Company in Romania: Key Issues, Registration and Business Operations

Romania offers one of the most accessible entry points for foreign business in Eastern Europe, combining EU membership, a competitive corporate tax rate of 16%, and a legal framework aligned with European directives. Establishing and operating a company here, however, requires navigating a layered set of procedural, fiscal, and governance obligations that differ meaningfully from Western European norms. This article covers the principal legal structures available to investors, the registration process and its practical timelines, ongoing compliance requirements, and the risks that most commonly affect foreign-owned businesses in Romania.

The Societate cu Raspundere Limitata (SRL), broadly equivalent to a private limited liability company, is the dominant vehicle for foreign investors entering Romania. It combines limited liability, a relatively simple governance structure, and low minimum share capital. The Legea Societatilor (Companies Law) No. 31/1990, as repeatedly amended, governs all commercial companies in Romania and sets out the foundational rules for each type.

The SRL requires a minimum share capital of RON 200 (approximately EUR 40), divided into social parts with a minimum value of RON 10 each. This low threshold makes it attractive for startups and SMEs, but it also means creditors rely almost entirely on the company's assets rather than its capital base. A non-obvious risk is that undercapitalisation can later be used by insolvency practitioners or creditors to argue for piercing the corporate veil under Article 2371 of the Civil Code (Codul Civil), particularly where the company was evidently insolvent from inception.

The Societate pe Actiuni (SA), or joint-stock company, is required where the business intends to issue shares to the public, operate in regulated sectors such as banking or insurance, or attract institutional investors. The SA demands a minimum share capital of RON 90,000 and a more complex governance structure, including a board of directors or a two-tier supervisory and management board. For most foreign investors entering Romania for the first time, the SA is disproportionately burdensome relative to its benefits at the early stage.

A branch (sucursala) is not a separate legal entity. It operates as an extension of the foreign parent and exposes that parent to unlimited liability for the branch's obligations. A representative office (birou de reprezentanta) cannot conduct commercial activity at all. Both are appropriate only for specific, limited purposes - market research, liaison, or pre-contractual activity - and should not be used as substitutes for a locally incorporated entity.

The practical choice for most international investors is therefore the SRL. Its governance can be structured with a single associate and a single administrator, making it operationally lean. Where multiple investors are involved, a shareholders' agreement (act aditional or conventie de actionari) should be drafted alongside the constitutive act to govern deadlock, exit rights, and dividend policy, since Romanian company law provides only a thin default framework on these points.

Company registration in Romania is handled by the Oficiul National al Registrului Comertului (ONRC), the National Trade Register Office, which operates both a central registry and territorial offices in each county. Since legislative reforms, registration can be initiated online through the ONRC portal, though in practice many steps still benefit from in-person or notarised document submission.

The registration sequence for an SRL proceeds as follows:

• Reservation of the company name through the ONRC, which can be done online and typically takes one to two business days.
• Drafting and notarising the constitutive act (act constitutiv), which must comply with Articles 7 and 8 of Companies Law No. 31/1990 and include the company's object of activity, share capital structure, and administrator details.
• Opening a bank account and depositing the share capital, with the bank issuing a confirmation letter.
• Filing the registration application with the ONRC, attaching the constitutive act, proof of registered office, identity documents of associates and administrators, and the capital deposit confirmation.
• Obtaining the registration certificate and fiscal registration number from the ONRC, which also notifies the Agentia Nationala de Administrare Fiscala (ANAF), the National Tax Administration Agency, automatically.

The ONRC is legally required to process standard registration applications within three business days of receiving a complete file. In practice, delays of five to ten business days occur when documents are incomplete or when the registered office documentation raises questions. Expedited processing is available for an additional fee, reducing the timeline to one business day.

A common mistake made by foreign investors is underestimating the registered office requirement. The company must have a genuine registered address in Romania, supported by a lease agreement or property ownership document. Using a virtual office address is permissible, but the lease must be valid and the landlord must consent in writing to the company's registration at that address. ANAF routinely verifies registered office addresses during fiscal inspections, and a company found to lack a genuine address risks administrative sanctions and complications with VAT registration.

