What are the opportunities and restrictions for foreign investors under Romanian law, in particular with regard to the establishment and ownership of commercial enterprises, taxation, and the formation and liquidation of companies in Romania?
Foreign private organizations are free to establish and own commercial enterprises and engage in all income-generating activities. Romanian legislation and regulatory acts provide a national regime for foreign investors, guaranteeing free access to domestic markets and allowing foreign investors to participate in privatization. There are no restrictions on foreigners' participation in commercial enterprises. Foreign investors have the right to establish fully foreign-owned companies in Romania and to convert and repatriate 100% of profits after taxes have been paid.
The standard corporate income tax rate is set at 16%. The standard VAT rate in Romania is 19%. The standard personal income tax rate is 10% (with some variations).
More information about the tax regime in Romania can be found at the following link: http://investromania.gov.ro/web/why-invest/tax/
Limited Liability Company (LLC) is the most common organizational form for companies with foreign capital in Romania, due to the following factors:
• Simplified procedures for establishment and registration.
• More flexible administrative system compared to other types of commercial enterprises.
• Minimum statutory capital requirements set by law.
According to current Romanian legislation, an LLC can have from one to 50 participants, and the statutory capital requirement is at least 200 lei (approximately 50 USD). The company can be managed by one or several individuals, both Romanian citizens and foreigners, each of whom may have equal rights. Romanian law does not differentiate between LLCs with purely Romanian capital and those created with foreign capital.
Recently, the number of joint-stock companies (JSCs) with foreign capital has been increasing. According to current legislation, a joint-stock company is a limited liability company with at least 5 shareholders. There is no maximum limit on the number of shareholders. However, the minimum amount of foreign capital must be at least 30% of the value of the share capital. In the case of investment in material assets (in kind), the amount of foreign capital must be 100%, and the investments must be made within the first 12 months from the date of establishment.
The procedure for registering a company is the same and involves the following stages:
• Development and approval of the founding documents of the newly created company.
• Submission of the founding documents along with an application for establishment to the National Trade Register of Romania.
• Registration with the tax authorities.
When opening a company with foreign capital, the share of the share capital invested by each shareholder cannot be less than 30%, unless otherwise provided by law.
To obtain a registration certificate for the company, which includes a unique registration code, the interested party must submit an application for registration and the founding documents of the company signed by all shareholders. The application also includes a commitment that the legal entity will operate strictly within the declared specialization.
The newly created company is also registered with the tax authorities, and a corresponding tax identification certificate is issued.
The liquidation of a company involves the following steps:
• Adoption of a decision to liquidate the company.
• Registration of the start of the company liquidation procedure in the National Trade Register of Romania and publication in the Official Gazette of Romania (Monitorul Oficial al României).
• Appointment of a liquidator who determines the existence of excessive indebtedness of the company, fulfills its obligations, makes claims, obtains settlements, and represents it in courts and other authorities.
• • Removal of the company from the National Trade Register of Romania.
