Unlocking Opportunities: Setting Up a Business in Romania for Foreign Entrepreneurs

In recent years, Romania has emerged as an enticing hub for foreign entrepreneurs looking to establish their businesses in Europe. With its strategic location in Eastern Europe, a skilled workforce, and a business-friendly environment, Romania offers numerous advantages for those seeking to tap into this dynamic market. In this article, we’ll explore the key advantages of setting up a business in Romania for foreign entrepreneurs.

1. Strategic Location

Situated at the crossroads of Central and Eastern Europe, Romania provides a gateway to a vast market. It offers easy access to the European Union and the Balkans. This strategic location enables foreign entrepreneurs to expand their businesses not only within Romania but also to neighboring countries, fostering regional growth and trade opportunities.

2. Skilled Workforce

Romania boasts a well-educated and skilled workforce. The country has a strong tradition in engineering, IT, and technical fields. Many Romanians are proficient in foreign languages, particularly English, which simplifies international business communications. Foreign entrepreneurs can leverage this pool of talent to develop their businesses and access a diverse range of skills.

3. Low Operating Costs

One of Romania’s most compelling advantages is its cost-effectiveness. Lower labor and operational costs make it an attractive location for businesses. Rent, utilities, and other overhead expenses are significantly more affordable than in Western European countries. This cost-efficiency allows businesses to maximize their profitability and invest in growth.

4. Favorable Taxation

Romania offers a competitive tax regime. For micro-enterprises in Romania with annual revenues less than or equal to 60,000 EUR and not engaged in specific activities listed in certain CAEN codes, a tax rate of 1% applies. However, for micro-enterprises with annual revenues exceeding 60,000 EUR but less than 500,000 EUR, or those involved in activities specified under the respective CAEN codes, a tax rate of 3% is applicable. These varying tax rates are designed to provide favorable conditions for small businesses, encouraging their growth and sustainability while also taking into account their specific circumstances and business activities.

Additionally, Romania has double taxation treaties with many countries, ensuring that businesses don’t pay taxes twice on the same income. The simplified tax system is designed to attract foreign investors and encourage business development.

5. European Union Membership

As a member of the European Union (EU) since 2007, Romania provides access to the largest single market in the world. Businesses established in Romania can easily trade with other EU member states without encountering trade barriers. This access to the EU’s vast consumer base and integrated supply chains can be a game-changer for foreign entrepreneurs.

6. Supportive Business Environment

Romania has made significant efforts to create a favorable business environment. Initiatives such as reducing bureaucracy, streamlining administrative processes, and improving transparency have enhanced the ease of doing business in the country. Additionally, foreign investors can benefit from numerous investment incentives and support programs.

7. Diverse Market Opportunities

Romania’s diverse market offers ample opportunities across various sectors, including technology, agriculture, manufacturing, and services. The country’s expanding middle class and increasing consumer demand make it an attractive destination for businesses looking to grow and diversify their customer base.

8. Infrastructure Development

Romania has invested in modernizing its infrastructure, including roads, railways, and airports. These improvements have boosted logistics and transportation efficiency, making it easier for businesses to move goods and people across the country and beyond.

9. Access to Funding and Investment

Romania is becoming increasingly attractive to international investors. It is a recipient of European structural and investment funds, providing financial support for various projects. Foreign entrepreneurs can access both local and EU funding programs, grants, and venture capital opportunities to kick-start and expand their businesses.

10. Quality of Life

Last but not least, Romania offers a high quality of life at an affordable cost. The country features a rich cultural heritage, a diverse natural landscape, and vibrant cities. Foreign entrepreneurs and their employees can enjoy a good work-life balance, a wide range of cultural activities, and a relatively low cost of living.

There are several types of commercial companies that foreigners and foreign entrepreneurs can establish, each with its own specific characteristics and rules. Here’s an overview of the main types of commercial companies available in Romania:

Limited Liability Company (SRL):

Characteristics: This type of company is closely linked to the individuals who are associates, and their liability is limited to their capital contributions. SRLs are often chosen by small and medium-sized businesses.