The CAEN code (Clasificarea Activitatilor din Economia Nationala), Romania's national activity classification system aligned with the EU NACE standard, must be selected at registration. The primary CAEN code determines the company's main activity and has implications for licensing, sector-specific regulation, and certain tax regimes. Selecting an overly narrow CAEN code at registration and then expanding activities without updating the registry is a frequent oversight that creates compliance gaps.

To receive a checklist on Romanian company registration documentation and ONRC filing requirements, send a request to info@vlolawfirm.com.

Once registered, the SRL is governed by its administrator (administrator), who may be a Romanian citizen or a foreign national. There is no residency requirement for the administrator of an SRL, which is a significant advantage for foreign investors who wish to retain direct control. The administrator's powers, limitations, and remuneration must be set out in the constitutive act or a separate administrator contract.

Companies Law No. 31/1990, Article 73, establishes the administrator's liability to the company and to third parties for acts performed in breach of the law or the constitutive act. This liability is personal and unlimited where the administrator acted with intent or gross negligence. In practice, Romanian courts have increasingly applied this provision in insolvency contexts, where insolvency practitioners (lichidatori judiciari) pursue administrators for damages caused by trading while insolvent or for failing to file for insolvency within the statutory period.

The obligation to file for insolvency is governed by Legea Insolventei (Insolvency Law) No. 85/2014. An administrator who knows or should know that the company is insolvent - defined as the inability to pay debts with available funds - must file an insolvency petition within 30 days. Failure to do so exposes the administrator to personal liability for the company's debts incurred after the insolvency threshold was crossed. Many foreign administrators are unaware of this 30-day trigger, treating it as a matter to be addressed when convenient rather than as a hard legal deadline.

For SA companies, the governance structure is more elaborate. The board of directors (consiliu de administratie) or the supervisory board (consiliu de supraveghere) and directorate (directorat) must meet minimum composition requirements, and certain decisions require qualified majority or unanimous shareholder approval under Articles 111 and 112 of Companies Law No. 31/1990. Conflicts of interest must be disclosed under Article 1441, and a director with a conflicting interest must abstain from the relevant vote.

A non-obvious risk in Romanian corporate governance is the use of general powers of attorney (procura generala) to delegate management authority to local representatives. While legally permissible, such powers of attorney create agency risk if the scope is not carefully defined. Romanian courts have upheld transactions entered into by attorneys-in-fact even where the foreign principal claimed the attorney exceeded their authority, provided the third party acted in good faith and the power of attorney was facially broad.

Romania's fiscal framework is administered by ANAF and is governed primarily by the Codul Fiscal (Fiscal Code), Law No. 227/2015. The standard corporate income tax rate is 16%, applied to taxable profit. Micro-enterprise taxation (impozit pe veniturile microintreprinderilor) applies to companies with annual turnover below EUR 500,000, with rates of 1% (where the company has at least one employee) or 3% (without employees). This regime is optional but widely used by small foreign-owned businesses.

VAT registration is mandatory once the company's taxable turnover exceeds RON 300,000 in a calendar year. Voluntary registration is available from the date of incorporation, which is advisable for companies that will incur significant input VAT before reaching the threshold. The standard VAT rate is 19%, with reduced rates of 9% and 5% applying to specific categories of goods and services under Articles 291 and 292 of the Fiscal Code.

A common mistake is delaying VAT registration until the threshold is approached, without accounting for the administrative lead time. ANAF's processing of VAT registration applications can take 30 to 45 days, during which the company cannot issue VAT invoices or recover input VAT. Companies operating in B2B supply chains where clients require VAT-compliant invoices from the outset should register voluntarily at incorporation.

Transfer pricing is a significant compliance area for foreign-owned Romanian companies transacting with related parties. Romania follows OECD Transfer Pricing Guidelines, and ANAF has intensified transfer pricing audits in recent years. Companies with related-party transactions above certain thresholds must prepare and maintain a transfer pricing file (dosar de preturi de transfer) and submit it to ANAF upon request within 25 days. Failure to maintain adequate documentation results in ANAF estimating the arm's length price, invariably to the company's detriment.

