Legal Requirements and Compliance for Businesses in Romania

Introduction

Romania has become an increasingly attractive location for company formation in Central and Eastern Europe. With competitive operating costs, an educated multilingual workforce, EU market access and a business-friendly tax regime, many foreign and domestic entrepreneurs choose Romania for establishing trading companies, service providers, IT firms and holding structures. This guide explains the legal requirements and compliance obligations for business registration in Romania, practical timelines and costs, required documents, and key considerations when selecting a corporate structure.

Why Romania is attractive for business

• EU membership and access to the Single Market.
• Competitive corporate tax regime: a standard corporate income tax rate of 16% (with alternative micro‑enterprise tax regimes at lower rates for qualifying small companies).
• Skilled, multilingual labour force—strong IT and engineering talent pool.
• Relatively low operating and labor costs compared with Western Europe.
• Government incentives for R&D, technology, and certain investments; regional development funds and EU funding opportunities.
• Simple, commonly used corporate structures (notably the SRL) and established company registration procedures.

Common corporate structures

SRL (Societate cu Răspundere Limitată — Limited Liability Company)

• Most commonly used form for SMEs and foreign investors.
• Shareholders’ liability limited to subscribed capital.
• Flexible ownership (single or multiple shareholders).
• Management by one or more directors (can be foreign nationals).
• Modest minimum share capital requirement compared with many EU jurisdictions (confirm current minimum with the Romanian Trade Register—historically low amounts have applied).

SA (Societate pe Acțiuni — Joint-Stock Company)

• Suited for larger businesses or where public listing is intended.
• Stricter governance and disclosure rules; higher formalities and minimum capital requirements.

Branch and Representative Office

• Branch: dependent entity of a foreign company that can carry out commercial activity in Romania; treated as an extension of the foreign parent.
• Representative office: limited to non-commercial activities (market research, promotion); cannot generate revenue locally.

Sole trader / PFA and other forms

• PFA (Persoană Fizică Autorizată) and II (Întreprindere Individuală) for sole entrepreneurs and micro-businesses; simpler bookkeeping but personal liability and different tax regimes.

Key legal and regulatory requirements for company formation

• Registered office in Romania: Evidence of premises (rental contract, property deed or a service agreement with a registered office provider) must be provided.
• Minimum share capital: Depends on the chosen structure (SRL vs SA). SRL minimum capital has historically been modest; verify current thresholds with the Trade Register or legal counsel.
• Directors and shareholders: At least one director is required for an SRL; directors can be non‑residents. Shareholders may be individuals or legal entities (domestic or foreign).
• Company name: Must be approved by the Romanian Trade Register (ONRC). Names must be unique and comply with local naming rules.
• NACE codes: The company must declare primary and secondary activities using the NACE classification system.
• Special licenses/authorizations: Certain activities (finance, insurance, healthcare, transport, food, gaming, security, etc.) require sector-specific permits before commencing operations.
• Tax registration: Registration with the National Agency for Fiscal Administration (ANAF) for corporate tax, VAT (if required), and payroll taxes when hiring employees.

Practical step-by-step company registration process

1. Name reservation: Submit proposed names to the Trade Register for approval (usually a short processing time).
2. Prepare incorporation documents: Draft and notarize the Articles of Association, shareholder resolutions, specimen signatures, and other documents required by ONRC.
3. Registered office documentation: Provide lease agreement or owner’s consent for the registered office.
4. Deposit share capital (where required): Open a temporary bank account to deposit the initial capital if applicable—bank confirmation may be required.
5. Submit application to Trade Register (ONRC): File incorporation application with required documents and pay registration fees.
6. Obtain fiscal identification: Once registered, obtain the tax identification number and register for corporate tax; consider VAT registration (mandatory if turnover exceeds threshold or for certain activities).
7. Open a permanent corporate bank account: After registration, transfer capital to the company’s permanent account.
8. Register for social contributions and payroll: If hiring, register with the relevant authorities for social security and payroll tax obligations.
9. Obtain licenses/permits if required for regulated activities.

Documents typically required

• Identification documents of shareholders and directors: passports for foreigners, national ID for Romanian citizens.
• Articles of Association / Incorporation deed (notarized).
• Proof of registered office (rental agreement, title deed, or hosted office agreement).
• Bank confirmation of share capital deposit (if required).
• Specimen signatures and power of attorney (if someone acts on behalf of a shareholder).
• NACE activity codes declaration.
• For foreign shareholders: company extracts, certificates of good standing, and corporate documents often need apostille/legalization and certified translation into Romanian.
• Application forms for the Trade Register and tax authorities.

