Basic type of legal private entities are:
- P.F.A. | Persoană Fizică Autorizată - Private small professional type.
- S.R.L. | Societate cu Răspundere Limitată – Limited companies (LTD)
- S.A. | Societate pe Acţiuni - Societes Anonymes
A foreign investor is interested in forms such as SRL & SA - LTD and SA. These two types of companies have important differences which are the following:
|Capital (min)||Opened sum - usually 200 LEI RON ~ 45 €||90.000 LEI RON ~ 20.300 €|
|Exclusion of a shareholder||Yes||No|
|Number of shareholders||1-50||2+|
|Dissolution||Even one shareholder can blocked the procedure||Majority has the absolute right for dissolution|
Usual type of companies in Romania are LTD's and even preferred by major multinationals such as IBM Romania, Hewlett-Packard HP Romania etc.
SRL – LTD | Establishment procedure
The procedure to establish a LTD company in its basic is simple and generally only 2 state agencies are involved:
A. National Trade Register Office
- Verification and reservation of company's name.
- Approval of legal address.
- Approval of shareholders and administrator(s).
- Submission of all supporting documents and final approval for the establishment of the company.
With the approval of the establishment by the National Trade Register Office, the new company receives a Tax Identification Number (CUI) and a European Commercial Registration Number (EUID), in order to proceed to the next steps in the Tax Office.
B. Tax Office
Registration and inclusion in the VAT regime and in the European intra-Community trade system VIES.
The process step by step in details:
Selection of 3 names for the company, which are submitted to the National Trade Register Office to be approved the first in order of preference.
- Signing a rental contract for the legal address.
- Deposit of share capital in the bank in the name of the company.
- Drafting of the company's articles of association, which includes all the details of the shareholders, responsibilities, operating procedures and codes of activities, basic and secondary, according to the official list (CODE CAEN) of Romania.
- Various certificates and statements (eg a solemn declaration that the trustee has no debts to state or private legal persons in Romania) and simple copies of the identitity cards or passports of the shareholders.
- Filing the file in the National Trade Register Office.
- Receipt of the approval of the establishment from the National Trade Register Office in 1-2 working days.
- Receipt from the National Trade Register Office of the official certificate of establishment with the Tax Identification Number of the company and the Registration Number.
- Activation of bank accounts in LEI & Euro or any other currency.
- Preparation of a file for the application for VAT.
Submitting an application for VAT (the procedure is detailed below) and admission to Vies - approval requires 1-3 working days.
Due to the change of the legislation for the inclusion in the VAT regime, the process has peculiarities, which we mention below:
The VAT regime and the new procedure
According to the Romanian Tax Code an LTD can be in VAT status or not. Those companies that are not under the VAT regime do not charge tax on their invoices for their services and the tax on expense invoices is not deductible. If their turnover reaches 65,000 euros then they are obliged, according to the Code, to apply for VAT.
Alternatives for a new company:
- If the company operates outside Romania then it has the right to receive a second VAT number for intra-Community transactions (services or goods), which it receives and enters VIES normally.
- If the company is active and approaches the limit of approximately 65,000 euros, it is essentially obliged to make an application but also commits the Tax Office to accept it after the sufficiency is proven.
- The company can apply from the beginning for inclusion in the normal VAT regime if it has even one (1) full-time employee, real estate or mobile property or it may immediately exceed the limit of 65,000 euros.