Representative office Bucharest
Foreign companies have several options when deciding the manner in which they will set up their business operations in Romania.
The representative office in Romania is not a separate legal entity registered in Romania, it is merely an extension of a foreign company willing to engage in certain activities in the country.
The office incorporated in Bucharest or in another Romanian city of choice is regulated by a number of laws, and our team describes the most important legal provisions below.
Our Romania company formation specialists answer a number of important questions about the representative office in this article.
Foreign investors or corporations ready to enter the Romanian market can reach out to us to find out more about the available options.
| Quick Facts | |
|---|---|
| Best used for | Promotional and marketing activities, general liaison activities. |
| Prohibited activities | Cannot provide services or engage in manufacturing activities. |
| Name | The same as the parent company's. |
| Legal entity | It is not a separate legal entity. |
| Judicial capacity | No |
| Liability | Parent company |
| Types of companies that can use a liaison office | Generally medium or large corporations that are interested in exploring their options in the Romanian market. |
| Limitations on foreign companies | Not applicable |
| Local representative | Yes |
| Subject to taxes | No, as it is not able to engage in economic activities. |
| Subject to reporting | No, given the fact that it does not derive income from Romania. |
| Registration | Registered with the National Agency for Fiscal Administration following the submission of a set of documents. |
| Alternatives to the representative office in Romania | The branch or the subsidiary. |
| How can we assist you | We can oversee the representative office's registration process with the Romanian authorities and provide guidance on other suitable business forms. |
| When to contact our team in Romania | As soon as the foreign legal entity decides that it is purposeful to open a liaison office in Romania. | Differences from a subsidiary | Can derive profit and it is a separate legal entity from the founding company. |
| Differences from a branch | Can drive profit but it is not a separate legal entity from the parent company. |
| Option to transition to another legal entity | Yes |
| Transitioning time (approx.) | One week |
| When to transition from a representative office | As soon as the foreign company determines that it will engage in commercial activities in Romania. |
| Assistance for changing the business form | Our team can assist with all the registrations and changes required to transition from a representative office to another business form. |
| Representative office costs in Romania | Include the costs associated with renting the space in which the liaison office will operate. |
| Documents required to set up the representative office | The company’s constitutive documents, decision to set up the liaison office, other documents for the local representative in Romania. |
| Document language | Romanian |
| Hiring employees | Yes |
| Limitations on hiring employees | Not applicable |
| Conditions for liaison office representative’s nationality | Not the case |
| Reasons to set up a liaison office in Romania | Low corporate-related costs, fast internet connectivity, talented workforce. |
| Why work with us | We are a team offering complete solutions to companies that are just testing the Romanian market as well as those that are ready to incorporate a company. |
| Other services | Counsel in choosing the right business form, virtual office solutions, accounting, etc. |
What is a representative office in Romania?
A representative office is a Romanian legal form authorized by the authorities to represent companies and foreign economic organizations in Romania.
This is a manner in which a foreign company can promote its commercial interests in Romania, through specialized offices, according to a predetermined agreement.
In most cases, foreign companies register representative offices in order to gather information about their niche, for various product promotions, or for the purpose of meetings the agreements signed with suppliers or partners in Romania.
It is useful to point out that opening a representative office will not allow the company to provide services or engage in any type of production/manufacturing work.
What is the representative office used for in Romania?
According to Romanian legal regulations, the representative office functions as an intermediary agent between mother companies and other external business partners.
In broad terms, it can be considered a broker for the main company. If interested in opening a representative office in Romania, clients should know that such a secondary establishment cannot engage in commercial revenue-generating activities such as concluding contracts and opening of letter of credit.
Any company choosing to set up a representative office in the country may take into consideration some specific roles that can be fulfilled by these business entities. Through these offices, the mother company can promote its brand and it can work with local agencies and distributors.
The representative office has no separate social capital and, if willing to create a representative office in Romania, individuals need to know that this type of business entity must not be registered with the Trade Register Office.
This type of office is not an independent legal entity and therefore the mother company must be held responsible for actions taken by the representative office.
What regulations apply to representative offices in Romania?
Clients interested in opening a representative office in Romania should know that there are specific regulations to follow in this particular case:
- The registration of the office starts with submitting a file with the Ministry of Economy, Commerce and Business Environment (according to Decree-Law No. 122/1990).
- The documents include specific details such as: the location of the representative office’s headquarters, the expected duration of the office’s operations, the number and positions of personnel that will be employed and the object of activity.
- According to the current procedures, the operating permit is issued within 30 days of the submission.
- As per the legal requirements in force, within 15 days of the issuance of this authorization, the representative office must be registered with the local Tax Office in its area of functioning.
