Question: What do I need to do in order to open a representative office in Romania? And what are the characteristics of this type of company?
Answer: Foreign companies are allowed to open representative offices in Romania, according to the specifications of Decree-Law No.122/1990. These entities are not allowed to conduct commercial activities on their behalf, but they have the right to market and oversee the trade of their mother companies.
The decision to open a representative office in Romania should be based on a thorough understanding of this business form’s general profile.
Given the fact that it is considered an agent for an overseas body, it cannot derive revenue from Romania. It is necessary for the office to open a RON bank account, which is funded only by its foreign currency account in order to imbrue in local currency.
Our Romanian lawyers can give you complete information about the representative office, its key traits and uses, and the main requirements to set up this type of presence in Romania.
Foreign companies interested in entering the market for commercial purposes can choose to open a different business form, such as a branch.
QUESTION: WHAT ARE THE MAIN CONDITIONS TO SET UP A REPRESENTATIVE OFFICE IN ROMANIA?
Setting up a representative office in Romania is done with the approval of the Ministry of Economy, Entrepreneurship and Tourism. The license must be renewed yearly.
| Quick Facts | |
|---|---|
| Best used for | Market research, promotional activities, general liaison. |
| Prohibited activities | Commercial and profit-deriving activities. |
| Name | The same as the name of the foreign parent company. |
| Legal entity | Not a legal entity |
| Judicial capacity | None |
| Liability | The parent company is liable |
| Types of companies that can use a liaison office | Large corporations looking to expand their activities to Romania. |
| Limitations on foreign companies | Not applicable |
| Local representative | Yes |
| Subject to taxes | No |
| Subject to reporting | Not the case |
| Registration | Mandatory, with the Romanian Agency for Fiscal Administration. |
| Alternatives to the representative office in Romania | The branch or the subsidiary as a means of expanding a foreign company to Romania. |
| How can we assist you | Representative office registration with the authorities. |
| When to contact our team in Romania | As soon as the Board takes the relevant steps toward expanding to Romania. |
The licensing process (and the renewal of the license) can be assisted by our lawyers in Romania. Additionally, if you wish to open a different business form – one that can engage in commercial activities and be subject to low corporate income tax in some cases – they can help you open a micro company (SRL-D) in Romania.
If the registration doesn’t take place in the first quarter of the opening year, the annual fee is prorated correspondingly. If a representative office stands for more than one foreign company, a supplementary fee of 10% must be disbursed for each of the represented businesses.
The annual fee for companies that set up a representative office in Romania is EUR 1,000 (the equivalent in lei at the Romanian National Bank’s exchange rate on the day of the payment).
QUESTION: WHAT ACTIVITIES CAN THE REPRESENTATIVE OFFICE ENGAGE IN?
Investors who open a representative office in Romania should note that the activities the company can engage in are non-commercial. Some examples include the following:
- The office serves as a manner in which the foreign company can observe and test the Romanian market;
- It can offer a useful introduction to the business and investment climate in Bucharest or another Romanian city;
- It can be used for general liaison activities, with potential business partners and clients;
- The representative office can be used for marketing activities, market research, promotional activities, and other such functions.
Discussing the characteristics and the limitations of the representative office beforehand with one of our Romanian lawyers can be useful before you decide to open this type of office.
The video below highlights the main steps for opening such an office:
Question: What are the necessary documents for opening a representative office in Romania and how long does the registration process take?
Answer: The necessary papers needed in order to open a representative office in Romania are listed below by our Romanian lawyers:
- the incorporation document for the parent company, along with information about its capital;
- a certificate of good standing issued by the bank for the mother company;
- a certified copy of the parent company’s registration certificate (which should highlight its business entity type);
- the power of attorney for the director of the representative office, drawn up by the parent company and certified by a notary.
The above-mentioned documents together with the certified translations and the tenancy agreement contract (where the registered office will be listed) must be submitted to the registry of the Ministry of Economy and Entrepreneurship when deciding to set up a representative office. Our attorneys in Romania can help investors prepare these additional documents (sworn translations, notarized documents and others).
The operating permit is usually issued within 30 days after the submission of the complete set of documents. If investors encounter any delay or issue, they can reach out to our Romanian law firm.
Foreign investors should know that company formation in Romania is different from other business forms. We recommend getting in touch with our team if you wish to know more about how to open a corporation in the country, as opposed to a representative office.
QUESTION: HOW IS A REPRESENTATIVE OFFICE TAXED IN ROMANIA?
Foreign companies that set up a representative office in Romania will be subject to a tax, despite the fact that they will not be deriving income from Romanian clients.
The following tax and reporting obligations apply to representative offices, as summarized by our attorneys in Romania:
- an annual tax of EUR 4,000 for each fiscal year (calculated in lei at the foreign exchange rate);
- if a foreign company closes its representative office during a fiscal year, this tax will be proportional to the number of months the office remained active in the country;
- the tax is payable in two installments, one before June 25th and the other no later than December 25th;
- foreign companies that open a Romanian representative office will also need to submit an annual statement to the tax authority;
- opening or closing a representative office in Romania is notified to the tax authorities within 30 days of such an action.
Additionally, representative offices are also asked to maintain a minimum set of accounting records. Our tax lawyers in Romania can give you more details about this.
If you are interested in other matters, such as how to buy a property or how to buy land in Romania, our lawyers can answer your questions. For property purchase, foreign buyers enjoy the same rights as Romanian citizens, however, our team will analyse your intended land purchase and will provide you with information on the main regulations for foreigners buying land in the country.
Do not let any legal matters stand in the way of opening or expanding your business. Our lawyers in Romania are here to help and make the incorporation process of a representative office hassle-free.
You can reach out to the experts at our law firm in Romania if you are interested in opening a representative office, a branch or a subsidiary. Call us now for a free consultation!