Business in Romania for Non-Residents

Romania stands out as a high-income mixed economy boasting highly skilled labor and an impressive Human Development Index, presenting abundant opportunities. Ranking 10th in total nominal GDP, Romania emerges as a compelling choice for establishing a company.

Foreign investors eyeing Romania must prioritize foreign direct investments, especially given the establishment of an FDI screening framework by the government in 2019, aimed at fostering more business prospects. The United States Census Bureau data revealing trade worth nearly three billion dollars between Romania and the United States until 2022 underscores the advantageous landscape awaiting fresh business ventures in Romania.

The strategic location of Romania further elevates its appeal for business operations. With its proximity to Moldova, Ukraine, Hungary, Serbia, and Bulgaria, Romania offers convenient access to adjacent markets for business expansion. Additionally, the country’s Ministry of Research, Innovation, and Digitization’s efforts to digitize the nation enhance the business environment. These factors collectively position Romania as a prime destination for company registration.

Benefits of Establishing a Business in Romania:

Favorable Taxation: Romania boasts the lowest corporate tax among European countries. Furthermore, the country has signed multiple double-taxation agreements, shielding companies from dual taxation. Moreover, the Romanian Fiscal Code exempts businesses dealing with technological equipment from corporate tax.
Flexible Ownership: Entrepreneurs can establish businesses in Romania as sole shareholders. Since July 2020, entrepreneurs can own multiple companies and receive dividends quarterly.
Robust Banking Sector: Romania’s healthy banking sector, featuring the lowest Non-Performing Loan (NPL) rate in Europe, facilitates easy access to loans for business growth.
EU Membership Benefits: As an EU member, Romania enjoys the privilege of unrestricted trade with other EU countries, expanding market access for its products and services.
Strategic Geographical Position: Romania’s dynamic geographic location serves as a gateway between the Middle East and other European countries, with the Constanta Port providing access to the Black Sea, facilitating seamless transportation for import and export activities.

Taxation and VAT Regulations in Romania

For those considering a micro-company setup, it’s crucial to understand that the tax program primarily affects corporation taxes, leaving VAT charged to customers unaffected. Small businesses benefit from VAT exemption up to €49,000 in sales. However, VAT-exempt status entails the inability to reclaim VAT on company purchases. Nevertheless, the ability to offer products at 19% lower prices compared to VAT-paying competitors presents a significant competitive advantage.

For remote business management without frequent travel to Romania, obtaining a community tax identification number requires a personal visit to relevant authorities.

Micro-companies enjoy a VAT exemption if monthly sales volumes do not exceed €4,000. Taxes are calculated at 3% of income every three months, or 1% with a Romanian employee and annual incomes below €1,000,000. Once this threshold is surpassed, a 16% tax on profits applies. Additionally, companies subject to profit-based taxation must maintain a minimum share capital of 45,000 Ron.

Micro-companies are ideal for online entrepreneurs, businesses, and digital nomads with minimal expenses to deduct. However, certain activities such as insurance, stock exchange, banking, oil or gas, and gambling are ineligible for micro-company status. Nevertheless, a diverse array of domains remains viable options for exploration.

Conclusion:

Embarking on the entrepreneurial journey in Romania as a non-resident offers a plethora of opportunities for growth and prosperity. By arming yourself with a deep understanding of the legal landscape, leveraging favorable tax policies, and implementing strategic operational approaches, you’ll be well-equipped to navigate the intricacies of Romania’s dynamic business ecosystem and transform your entrepreneurial dreams into tangible success. So, let’s embark on this transformative odyssey together, seizing the boundless possibilities that await in Romania’s flourishing business landscape

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