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Company formation Romania – Tax haven of the EU!
Company formation Romania offers number of key advantages that sets it apart from rest of the EU. The country of Romania, which lies in the southeast of Europe near the Balkan peninsula, counts as member of European Union since 01.01.2007. Starting a business in Romania especially for production, research or telecommunication activities is particularly popular, as Romania is one of the most attractive countries in Europe, if not the world, for company incorporation abroad.
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To avoid mistakes as you set up your new company, it is essential to seek advice. We would be happy to provide you with the best advice on how to set up your company abroad. We are offering you a short, intial, free and non-binding consultation via email. It will go a long to way to help you setup your company the right way.
Tatjana Lintner
Key account manager at W-V Law Firm LLP
Tatjana Lintner
Key account manager bei W-V Law Firm LLP
Micro-enterprise tax structure
Regarding tax levels, we must make a distinction between 2 circumstances: whether or not your company has at least one employee with a full-time employment contract. Up until 2023, your business paid 3% of its annual gross sales in taxes if it had no employees. But starting in 2023, it will be subject to a 16% profit tax.
The tax will stay at 1% of revenue if your business employs at least one full-time Romanian or other legal employee of any nationality. In essence, you will have to perform some calculations to determine which taxation method is best for you. More specifically, you will pay your employee's salaries and taxes if the 16% tax on profits is more than the 1% on revenue.
Regarding the tax rate, only businesses with annual revenues of less than 500.000 euros will be subject to the 1% tax on yearly revenue. The ceiling prior to 2023 was 1 million euros of annual income.
Finally, if your company activity includes consulting (primary CAEN code), it will no longer be considered a microenterprise and will not be eligible for the 1% tax on annual income even if it meets all of the requirements listed above. Before 2023, businesses that provided consulting services might also be subject to a 1% or 3% tax.
| From 2023 | till 500.000 EUR turnover | above 500.000 EUR turnover |
| Corporate tax | 1% on turnover | 16% on profit |
| Capital gain tax | 8% | 8% |
Low personnel costs
The biggest advantage for starting a business in Romania is the low personnel costs. In comparison to the major western European countries, these can be saved by up to 80% for the same type and qualification of the activity and skill required.
High qualification and language skills of your potential staff
Numerous highly motivated trained professionals are at your disposal as possible personnel for your company. Since the degree programs in the country are offered in various languages, there are no language barriers. This is the basic building block, so that the staff delivers a high quality standard. That is why Romania offers itself as an alternative to outsource research, production or development activities. Due to the variety of language skills, Romania is now a lucrative location for call center companies.
EU law in Romania
The Romanian legal system is largely aligned with EU law. Therefore, the company formation formalities are relatively easy to handle.
Tax benefits
You can withdraw money from the corporation as dividends once your Romanian business begins to turn a profit. Dividends may be paid annually or every three months.
The dividend tax for all business owners will rise to 8% from 5% starting in 2023.
The key advantages for company formation in Romania at a glance
- - Low labor costs.
- - Large Internal Market - With a population of 21.6 million, Romania is the second largest market in Central and Eastern Europe. Thus, a large-scale distribution in the domestic is also possible.
- - High number of potential applicants for vacant positions in your organization due to fairly large population size.
- - High level of education - Numerous studies prove the excellent education of Romanian graduates.
- - Numerous Business Centers - Thus, there is a wide choice of locations for your business
- - Strongly developed airport infrastructure
- - Tax benefits
- - Talent of the staff - Excellent for call centers
We comply with the following code:
- - Legally secure foundations
- - No unexpected(hidden) costs
- - No false promises
- - Finding the right solution by focusing on your requirements
With this strategy, we have been on the market since 2013 and have not disappointed any customer so far. And we prioritize it in keeping that way. We strive to ensure that every client is satisfied and does not take risks with the solutions we provide for them, but only exploits legal opportunities. Starting a company that involves doing real business is more costly than a letterbox company, but it is the only way to save on taxes without risking legal action.
Company formation in Romania
The type of companies in Romania are the SRL limited liability company or the public limited companies.
The SRL is a popular form of company, as it requires minimal management requirements, has greater flexibility with other companies, and has a relatively low initial capital (minimum capital 200.00 lei [about 40 euros]). The SRL is managed by one or more directors (managing directors).
The number of public limited companies in Romania has increased significantly recently. The share capital is at least 20,000 euros and the corporation should own at least 2 shareholders, whereas the number of shareholders is unlimited. When founding a public limited company, however, it should be noted that 30% of the share capital or 100% of the capital stock must be paid immediately after it has been set up. The remaining capital is to be paid within 12 months after establishment.
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We can give you advise on choosing right jurisdiction for your business. Contact us today.
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Further advantages of Romania:
- - Romania is a Member State of the European Union
- - Attractive investment location
- - "Flat Tax" amounting to only 3% corporation tax since 2017 up to 500,000 EUR turnover!
