Set up Subsidiary in Romania

An overseas corporation can do business in Romania via a subsidiary. The subsidiary has a legal personality and is regarded as a Romanian entity. According to the Law No.31/1990, a Romanian subsidiary of a foreign company is a Romanian legal person and, consequently, it is subject to Romanian laws. It is liable, on its own behalf, for the actions assumed.. It is accountable, on its own part, for the actions taken on. The Romanian subsidiary has its own patrimony and bank account.

In practice, subsidiaries are commissioned following the same steps as the registration of companies, i.e. notarizing the statutes, and registering the subsidiary with the National Trade Register Office. The formation of a subsidiary must comply with the minimum capital requirements under the Romanian Company Law. The formation of a subsidiary must comply with the minimum capital requirements under the Romanian Company Law no.31/1990.

Set up Branch in Romania

The branch is just an extension of the parent company and therefore has no legal personality and no independence. Law no. 105/1992 on the Regulation of the Private International Law Relationship adopts the accepted international practice by which a branch is governed by the national law of its parent company.

Legally, the branch has no separate status from the foreign company itself. It is merely carrying on business in Romania. The foreign company will be liable to the employees and creditors of the branch for the actions of, and debts contracted by, its managers and agents on behalf of the branch.

The formation of a branch follows the same steps as that of a subsidiary, but they do not need to establish incorporation statutes.
- a notarized copy of the articles of incorporation of the parent company;
- evidence of registration of the parent company in its country of origin;
- documentation indicating the company's solvency; and

Assuming the branch is accepted, it must then be registered with the local office of the National Trade Register Office.

The main differences between a subsidiary and a branch are:

- While a subsidiary has a legal personality and is considered a Romanian entity, the branch is just an extension of the parent company and therefore has no legal personality and no independence.
- The branch has no separate status from the foreign company itself and a Romanian subsidiary of a foreign company is a Romanian legal person and, consequently, it is subject to Romanian laws.

Set up Representative office in Romania

Overseas businesses can open subsidiary administrative centers in Romania, according with the specifications of the Decree – Law No.122/1990. They cannot perform commercial activities on their behalf, they have the right to market and oversee the trade of their mother companies. A representative office in Romania its position of agent of a overseas body, cannot produce revenues in local money. It is necessary that the office to open a RON bank account, which is to be funded only by its foreign currency account in order to imbrues in local currency.

Setting up a representative office in Romania with the approval of the Ministry of Industry and Commerce, Department of Foreign Trade, is a simple thing. The license must be renewed yearly against payment of the corresponding fee. If the registration doesn’t takes place in the first quarter of the opening year, the annual fee is prorated correspondingly. If a representative office stands for more than one foreign company, a supplementary fee of 10% must be disbursed for every one of the represented business.

A minimum taxation is applied to the majority of the representative offices because their individual " revenue " is their support by their mother company. Starting with January 1st, 1997, representative offices have to keep constitutional accounts in accordance with legislation applicable to companies.

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