Investors who open an SPV company in Romania will incorporate a distinct legal entity. The Special Purpose Vehicle (SPV) is a legal entity created by a foreign company interested in using it for a special business need in Romania, such as financing a particular project or isolating financial risk.
Foreign companies can easily open an SPV company in Romania or engage in other business operations in the country with the help of a local team of business and company formation experts, such as our lawyers in Romania. Our team provides complete incorporation solutions and can assist in the structuring of a legal entity used for a particular purpose.
| Quick Facts | |
|---|---|
| SPV uses | Securitization, property ownership and sale, risk sharing, asset holding and transfer, etc. |
|
General governing law |
Law no. 31/1990 on commercial companies, with its subsequent amendments and additions, as well as other relevant laws. |
|
Special legal requirements for SPVs |
Certain requirements can apply according to the effective object of activity (according to particular NACE code regulations in Romania). |
| Foreign ownership | Full foreign ownership is permitted in Romania. |
| SPV legal capacity |
The special purpose vehicle company is a separate legal entity. |
| Types of companies used as SPVs |
The private limited liability company (SRL) is generally used for this purpose. |
| Minimum capital |
No prescribed minimum for the LLC (SRL company) |
| Minimum number of shareholders |
1 |
| Registered address |
Must be an address in Romania. |
| Incorporation documents | Articles of Association, Memorandum, documents concerning the company founders, etc. |
| Incorporation time |
Approximately 1 week |
| Registration authority |
The National Trade Register Office in the city in which the company will activate. |
| Corporate tax in Romania |
16% regular corporate income tax or 1% or 3% as micro-company |
| Annual tax compliance |
Quarterly compliance plus a final calculation at the end of the tax year. |
| Double tax treaty network | Approximately 90 DTAs |
How is the SPV used and structured?
The special purpose vehicle is commonly used to meet certain investment strategies that foreign companies have for doing business in Romania. To this end, it can be used for securitization purposes, risk mitigation, financing certain operations or projects in Romania, or raising capital. In some cases, the SPV can be used for real estate purposes, such as when it is needed to buy property in Romania.
How can investors open an SPV in Romania?
The SPV in Romania is usually a private limited liability company (which, in Romania, is the SRL company). This is a preferred business form because it is a separate legal entity from its founders who can be either individuals or other corporations.
The general process for company formation in Romania is observed when opening a special purpose vehicle. We list the most important steps below:
- Selecting the business name: this needs to be unique and reserved before company registration;
- Preparing the documents: the Articles of Association and the Memorandum for the LLC can be drafted with the help of our Romania lawyers;
- Registering the business: the company needs to be registered with the National Trade Register Office;
- Following up with other registrations: these can include obtaining special permits and licenses, following the procedures for hiring employees in Romania, and others.
We invite you to watch a video about SPV registration:
What are the SPV compliance requirements?
Some aspects investors are advised to keep in mind in terms of company compliance if they open an SPV company in Romania:
- The standard corporate income tax is 16%; a special micro-company regime applies in which small companies are taxed on their revenue and the percentage of the tax is either 1% or 3% for qualifying businesses; mandatory conditions apply, and these can be detailed by the experts at our law firm in Romania;
- The value-added tax in Romania (for companies that provide goods or services that are subject to this tax) is 19%, with two reduced rates of 9% and 5%;
- The dividend withholding tax payable to a non-resident company is 8% unless reduced under a double tax treaty;
- Romania has signed approximately 90 double tax treaties with countries worldwide.
Romanian companies observe the IFRS accounting standards, as well as certain EU directives. Corporate tax is calculated and paid on a quarterly basis and returns are due by the 25th day of the month following the one for which the filing is made. Non-resident companies that engage in business activities in Romania through multiple permanent establishments are required to designate one of these entities to fulfill the filing requirements.
Discussing the tax obligations according to the activities of the special purpose vehicle can be advisable before investors open an SPV in Romania. Our tax lawyers can give you complete information on the latest fiscal changes, so that you can understand the current regulations, and how these apply to the special purpose vehicle.
SPV FAQ
Investors who open a SPV company in Romania can structure it to meet their specific business needs. Whether it is for a joint venture or to secure property deals in the country (with or without a limited duration), the SPV can be a useful business tool for foreign entrepreneurs.
Our Romanian lawyers answer some of the commonly asked questions about this investment vehicle, so that entrepreneurs can have a clearer image of the advantages they gain when they open a company in Romania.
No. There is no additional, special law that governs these types of companies. Essentially, the SPV is governed by the same law that oversees the incorporation and management of local companies in Romania. Additionally, the labour laws are relevant when the special purpose vehicle hires employees in Romania. Depending on the activities it will engage in, the SPV may require special permits and licenses.
Investors in Romania enjoy the flexibility to structure the special purpose vehicle according to their business needs. As these types of structures can be created for several different purposes, such as for buying land in Romania, our lawyers in Romania can answer any additional questions about the laws that govern the industry in which the SPV will operate.
In most cases, this is the investor’s choice. However, the business needs may differ from one investment project to another, and, in practice, investors will determine the duration of the SPV company in Romania based on its particular use. While it does not have to be set up for a limited period, most projects involving SPVs tend to be limited.
According to Romanian law, the private or public limited companies offer, as their name suggests, limited liability to the natural or legal persons that incorporate them. This means that the founder(s) will only be liable to the amount they have invested in the Romanian SPV. The special purpose vehicle will have its obligations and assets in Romania, separate from those of the parent company that incorporates it (if this is the case).
If the special purpose vehicle is a type of structure that would be useful in your business ventures in Romania, talking to our local experts in company formation in Romania is helpful.
Our lawyers provide a wide range of legal services to companies and individuals alike. We can assist you not only with company creation, but also with matters related to divorce in Romania.
If you want to know more about how to open an SPV in Romania, please contact us.