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How to Open a Romanian Micro enterprise

Updated on Monday 05th August 2019

The micro company is one of the types of companies can be incorporated in Romania. This legal entity type has suffered a number of changes regarding taxation in recent years. Today, it remains one of the most advantageous options in terms of taxes, and it even allows for a significantly reduced tax rate for those companies that have at least one employee. 
 
The micro company regime has a number of significant advantages, however, there are also issues that need to be taken into consideration by company founders, such as the criteria that apply in order for a Romanian company to be considered a microenterprise. 
 
In this article, our experts in company formation in Romania discuss the main characteristics of the micro company and answer some of the most commonly asked questions regarding taxation, reporting and the general requirements for this business form. 
 

Opening a microenterprise in Romania

Due to the ever changing economic environment in Romania, microenterprises have gone through various interpretations and changes of the general conditions that must be met in order to establish such a company.

This has not happened only in Romania, as the changing economic environment is a characteristic of intensively developing countries.

Opening a microenterprise in Romania comprises the same general steps required for the formation of other legal entities. These include the following:
 
  1. Choosing a company name: this needs to be an original name that, once checked for availability, the name can be reserved. 
  2. Drafting the documents: these are the Articles of Association and one of our lawyers in Romania can help you draft them.
  3. Open a bank account: this is required for the purpose of submitting the minimum share capital which is 200 lei.
  4. Preparing the documents: gathering all of the documents and filling in the registration application; the company directors will need to provide specimen signatures.
  5. Registering the company: the documents are submitted to the National Trade Register Office for the purpose of registering the new company.
 
The company’s Articles of Association include the following information about the company: the name and emblem, its registered office seat, the duration of the company and the type of company, the main business activity as well as the secondary ones, the names of the company administrators, the manner in which certain company modifications can take place. Our team can help entrepreneurs draw up the Articles of Association as well as provide the required assistance for correctly filling in the application form as well as any other needed forms when opening a micro company in Romania.
 
We recommend including more than one object of activity when incorporating the company. This is done according to the classification of the activities of the national economy and it is advisable to choose one main object and several other objects of activity as the process of adding more objects later will imply a number of steps and can be time-consuming for the company administrators. Company owners who wish to make subsequent changes to their company, such as adding more objects of activity or changing the company’s registered office can reach out to our lawyers in Romania.
 
A micro company has a series of advantages that are of significant importance to those investors interested in opening a small business. The liability of the founders is limited to their contribution to the share capital, which has a low value of approximately 42 euros (200 lei). There is no limit when selecting the codes for the activities according to the CAEN/NACE classification. Issues that need to be taken into consideration when opening this type of company include observing the annual taxation threshold for the purpose of benefiting from the low 3% or 1% taxation rates and observing all of the usual costs for running a company such as the accountancy costs, the administrative costs and the costs associated with dividend payments.

For those interested in opening a microenterprise in Romania, it is important to understand that this is a subgenre of the limited liability field that has certain specifications.

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What are the main characteristics of the microenterprise?

The main characteristics that need to be taken into account when deciding to open a microenterprise are the annual income limits, the origin of profits and the owners of the shared capital.

Therefore, a microenterprise established in Romania, must have as capital shareholders persons that are not part of local or state authorities.

Certain limitations regarding the the number of employees, can apply to these types of companies. Investors are advised to consult with one of our agents who specialize in company registration in Romania if the number of employees is an essential aspect for the business. We do remind investors that this business form is suitable to small companies and, in some cases, to medium-sized businesses, therefore the limitations on the number of employees should not interfere with the projected business plans.

Since 2017, the Romanian legislation regarding micro enterprises has changed again, but in the benefit of those opening such companies.

Regardless of these changes, it is a very good idea to open with a micro company if you want to start a small business. In addition, the conditions regarding the number of employees were eliminated and the procedure to open a micro company is the same as opening a SRL company in Romania.

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There are several defining traits for a micro company in Romania and these are the following:

  • annual profits requirement: the profits of the company should not exceed the equivalent in lei of 1 million euros. 
  • the ownership: the share capital of the company is owned by natural persons, cannot be state-owned or owned by territorial administrative entities.
  • the status: the company should not be subject to liquidation or, as applicable, winding up.
A different type of micro company is the one incorporated specifically for the purpose of accessing European Union funds. When the company is incorporated for these types of projects, the conditions are for the company to have less than ten employees and an annual turnover of less than two million euros. One of the experts at our Romanian law firm can give investors more information about the treatment of small and medium sized companies in the context of accessing EU funds, as defined by the European Commission. 
 

What is the taxation regime for a microenterprise in Romania?

The most well known characteristic of such companies is the taxation regime, which is extremely advantageous for a start-up.

For 2019, there are two tax thresholds for micro companies. These are 1% for those companies that have at least one employee and 3% for companies with no employees. The tax rate can change from one trimester to the other if the company hires employees during this time or if the existing employees are dismissed, whichever the case. For the purpose of benefiting from the lowest tax threshold, the company is required to have employees for which it has concluded a full-time individual employment contract. In some cases, when part-time employment contracts amount to full-time ones for more employees, the company can still benefit from the reduced rate. We recommend talking to one of our Romanian lawyers for more details about how this combined full-time employment can be achieved.
 
A special case can apply for those micro companies that have a share capital below 45.000 lei and two employees. These legal entities can opt for taxation on profit. One of our lawyers in Romania can give you more details on the current regulations that apply for this optional profit tax regime for micro companies.
To sum up, opening a micro company in Romania is a safe and successful investment if you are correctly informed and aware of all specific characteristics that might occur at a certain point and the circumstances that might change.
 

What are the reporting requirements for these types of companies?

The profits tax is calculated and paid each trimester, with the final submission date on the 25th of the month following the trimester for which the payment is made. For 2019, there are four dates: April 25th, July 25th, October 25th and January 27th 2020. The fiscal year for a micro company is the same as the calendar year. If the company exceeds the profit threshold of one million euros, then the profits tax will be imposed during the calendar/tax year (as stated above, this can also be an optional change).
 
Another issue worth considering is the fact that, starting with 2018, micro companies in Romania can make tax deductions of up to 20% of the owed amount. This is possible only when the company engages in sponsoring non-profit entities and cultural entities, which provide accredited social services with at least one of these services being a licensed one. Entrepreneurs can reach out to one of our Romanian lawyers for detailed information about this deduction regime and the conditions under which it applies.
 
The Romanian micro company allows for one of the lowest taxation rates for business entities in the EU, especially in the situation in which it has employees. The fact that the company can opt for a taxation change, from the 1% or 3% rate to the usual profits tax, can be useful for some types of companies, such as those that are recording losses or those that are in a financing phase.
 
Investors who are interested in company formation in Romania can contact our agents. We can provide complete details about the micro company as well as the other available business forms.

To sum up, opening a micro company in Romania is a safe and successful investment if you are correctly informed and aware of all specific characteristics that might occur at a certain point and the circumstances that might change.


Our lawyers in Bucharest have a vast experience and can guide you by offering the necessary professional help for those interested in opening a micro enterprise in Romania.

We are keeping pace with the changes and are always well informed in order to be able to offer our clients the best advice and strategies for their businesses.

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