Founders: A minimum of one associate is required to establish an SRL, and there can be up to 50 associates.

Name: The company name must include the term “Limited Liability Company” or its abbreviation “SRL.”

General Partnership (Societate în Nume Colectiv – SNC):

Characteristics: SNCs are characterized by close cooperation and personal relationships among founders, often friends, family members, or colleagues.

Founders: SNCs require at least two individuals or legal entities as associates.

Name: The company name must include the term “General Partnership” or its abbreviation “SNC.”

Limited Partnership (Societate în Comandită Simpă – SCS):

Characteristics: SCSs are similar to general partnerships but involve associates with limited liability and unlimited liability.

Founders: There must be at least one general partner (with unlimited liability) and at least one limited partner (with limited liability).

Name: The company name must include the term “Limited Partnership” or its abbreviation “SCS.”

Joint-Stock Company (Societate pe Acțiuni – SA):

Characteristics: SAs are typically used for larger businesses and are characterized by shares that can be publicly traded.

Founders: At least two individuals or legal entities are required to establish an SA.

Name: The company name must include the term “Joint-Stock Company” or its abbreviation “SA.”

Limited Partnership by Shares (Societate în Comandită pe Acțiuni – SCA):

Characteristics: SCA combines the features of both joint-stock companies and limited partnerships.

Founders: Similar to SCS, there must be at least one general partner (with unlimited liability) and at least one limited partner (with limited liability).

Name: The company name must include the term “Limited Partnership by Shares” or its abbreviation “SCA.”

Association

In cases where our primary purpose is not to conduct economic activities for profit but rather to engage in various civic activities in fields such as education, sports, culture, or the arts, it is preferable to register an association.

An association can have employees and can even carry out commercial activities if they serve the purpose specified in the articles of association. In such cases, dividends are not distributed, and in certain situations, income tax may be applicable.

These are the main types of commercial companies in Romania. Each has its own requirements, advantages, and disadvantages, making it essential for foreign entrepreneurs to carefully consider their business goals and choose the most suitable legal structure for their enterprise.

Registration Procedure

The registration procedure is efficient, often concluding on the next business day following document submission. The process can be conducted both in person and remotely, although it is advisable for the company’s manager to be physically present in Romania for at least one day to streamline the process.

Steps for Registration:

Choosing an unique Company Name: The selected name should be distinctive to prevent any similarity with existing business names.

Defining Business Activities: Clearly specify the business activities the company intends to engage in.

Appointing a Managing Director: The director can be a partner, the sole owner, or a third party, and is appointed by the sole owner or the general assembly of partners.

Preparing Necessary Documents: This step is almost entirely completed by us, and the majority of the required documents consist of:

– The registration request – which we will complete on your behalf.

– The standard statement regarding compliance with the conditions for the operation/conduct of activities for the registered office and/or secondary offices – which we will also fill out and provide the document for your signature.

– Evidence of name availability and reservation for the company – we will obtain this for you, but you need to provide us with three name options.

– The articles of association – also drafted by us.

– The document confirming the right to use the space designated as the registered office and, if applicable, the document confirming the right to use the space designated as a secondary office (sales contract, lease, or loan agreement).

– Certified copies of the identification documents of the founders, administrators, auditors, or individual censors.

– Declaration regarding the legal beneficiary of the legal entity – which we will also complete on your behalf and provide the document for your signature.

– Proof of payment of the legally required fees, including the publication fee in the Official Gazette, Part IV.

In conclusion, Romania’s strategic location, skilled workforce, low operating costs, favorable taxation, EU membership, supportive business environment, diverse market opportunities, infrastructure development, access to funding, and quality of life combine to create a welcoming environment for foreign entrepreneurs. Whether you are a tech startup, a manufacturing company, or a service provider, Romania offers a promising platform for your business to thrive and expand in the heart of Europe. Embrace the opportunities, and consider setting up your business in Romania – where innovation and growth go hand in hand.