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.

Micro-enterprise tax structure

Micro-enterprises are subject to a mandatory revenue tax rate in lieu of the standard profit tax.

The scope of the micro-enterprise tax structure  (3% of turnover (not profit), if the company has no employees, otherwise 1% of turnover) has been significantly expanded by the EO. Starting on 1st January 2018, all companies that have a revenue less than €1,000,000 as of 31st December 2017 are obliged to pay the micro-company tax (until now the limit was €500,000).

The tax rates used as of 2017 for micro-enterprise income tax are:

  • 1% for micro-enterprises with one or more employees, which makes Romania the most ideal location for mid-level companies.
  • 3% for micro-enterprises with no employees.

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

In Romania, the uniform tax rate of 16% exists, which applies to both corporation tax and payroll tax. The dividend tax is maximum 15%. Another advantage is that there is no trade tax in Romania. Therefore, Romania is also a tax haven for businesses involved in trading.

 

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

The biggest mistakes when starting a business abroad

Many agencies and law firms do not advise comprehensively or wrongly. Learn what to look for.

Gravity of the situation

Often, these law firms think foreign companies are half-silk, tax evasion is favored and mailbox companies are the leaders rather than the exception. This is true, however, only in some start-up agencies that do not have the necessary expertise. Self-proclaimed law firms that do not employ tax accountants or lawyers usually set up companies that are unlikely to operate legally. We set up and look after companies that can withstand tax audits and that are legally operated.

Is physical presence required in the country where you wish to set up your company?

You can set up a company worldwide, as long as the respective country allows you as a foreigner to acquire shares in local companies or to act as a managing director. If this is not the case trustees can be used. For example, Cyprus allows every EU citizen to own and run a business. Nevertheless, trustees can be used for the purpose of identity protection. However, it is important that the management takes place locally, in the country in which the company is to be taxable. In addition, a permanent establishment must be set up. Without these, a major tax offices around the world do not recognize the company and in the worst case would require additional payment of corporate and business taxes plus late payment surcharges. We rent you a real office and set up a permanent establishment that meets all requirements beyond doubt.

Problematic Law firms: Privacy is not regarded.

Some law firms bind customers with toggle contracts and exert pressure when the customer wants to close his company. If you are a client of a law firm that has established a legally flawed company, they can be blackmailed. Because in the case of a fiscal problem, law firms without a license are not bound by a duty of secrecy.

Migrating to a different law firm

We receive many inquiries from customers who already own a foreign company and are looking for a new law firm. The process of changing law firm is made often difficult on purpose. Therefore, we have developed a principle of trust. If you are not satisfied with us and want to change, you can do that at any time. The necessary documents (resignation letter), you receive from us standardized after founding. You are therefore protected against unexpected costs and you are free at any time to visit another law firm. So far we have not lost any customer to another law firm.

Privacy / Firm Location

Your accounting documents are kept safe with us. In addition, all electronic data is stored encrypted and accessible only by us, which are bound to a professional secrecy. All accounting records are also stored locally only. Neither authorities nor hackers are able to access this data.

No taxes?

There are quite a few locations in the world that do not charge taxes on companies or individuals, or only estimate a very low flat rate tax. But this can rarely be used without corresponding change of residence. If you are a resident of any major country, the relevant double taxation agreement is decisive. Providers who promise otherwise lead them to tax evasion, which in the case of discovery usually punishes severely. We advise against setting up companies in countries that have already been blacklisted by the OECD. The foundation is usually very cheap, but the tax consequences in your origin country can be devastating. Since the introduction of the automatic exchange of information between almost all major countries, an anonymous private account no longer exists.

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.

 

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%) 3,000 EUR(3%) Can be effectively reduced to 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.

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