Foreign companies that decide to register a representative office can benefit from working with a legal professional who is trained and is familiar with the business environment in the country.
Our company is able to provide comprehensive approaches fitting all expectations and always serving our clients’ best interests. Our lawyers develop unique strategies which will result in great financial rewards.
A representative office is not a legal entity and has no right to engage in trading.
The office only allows a foreign entity to establish a presence in the country and perform minimal activities, as authorized.
We invite you to watch a short video about the liaison office in Romania:
How is the representative office registered?
In order to open a representative office in Romania, the foreign company must submit a request. The following documents are filed with the relevant authorities:
- the decision to open the representative office in Romania;
- proof of registered office;
- the representative activity performed in Romania;
- representative office duration or functioning period;
- number of appointed individuals, their name, residence and identification documents;
- proof of foreign company’s creditworthiness by means of relevant bank statements;
- the foreign company’s registration certificate, issued by the authorities in its country of origin;
- proof of the annual representative office tax payment;
- other documents concerning the foreign company, as may be required for the particular representative activities that will take place in Romania.
The decision to open the representative office as well as the power of attorney for the appointed representative can be drawn up as a single document or as two separate documents. The original document and the legalized translation are required.
All of the documents required to register a representative office need to be translated and legalized in Romanian.
Our team can help you prepare the documents. In order to legalize the Romanian translation of a foreign-issued document, the original document in the foreign language needs to be presented to the notary office.
Any Romanian representative offices working on behalf of banks are subject to Law no. 58.1998 and the subsequent legislation issued by the National Bank of Romania and duly published in the National Gazette.
Changing the registered office particulars or closing the office
It is important to keep in mind that any change that occurs in the legal status of the company during the authorized period for the representative office must be communicated to the Ministry of Economy in 30 days in order to change the operating license.
The following documents are relevant for the extension of the registered office’s authorization:
- the extension request form, filled in (original and copy);
- proof of registered office tax payment for the period of the extension (1.2000 USD/year);
- recent authorization;
- registered office representative power of attorney;
- power of attorney for the individual submitting the extension request, if the person is not the appointed representative.
When the registered office changes its registered office, the request will include the application for the registered office change and the relevant documents for the new space (lease or purchase agreement).
In all cases, when the person submitting the request is not the same as the empowered appointed representative, the said individual will need to provide an adequate power of attorney.
As part of the registered office particulars that can be subject to change, we also mention changing the appointed representative or adding another individual to also act in the same capacity. The request will include the request form, along with the power of attorney for the new or changed representative, along with the individual’s identification documents.
The authorization may be withdrawn before expiration in the following cases:
- Exceeding the object of activity that was authorized;
- Violation of legal provisions by the staff of the representative office;
- Incompliance with tax obligations;
If one of the above cases occurs, the Ministry of Economy will notify the company 90 days before liquidation.
The process for closing a representative office also involves making the relevant submissions with the Ministry of Economy. In this case, the documents will be the following:
- representative office closure request form;
- the foreign company’s decision to close the Romanian representative office;
- the most recent authorization for the representative office, as available’
- the first issued authorization for the office;
- confirmation of having removed the representative office’s appointed tax identification number with the National Agency for Fiscal Administration.
What are the taxes applicable to the representative office?
The representative office in Romania is not a legal entity although registered with the authorities, therefore, it is not taxed as a locally registered company or as a foreign legal entity deriving income from Romania.
The fact that it does not engage in commercial activities, and is limited to representative ones, makes it subject to different tax requirements.
Our team lists some of the applicable laws and tax provisions below:
- the person in charge of the representative office must register with the tax office within 15 days from when the authorization has been issued; the fiscal identification code, used for making the relevant payments for the annual fee is issued as a result of this registration;
- a fiscal declaration on the establishment or abolition of a representative office during the fiscal year must be submitted to the competent tax authority in a maximum of 30 days after the representative office was abolished or established;
- within 30 days after submitting the declaration, the authority will recalculate the taxes that must be paid;
- the registered office pays 1.2000 USD/year to the National Agency for Fiscal Administration;
- when the company is subject to additional representation, the required 10% of the 1.2000 USD, or 120 USD, can also be paid into installments for 3, 6 or 9 months, as needed.
The representative office is also subject to certain accounting requirements, however, these can differ according to the type of activity it is engaged in. The office can choose a single or double-entry accounting system.
Doing business in Romania
The representative office is not the only type of business form available to foreign companies looking to set up their operations in Romania.
The branch and the subsidiary are the two options that also allow a foreign company to engage in the same business activities as the ones being performed in its country of origin and/or other additional ones.
If you wish to know more about the representative office or the other options for entering the Romanian market, please contact us for details.
We assist investors who wish to open micro-companies in Romania as well as other business forms.