Dividend withholding tax is 8% for distributions to non-resident shareholders, reduced to 0% where the EU Parent-Subsidiary Directive applies - specifically, where the parent company holds at least 10% of the Romanian subsidiary's share capital for an uninterrupted period of at least one year. Double tax treaties concluded by Romania may further reduce or eliminate withholding tax, but treaty benefits require the foreign shareholder to obtain and present a certificate of fiscal residence from their home jurisdiction.

To receive a checklist on Romanian fiscal compliance obligations for foreign-owned companies, send a request to info@vlolawfirm.com.

Romanian employment is governed by the Codul Muncii (Labour Code), Law No. 53/2003, which provides strong employee protections aligned with EU directives. Every employee must have a written individual employment contract (contract individual de munca) registered in the Registrul General de Evidenta a Salariatilor (REVISAL), the national electronic employment register, before the employee begins work. Failure to register before the start date exposes the employer to fines ranging from moderate to substantial amounts per unregistered employee.

The minimum gross wage in Romania is set by government decision and has increased significantly in recent years. Employers must also pay social contributions on top of the gross wage: the employee bears the pension contribution (25%) and health contribution (10%), while the employer pays a work insurance contribution (2.25%) on the gross wage fund. These rates are set under the Fiscal Code and are subject to periodic revision.

Fixed-term contracts are permitted under Article 82 of the Labour Code but are limited to a maximum duration of 36 months, including renewals. Using successive fixed-term contracts to avoid indefinite employment relationships is a recognised risk: Romanian courts have consistently reclassified such arrangements as indefinite contracts where the employer cannot demonstrate a genuine temporary need.

Termination of employment in Romania is procedurally demanding. Dismissal for reasons related to the employee (disciplinary or performance-based) requires a prior investigation procedure, written notification, and a hearing. Collective redundancy triggers additional obligations, including notification of the Inspectoratul Teritorial de Munca (ITM), the territorial labour inspectorate, and the relevant trade union or employee representatives, with a minimum 30-day consultation period before notices are issued.

A practical scenario: a foreign investor acquires a Romanian company with 50 employees and immediately restructures, dismissing 15 employees without following the collective redundancy procedure. The ITM can annul the dismissals, and the employees can obtain reinstatement orders from the labour court (tribunal) together with back pay for the entire period of unlawful dismissal. The cost of non-compliance in this scenario - legal fees, back pay, and reputational damage - typically far exceeds the cost of proper procedural compliance from the outset.

Commercial disputes in Romania are resolved before the ordinary courts (judecatorii, tribunale, curti de apel) or, where the parties have agreed, before arbitral tribunals. The principal arbitral institution is the Curtea de Arbitraj Comercial International de pe langa Camera de Comert si Industrie a Romaniei (CACIR), the International Commercial Arbitration Court attached to the Romanian Chamber of Commerce. International arbitration under ICC, LCIA, or UNCITRAL rules is also available where the contract so provides.

Romanian civil procedure is governed by the Codul de Procedura Civila (Civil Procedure Code), Law No. 134/2010. First-instance commercial disputes are heard by the tribunal (tribunal) at the county level. Appeals (apel) lie to the court of appeal (curtea de apel), and further recourse (recurs) to the Inalta Curte de Casatie si Justitie (ICCJ), the High Court of Cassation and Justice, is limited to questions of law. The full litigation cycle from first instance to final recurs decision routinely takes three to five years in complex commercial matters.

Interim measures are available under Articles 952-977 of the Civil Procedure Code. A creditor can apply for a sequestration order (sechestru asigurator) over the debtor's assets or a judicial mortgage (ipoteca judiciara) over real property without prior notice to the debtor, provided the claim is credible and there is urgency. The court must rule on such applications within 48 hours of filing. These tools are effective but require precise legal drafting: an application that fails to establish urgency or credible claim value will be rejected, and the applicant may face a damages claim from the debtor.

Enforcement of foreign judgments in Romania follows EU Regulation 1215/2012 (Brussels I Recast) for judgments from EU member states, which are enforceable without a separate exequatur procedure. Judgments from non-EU jurisdictions require recognition proceedings before the Romanian court under Articles 1094-1102 of the Civil Procedure Code, which assess jurisdiction, public policy, and finality. Recognition proceedings typically take six to twelve months.

