Romania

Economic and Legal Climate

Romania, located in Southeastern Europe, offers a dynamic and growing economy characterized by a diverse industrial base, strategic location, and competitive labor costs. The country has strengths in sectors such as technology, manufacturing, agriculture, and energy. Romania’s legal system is based on civil law, providing comprehensive legal protections and a transparent regulatory framework. As a member of the European Union (EU), Romania offers businesses access to the European Single Market and various EU trade agreements.

Official Languages

The official language of Romania is Romanian. While English is increasingly spoken in business circles, especially in larger cities and among the educated population, proficiency levels can vary. Engaging local legal and business experts who are fluent in Romanian is advisable for international investors.

Banking System

Romania has a well-developed and regulated banking system overseen by the National Bank of Romania (BNR). The country hosts a variety of local and international banks offering comprehensive financial services. The banking sector is known for its stability, innovation, and strong emphasis on digital banking services, supporting both domestic and international business operations.

Maintenance Costs

Maintenance costs for companies in Romania are moderate. Annual compliance requirements include renewing business licenses, filing tax returns, conducting audits, and maintaining proper accounting records. These processes are relatively straightforward but can involve some administrative efforts and costs, which are generally manageable with the assistance of local professionals.

Setting Up Costs

Setting up a company in Romania involves several costs, including incorporation fees, legal fees, and registration with the Romanian Trade Register (RegistrulComerțului). The process includes drafting the company’s articles of association, obtaining a tax identification number (CUI), and registering for VAT. The incorporation process is efficient and can typically be completed within a few days if all documentation is in order.

Corporate Tax Rate

Romania offers a competitive corporate tax regime with a standard corporate tax rate of 16% on taxable profits. The country also provides various tax incentives and deductions for research and development (R&D), innovation, and investments in specific regions or sectors, enhancing tax efficiency for businesses. Small and micro-enterprises benefit from reduced tax rates, depending on turnover and other criteria.

Territorial or Non-Territorial Principles

Romania operates a worldwide tax system, meaning resident companies are taxed on their global income. However, extensive double taxation treaties and incentives are available to help mitigate the impact of double taxation and enhance tax efficiency for foreign investors.

Currency Regulation

As a member of the European Union, Romania imposes no significant restrictions on foreign exchange transactions, allowing for the free flow of capital within the EU and internationally. The currency used is the Romanian leu (RON).

Advantages of Setting Up a Company in Romania

1. Strategic Location: Romania’s location provides easy access to European, Middle Eastern, and Asian markets.
2. Competitive Labor Costs: Access to a cost-effective and skilled labor force, particularly in sectors such as technology, manufacturing, and engineering.
3. Growing Economy: Recent economic growth and development efforts have positioned Romania as an attractive destination for investment.
4. Government Incentives: Various tax incentives and support programs for innovation, R&D, and investments in economically disadvantaged regions.
5. Business-Friendly Environment: Transparent regulatory framework, supportive government policies, and efficient administrative processes facilitate easy company setup and growth.

Disadvantages of Setting Up a Company in Romania

1. Bureaucratic Complexity: Navigating Romania’s regulatory and bureaucratic landscape can be challenging and time-consuming.
2. Infrastructure Development: While improving, some aspects of Romania’s infrastructure may not be as developed as in other major international business hubs.
3. Language Barrier: While English is increasingly spoken, proficiency in Romanian is essential for many legal and administrative matters, necessitating local expertise.

Conclusion

Romania offers a highly attractive environment for setting up a company, with its strategic location, competitive labor costs, and growing economy. Despite challenges such as bureaucratic complexity and infrastructure development, the advantages of a business-friendly environment, central location, and supportive government policies make Romania a compelling destination for business expansion. Global Expand can assist you in navigating the complexities of setting up a company in Romania, ensuring a smooth and successful entry into this dynamic and emerging market.