. Confirm current corporate tax rules with a Romanian tax advisor, as regimes and thresholds change.
• VAT: registration obligations arise when taxable turnover exceeds the statutory threshold (or earlier on voluntary registration). VAT rates and thresholds are defined by Romanian tax law.
• Payroll taxes and social contributions apply to employee salaries—employers must register and make periodic contributions to social insurance and health funds.

Practical considerations for foreign investors

• Banking and KYC: Romanian banks have strict KYC requirements; expect to provide comprehensive documentation on beneficial owners and business activity.
• Language and translation: official documents and filings are in Romanian; certified translations are usually required.
• Local counsel and accounting: retain Romanian legal and accounting advisors to navigate registration, tax optimization and labor law compliance.
• Timeframe variability: 4–6 weeks is typical for straightforward SRL incorporation, but timelines can extend if sectoral approvals, capital formation, or complex ownership structures are involved.

Conclusion

Romania allows extensive foreign ownership and is a pragmatic jurisdiction for company formation in Europe, offering flexible corporate structures (particularly the SRL), a skilled workforce, and EU market access. While most businesses can be 100% foreign-owned, investors must identify sectoral restrictions, licensing requirements, beneficial ownership disclosure obligations, and tax regime variations. Typical setup time for a straightforward company is 4–6 weeks, with total costs depending on structure, licenses and professional services. Engaging local legal and accounting advisors early in the process will minimize delays, ensure compliance with registration and AML rules, and clarify the applicable corporate tax regime and incentives for your specific business plan.