Create a Romanian Company

The creation of a Romanian company implies a thorough analysis of a number of issues before actually commencing the company formation procedures. We have listed below a series of issues which in our view are vital to be taken into consideration. Of course we look forward to receive more suggestions from the visitors of our blog or of our main website www.RomanianLawOffice.com.

Selecting the type of Romanian entity that is right for the investor

The main types of entities are:

-         The Romanian Limited Liability Company (SRL) with natural persons as shareholders. This type of company has min. share capital of 200 lei and can have a single shareholder.

-         The Romanian SRL company with a foreign company as sole or main shareholder. This is the structure mostly preferred by foreign companies expanding to Romania. This entity is a Romanian Subsidiary (FILIALA). It has the same characteristics as the regular LLC and the same minimum capital of 200 lei.

-    The Romanian Branch (SUCURSALA) does not have its own legal personality and is basically an extension of the parent company in Romania.

Estimating the on-going costs for the maintenance of the Romanian Company

Maintenance and good standing of a Romanian Company does not imply important costs. The investor should consider the fees for a registered office, the appointment of a Romanian accountant. There is no longer a minimum tax to be paid yearly to the Romanian State, therefore if a company has no profit, then it doesn’t need to pay anything to the State.

Romanian Corporate Tax, Dividend Tax and Employee Taxes

Romania has flat corporate tax of 16% and a flat 16% dividend tax (if other treaties do not apply). Taxes paid by the employer for the employee are estimated to be around 40% of the salary.

Creating the best shareholding structure for tax minimization and company activity

The foreign investor should base his strategy in this sense on the location of the shareholders of the future Romanian company. For instance Romania has special regulations for dividend tax charged on non-resident shareholders located in another European Union Country. If the shareholders are not located in the EU, then it would firstly be best to verify whether Romania has concluded a Tax Treaty with the respective country in order to avoid double taxation. (Romania has actually signed treaties with many countries for this purpose).

A foreign investor should also take into account that Romania has recently adopted a regulation that allows the government to charge 50% withholding tax for those investors located in countries that have not adopted common transparency treaties with Romania. If your country is non-EU and does not have a signed double taxation treaty with Romania then you are strongly advised to verify this matter beforehand.

Real Estate Prices in Romania 2013

Surprisingly it seems that Cluj is the only Romanian city where housing prices have increased in the latest period, while in all the other cities prices have dropped or are more or less stagnating. This is at least what the the Romanian Real Estate Portal imobiliare.ro is reporting. The average price per built square meter in Bucharest is 1,100 EUR.

Cluj-Napoca is the only city where housing prices have increased in the last 12 months, provided that in Constanta, Ploiesti, Timisoara, Brasov and Bucharest developers/sellers have dropped prices by up to 4.2 %.Once in April asking prices for apartments across the country were down, registering a decline of 2.4% from 953-935 euros per square meter residential market in May was marked by stability. The nationally in May was recorded a slight appreciation of 0.3% up to 938 euros per square meter. However, the general trend in major cities of the country was, with two exceptions, at loss.

The first place among large cities by cheapening the residential segment recorded within 12 months is Constanta and Ploiesti, with decreases of 4.2% compared to 2012.In Constanta prices have fallen below 900 euros per square meter, and from 906-868 euros per square meter.In Bucharest, the claims of owners and developers fell by 3.9% in the 12 months to 1,096 euros per square meter, compared to 1,140 euros per square meter in the same period last year.The next place is Brasov, where prices requested by sellers and intermediaries are 1.8% lower compared to the end of May 2012. Under these conditions, the average price reached 833 euros per square meter to 848 euros per square meter last year.In Timisoara, housing prices have remained relatively stable over the past 12 months, with a margin of 1% decrease from 794-786 euros per square meter.The largest city in Transylvania, Cluj-Napoca is one of the analyzed where asking prices are now higher than in the same period last year - even if the difference is a low 0.3%. The average price in Cluj-Napoca is located at 940 euros per square meter to 937 euros per square meter in May 2012.

Types of newly formed businesses in Romania

Some interesting statistics on the types of newly formed businesses in Romania were releases in the Romanian media. This information is quite useful for those investors looking for opportunities in Romania and see the latest business trends. Enescu & Cuc Law Firm is specialized in Romanian company formation therefore please contact us in order to have any related inquiry answered.

It's reported that last year in Romania were registered and were still active, about 140,083 new Romanian businesses, excluding agricultural enterprises. Three quarters of firms headquartered at the manager's domicile. The numbers also show a strange growth in areas such as construction and transport sectors in which new Romanian companies are established. The rate of creation of new enterprises, calculated from 1 January 1995, is situated in the range of 13-17% annually until 2001, after showing a significant increase correlated with improved legislation establishing small and medium enterprises.Almost all new businesses in Romania have a single seat. In 2011, new companies whose registered office is the manager's home address is 71.2 %, while those who value independent company seat is 28.8%. The "industry" new sightings share, 16.8%, is up from previous years. There is a decrease in the share of the trade, hotels and restaurants, and other services and an increase in the share of transport and building sectors.The proportion of founders / managers of newly created aged 45-49 years, has a slight increase of 1.4 percentage points compared to 2010, the age between 40-44 years is a decrease of 1.3 percentage points compared to precedent, other age groups showing slight variations of weights to the situation in 2010. At regional level, the variation around the average is relatively low, the Center has increased by 8.1 percentage points compared to the average for the age group 30-39 years, and the Northeast region has a decrease of 3.1 percentage points compared to the average age group greater than or equal to 60 years. Annually, more than half of the companies have founders / managers men. The proportion of women founders / managers is around a third (a slight decrease compared to 2010), the highest percentage 40.5% recorded in 2010.