Opening a bank account
We must make a distinction between the social capital bank account that is set up before the registration of the company and for which generally banks allow a new company to be represented through a proxy, even by third parties (that are not shareholders or directors), and a company’s current account that can be set up only by the director of the company or a third party based on a notarized (and apostilled) power of attorney. Moreover, each bank has its internal norms that are not made public, so a client cannot know in advance the entire set of requested documents.
UBO declarations and anti-money laundering reporting
When registering a company with the Romanian Trade Registry (including branch offices) or setting up a bank account, shareholders/directors are under the obligation to disclose the identity of the ultimate beneficial owners. Banks, financial institutions, auditors, attorneys and other entities listed as reporting entities by the anti-money laundering law are under the obligation to report suspicious transactions. The UBO registry is not public, only state authorities have access to the information.
Labour & workforce
Due to emigration of Romanian nationals to foreign countries, investors might face a shortage of workforce in certain sectors. Foreign investors that are citizens of non-EU countries shall have to obtain, depending on their specific situation, a residence permit based on their labour contract or their investor status. Obtaining the residence permit is generally not burdensome.
Real estate & Infrastructure
Due to the lack of complete, consolidated and accurate land measurements and not up-to-date owners’ registries, due diligence of legal and technical matters is necessary before any real estate acquisition. Pre-emption rights, including to the benefit of the Romanian state, are to be observed when selling certain types of real estate (agricultural lands, historical monuments, forests etc.). No significant developments have been registered in the last decade in road, railway, naval infrastructure, and this has proven to be a big downfall for those companies that were producing goods for export. On the other hand, companies with activities in construction and/or development of infrastructure projects are seeing Romania as a very promising market especially in the context of the EU-funded projects that have been initiated or that are in a planning stage.
Tax & Accounting
Romania has attractive tax rates:
- A company that has turnover under 1 million EUR is registered as a microenterprise, that shall pay turnover tax of 1% if it has at least one employee or 3% if it has no employees.
- Companies that are not microenterprises are subject to corporate tax of 16% on applied on the registered profit.
- Dividend tax is 5%. For the shareholders, legal entities headquartered in EU that hold at least 10% from the social capital of the Romanian company for a continuous period of at least 1 year, dividends shall be exempt from tax. Dividends are distributed quarterly or yearly.
- The standard VAT rate is 19%, by exemption, for specific products or services there are reduced rates:
- 9% for food, water, medicines, prosthetics, restaurant and catering services etc.
- 5% for books, museums/castle tickets, specific types of estates with a social policy.