Legal Business Entitities Romania

Local and foreign investors have several legal business entities in Romania to choose from when they decide to set up their commercial activities in the country. Understanding the key differences and advantages between these is important and our team can assist those who are interested in company formation in Romania.

Types of legal business entities in Romania

The most common types of legal business entities in Romania are the following:

• The general partnership;
• The limited partnership;
• The limited liability company – which can also qualify as a Romanian micro company, subject to conditions;
• The joint stock company;
• The branch of a foreign company.

A commercial company in Romania is considered a legal person. It can enter into agreements in its own name, accrue debt, sue and be sued. The joint stock company and the limited liability company fall into this category.

In addition to the aforementioned Romanian business forms, entrepreneurs can also open a sole trader in the country. However, this type of business does not have legal capacity, and it is not separate from its founder, therefore it does not qualify as a legal business entity for the purpose of the discussion herein.

Key differences between the legal business entities in Romania

The joint stock company and the private limited liability company are the two types of companies in Romania that have legal capacity and can be incorporated by local and foreign investors alike, with no differences in terms of ownership rights or residency requirements.

Below, our experts in company formation in Romania list some of the key differences between these legal business entities:

• Size: the private limited company is suitable for small to medium business ventures while the joint-stock is commonly used by those opening large companies;
• Capital: the private limited company (SRL) does not require a minimum share capital while the joint-stock company does;
• Incorporation documents: both legal business entities in Romania are incorporated by registering their constitutive documents with the National Trade Register Office;
• Taxation: the corporate income tax applies to their worldwide income, however, qualifying small SRL companies can benefit from lower tax rates (see below);
• Reporting: large companies such as the SA can be subject to audit and more complex reporting. All Romanian legal business entities are subject to annual submissions and reporting.

Please keep in mind that several important factors should be taken into account when choosing between the main business entities in Romania. The list above should only be used for informative purposes as it is not exhaustive. We recommend reaching out to an incorporation specialist, such as one of our agents, who can answer your questions.

The main steps required to register a company in Romania

Once investors choose between one of the types of corporations in Romania briefly described above, it is time to start the incorporation process. We list the main steps below:

• Choose and reserve the company name: each name must be unique and comply with the local rules for company names. The chosen one (if available) can be reserved to ensure its upcoming use;
• Prepare the documents: the Articles of Incorporation are the company’s constitutive documents and are mandatory for both the SRL and the SA companies in Romania;
• Register: the incorporation documents along with details about the company founders and the application form are submitted to the regional Trade Register Office;
• License: companies may require additional licenses and permits, depending on the industry in which they activate.

Registered companies are also registered for tax purposes. We remind investors of the corporate tax rates in Romania:

• 16% corporate income tax rate;
• 1% of revenue for micro-companies;
• 3% of revenue for micro-companies.

All newly incorporated legal business entities in Romania may be treated as corporate income tax payers, but some may choose to opt for the micro-company regime, as long as they qualify.

Contact us for complete information about the legal business entities in Romania and assistance with their registration.