- - Low labor/employment costs (minimum wage 275 EUR)
- - Geographical proximity to Central Europe, short flight time
- - Large sales market
Tax structure comparison
Here are some examples of the tax differences between a highly taxed jurisdiction versus major tax havens.
| Belgian Limited (SPRL/BVBA) | Romanian Limited (SRL) | Malta Limited (Ltd.) | |
|---|---|---|---|
| Profit | 100,000 EUR | 100,000 EUR | 100,000 EUR |
| Corporate tax | 33% including. surcharge tax rate 3% Totally 36,000 EUR(36%) | 1,000 EUR (1%) | 5,000* EUR (5%) Effectively reduced from 35% |
| Profit after taxes | 64,000 EUR | 99,000 EUR | 95,000 EUR |
| Key advantages | Strong economy, highly reputed country | Lowest corporate tax in EU, ideal for micro-enterprise, low cost and highly skilled labor force | Stable and growing economy, high anonymity, low start-up capital |
| Tax | 36,000 EUR | 1,000 EUR | 5,000 EUR |
Company formation Romania - That's how it works
- Send us a non-binding inquiry about the incorporation of a company in Romania.
- We will send you an offer within a few hours.
- After acceptance of the offer or clarification of important questions, send us a copy of your ID.
- We start the process for company incorporation and apply for tax number, etc.
In 2-4 weeks you have a fully functioning company based in Romania including an account with one or more banks.
If you too want to take advantage of a Romanian company, please send us your request and we will get back to you.
With our knowledge and experience, we not only advise you, but also implement the recommended measures with you. We have our office in Romania and are therefore able to provide on-site services quickly and reliably. This sets us apart from re-sellers who unnecessarily increase or extend costs and communication.
The biggest mistakes when starting a company abroad
Not all topics related to founding a company abroad are always free of prejudices and false information that have prevailed over the years. We give you an overview of the most important questions about founding a company abroad.
Founding a company abroad as a citizen of another country is legal?
Founding a company abroad as a citizen of another country is legal?
Yes, in most countries foreigners can be sole shareholder of a local entity.
Do you have to live in the country where you start a company?
Do you have to live in the country where you start a company?
No you can set up a company anywhere in the world, as long as the country in question allows you, as a foreigner, to acquire shares in local companies. If this is not the case, trustees can be used. Freedom of establishment applies within the European Union. However, it is important that the management takes place locally, in the country in which the company is registered. In addition, a permanent establishment must be set up. Without this, a German tax office will not recognize the company and, in the worst case, would demand back payment of corporate and trade taxes plus late payment penalties. We rent you a real office and set up a permanent establishment that meets all requirements without a doubt. In addition, we have real managing directors who run companies in the home country and are resident there.
Problematic law firms: closure is made more difficult
Problematic law firms: closure is made more difficult
Some law firms tie clients with gag contracts and apply pressure when the client wants to close their business. If you are a client of a law firm that has set up a legally unsound company for you, you make yourself vulnerable to blackmail. Because in the event of a tax problem, law firms without a license are not bound by a duty of confidentiality.
Changing offices is made more difficult
Changing offices is made more difficult
We receive many inquiries from customers who already own a foreign company and are looking for a new law firm. Switching to us is then often made more difficult. So horrendous final bills are made, which have to be paid before a change is possible. Therefore we have developed a trust principle. If you are not satisfied with us and want to switch, you can do so at any time. You will receive the necessary documents (resignation letter) from us in a standardized form after the foundation. This protects you from unexpected costs and you are free to go to another law firm at any time. So far we have not lost a client to another law firm.
Privacy Policy/Office Location
Privacy Policy/Office Location
Your accounting documents are safe with us. In addition, all electronic data is only stored in encrypted form and apart from us, who are bound by professional secrecy, no one has access. All accounting documents are also only stored locally. Neither authorities nor hackers can access this data.
No taxes?
No taxes?
There are certainly locations in the world that do not charge any taxes to companies and private individuals or only charge a very low flat-rate tax. However, this can rarely be used without a corresponding change of residence. If you are resident in Germany, the relevant double taxation agreement is decisive. Providers who promise otherwise will tempt you into tax evasion, which is usually severely punished if discovered. We advise you not to set up companies in countries that have already been blacklisted by the OECD. The foundation is usually very cheap, but the tax consequences in Germany can be devastating. Since the introduction of the automatic exchange of information between almost all major countries, an anonymous account or company no longer exists.
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We would be happy to advise you by telephone or email as part of a non-binding initial consultation. Please describe your request as precisely as possible and the responsible contact person will Request a free quote! with you as soon as possible.
Fabian Wilk
Member at W & V Law Firm LLP
+44. 208 089 1423-10 069. 247563060For callers from Germany (landline) [email protected] Mon to Fri 09.00 to 18.00
Fabian Wilk
Member at W & V Law Firm LLP