A practical scenario relevant to foreign investors: a German supplier delivers goods to a Romanian buyer who refuses to pay. The supplier obtains a German court judgment and seeks enforcement in Romania under Brussels I Recast. The Romanian enforcement officer (executor judecatoresc) can proceed directly against the debtor's Romanian bank accounts and movable assets. The process from filing the enforcement request to first asset attachment typically takes two to four weeks, making this one of the more efficient cross-border enforcement mechanisms available in the region.

A second scenario: two foreign shareholders of a Romanian SRL reach a deadlock on a strategic decision. Romanian company law provides limited statutory mechanisms for resolving shareholder deadlock. Where the constitutive act is silent, one shareholder may petition the court under Article 227 of Companies Law No. 31/1990 for dissolution on grounds of impossibility of achieving the company's object. This is a drastic remedy. A well-drafted shareholders' agreement with a deadlock resolution mechanism - such as a buy-sell (shotgun) clause or mandatory mediation - is far preferable and should be put in place at incorporation.

A third scenario: a foreign investor's Romanian subsidiary is targeted by a competitor's bad-faith trademark filing. Romanian intellectual property disputes are handled by the Oficiul de Stat pentru Inventii si Marci (OSIM), the State Office for Inventions and Trademarks, at the administrative level, with appeals to the Tribunalul Bucuresti (Bucharest Tribunal). Opposition and cancellation proceedings before OSIM are relatively cost-effective but can take 12 to 24 months. Where the investor holds an EU trademark, the EUIPO cancellation route may be faster and should be considered in parallel.

To receive a checklist on dispute resolution options and enforcement mechanisms for foreign businesses in Romania, send a request to info@vlolawfirm.com.

What are the main risks of operating a Romanian company without a local legal adviser?

Foreign investors who manage Romanian companies without local legal support frequently encounter compliance gaps in three areas: fiscal registration and VAT obligations, employment contract registration in REVISAL, and the 30-day insolvency filing obligation. Each of these carries administrative fines or personal liability for the administrator. Romanian law is formally aligned with EU standards but contains procedural specificities - such as the REVISAL pre-registration requirement - that are not intuitive for investors accustomed to Western European practice. Engaging a local adviser from the outset costs a fraction of the remediation expenses that arise from non-compliance discovered during an ANAF audit or labour inspection.

How long does it take to set up and make a Romanian company fully operational, and what does it cost?

The ONRC registration itself takes three to five business days for a standard SRL. However, full operational readiness - including VAT registration, opening a business bank account, registering for social contributions, and setting up payroll - typically takes four to eight weeks in total. Bank account opening is often the longest step, as Romanian banks apply enhanced due diligence to foreign-owned companies and may request extensive documentation on the beneficial owner. Legal and notarial fees for incorporation start from the low hundreds of EUR for a straightforward SRL. VAT registration and ongoing compliance advisory fees vary depending on transaction volume and complexity.

When should a foreign investor consider arbitration rather than Romanian court litigation for a commercial dispute?

Arbitration is preferable where the dispute involves a foreign counterparty, where confidentiality is commercially important, or where the parties want a specialist tribunal rather than a generalist court. Romanian court litigation is slower but benefits from direct access to interim measures and enforcement mechanisms under domestic procedural law. For disputes with Romanian counterparties where assets are located in Romania, a hybrid approach - arbitration on the merits with Romanian court interim measures - is often the most effective strategy. The choice should be made at the contract drafting stage, not after a dispute arises, since Romanian courts will enforce a valid arbitration clause and decline jurisdiction over the merits.

Romania presents a genuine opportunity for foreign investors: EU membership, a competitive tax environment, and a growing domestic market. The legal framework is substantive and largely EU-compliant, but procedural requirements - from ONRC registration to REVISAL employment registration and ANAF fiscal compliance - demand careful attention. The most costly mistakes arise not from the complexity of Romanian law itself but from underestimating the specificity of its procedural requirements and the personal liability exposure of company administrators.

Our law firm VLO Law Firm has experience supporting clients in Romania on corporate formation, governance, fiscal compliance, employment structuring, and commercial dispute resolution matters. We can assist with company registration, drafting constitutive acts and shareholders' agreements, VAT and transfer pricing compliance, employment contract structuring, and representing clients in Romanian court and arbitration proceedings. To receive a consultation, contact: info@vlolawfirm.com.