Romania
SETTING UP IN BUSINESS Introduction Romania has pulled off a minor economic miracle in recent years, sweeping aside the remnants of socialist planning and transforming itself into a model of free-market reform. Now a full member of the EU, and with GDP moving ahead briskly at more than 5% annually, Romania is one of Europe’s most promising locations for investors wishing to set up a new company. For many, however, it is uncharted territory, which is why we should be your first port of call. Our specialist experts will steer you safely to success.
How has EU membership changed Romania’s business climate? In order to qualify for EU accession, Romania has had to speed up its economic reform process along the following lines: How have international investors responded to these changes? Inward investment has risen sharply over the past few years. In 2005 the net inflow of foreign direct investment was €5.2 billion, up 27% on the previous year. The figure for 2006, when published, is likely to show a further significant increase. The trend is being driven by Romania’s economic and political stability, EU accession, and changes to the tax regime. What is the rate of corporation tax in Romania? The standard rate of corporation tax has been reduced to 16%. An exception applies to nightclubs and gambling operations where it is at least 5% of gross revenue. However, corporation tax is much lower for micro-companies, defined as businesses with annual turnover of less than €100,000 and with fewer than ten employees. For such companies, corporation tax is currently just 2%, rising to 3% by 2009. What are the most common types of company in Romania? The two most popular forms of business entity in Romania are: How much share capital is required for a limited liability (SRL) company? The minimum share capital for an SRL company is just €60, provided the business has no more than fifty shareholders. What are the other key features of a limited liability (SRL) company? How much share capital is required for a joint stock (SA) company? The minimum share capital for an SA company is €25,000 of which at least 30% has to be paid up. What are the features of a joint stock (AD) company? What other types of company are there in Romania? The other main forms of business entity are: What is the regulatory environment like? Romania has been ranked first in Eastern Europe and second globally in a World Bank report on regulatory reform. The report, Doing Business 2007, praised Romania for making it simpler, faster and cheaper to set up a new business and start trading. As well as reducing corporation tax to a flat rate of 16%, the government has eased regulatory requirements across the board, ranging from building permits to customs procedures and labor laws. How easy is it to recruit staff in Romania? Spurred by the continued strength of the economy, Romania has been able to keep unemployment below the 6% level. But with a large, well-educated workforce and low average salaries, there should be little difficulty for foreign companies when it comes to recruitment. The challenge, as always, is to ensure that applicants are of the highest quality and that the recruitment process is efficient. For advice on this, and on Romania’s labor laws, contact our recruitment team. Are there financial incentives available? Romania offers a wide range of financial incentives to foreign investors. These include tax breaks, cheap loans and free access to public utilities, with particular benefits for investors seeking to create employment in disadvantaged areas. What about banking facilities? Almost all of Romania’s commercial banks have been privatized, and foreign banks now play a major role in the country’s financial sector. This has helped to improve the breadth, quality and efficiency of financial services available to the international business community, and investors wishing to start a business in Romania will find a comprehensive array of services available to them. We can guide you through the process of opening a bank account in Romania: just get in touch and we’ll get it sorted.