Costs — initial and ongoing (typical ranges)

Note: fees and professional charges vary; figures below are indicative and should be confirmed with service providers.

• Trade Register filing fee: modest — generally a few hundred RON (varies by the type of service and rush requests).
• Notary fees: for notarization of incorporation documents — variable; often several hundred RON.
• Bank fees: initial account opening and capital deposit fees are usually small.
• Registered office service: monthly fees for a virtual office range from inexpensive to moderate depending on the provider.
• Legal and consultancy fees: incorporation assistance from lawyers or corporate service providers typically ranges from a few hundred to a few thousand euros depending on complexity and whether additional services (VAT registration, licensing, translations) are required.
• Accounting and payroll services: ongoing monthly accounting can range from approx. €100–€400 or more depending on transaction volume and payroll obligations.
• Annual statutory audit (if required): thresholds apply; audit costs depend on company size and complexity.

Timelines

A typical company formation timeline in Romania is 4–6 weeks from initial preparations to full operational status — this is a practical average and reflects:

• Name reservation and pre-document preparation: a few days to 1 week.
• Notarization and document legalization (if foreign documents are involved): 1–2 weeks.
• Bank deposit and confirmation: several days.
• Trade Register registration: in many cases 1–2 weeks, but can be longer if additional checks or clarifications are requested.
• VAT registration and other tax registrations: additional 1–2 weeks depending on ANAF workload and documentation completeness.

Complex cases (regulated activities, multiple foreign shareholders requiring document legalization and translations) can extend the timeline. The 4–6 week estimate is a reasonable planning assumption for typical SRL formations when all documents are in order.

Taxation and ongoing compliance

• Corporate income tax: the standard corporate tax rate in Romania is 16%. Small companies that meet criteria may opt for the micro‑enterprise tax regime, where tax rates are lower (typically 1% or 3% of turnover depending on whether the company has employees and other qualifying conditions).
• VAT: standard VAT register rules apply. Mandatory VAT registration is triggered when turnover exceeds a statutory threshold (historically RON 300,000 — verify current threshold) or when engaging in certain taxable activities. Voluntary registration is also possible.
• Payroll taxes and social contributions: employers must withhold and remit income tax and social contributions for employees; the employer also has contribution obligations. Complying with payroll, labor law, and social security registrations is essential.
• Tax filings: companies must file corporate tax returns, VAT returns (monthly/quarterly as applicable), and periodic payroll declarations. Annual financial statements must be prepared in accordance with Romanian accounting standards and filed with the Trade Register and tax authorities within statutory deadlines.
• Accounting: mandatory bookkeeping in Romanian and in Romanian lei (RON) for financial statement filings. Many businesses engage professional accounting firms to ensure compliance.
• Statutory audit: larger companies meeting specific size thresholds must have their annual financial statements audited by a licensed statutory auditor.

Hiring employees and work permits

• Employment contracts must comply with Romanian labor law, and employees must be registered for social security.
• Non‑EU/EEA citizens generally require work and residence permits to be employed in Romania; EU/EEA citizens can work with more limited formalities but must register with authorities depending on duration and nature of stay.
• Payroll administration and labor law compliance are important ongoing obligations.

Practical tips and common pitfalls

• Use a local corporate services provider or lawyer for initial registration to reduce delays caused by incorrect document formatting or missing translations.
• Ensure foreign corporate documents are apostilled/legalized and translated by an authorized translator before submission.
• Verify in advance whether your planned activity requires special licensing; obtaining licenses after incorporation can delay operational start.
• Plan for ongoing accounting and payroll services—outsourcing these functions is common and cost-effective for small and medium businesses.
• Keep updated on thresholds and tax rule changes (VAT thresholds, micro-enterprise eligibility, specific incentives) because Romanian tax and business law can change.

Conclusion

Forming a company in Romania is a pragmatic choice for many investors due to its EU membership, competitive corporate tax regime (standard 16% corporate tax and alternative micro‑enterprise tax options), skilled workforce and relatively low setup costs. The SRL is the prevalent corporate structure for foreign and local entrepreneurs, and a typical setup timeline is around 4–6 weeks when all documentation is prepared correctly. To navigate legal, tax and administrative requirements efficiently—especially if you have foreign shareholders or regulated activities—engage local legal and accounting advisors who can handle trades register filings, translations and tax registrations, ensuring timely compliance and a smooth launch.