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How to Open a Romanian Micro enterprise

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.

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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MAIN CHARACTERISTICS OF MICROENTERPRISES

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 share owners persons that are not part of local or state authorities.

Also, the maximum revenue limit is 65,000 euro coming from other areas than: insurance, banking, reinsurance, consultancy, management, gambling and capital market field (except intermediaries between entities involving this area). 

In the past there were some limitations regarding the number of employees, but now they were completely eliminated.

What are the main changes regarding micro companies in Romania since 2017

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

For instance, those companies that have under 500,000 euro turnover will pay lower taxes:

  • 3% (for those companies with no employees) or
  • 1%  (with minimum 3 employees) corporate tax and
  • 5% dividend tax.

These being said, 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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Still, the good taxing benefits are available for a micro company in certain conditions:

  • It must not obtain revenue from banking, gambling or insurance
  • Over 80% of the total revenue does not come from management and consulting (only 20% of the revenue can be from consulting and management)
  • The income has not exceed 500,000 euro
  • The shareholders are not public or local authorities or the state

After the company have exceeded 500,000 euro in one fiscal year, or has over 20% revenues from management and consultation will become profit tax payers, meaning 16% of the profit.

This tax is calculated and paid from quarter, taking into consideration expenditures and revenues from the beginning of the fiscal year.

The tax that will need to be pay is the difference between the tax that was calculated at the start of the fiscal year to the end of the reporting period and the income tax that the enterprise must pay in the year.

Another new change in the micro company legislation is the fact that the tax base has expanded, since in the old legislation only exploitation was mentioned, and now, income for grants become taxable, as well as the subsequent billing of trade discounts and exchange rate differences.

If all conditions mentioned above are met, a new micro company is obliged to pay the level of taxation starting with the first fiscal year.

When the conditions are not met any longer, they will apply the new level of taxation starting from the next fiscal year after the one during which the company exceeds the limits.

Companies that have the main activity one of the following: betting, casino, gambling, banking, insurance or capital market (except those that activate as intermediaries) cannot be registered as micro companies according to the Romanian law.

Still, for the other areas of activities it is much more convenient to start as a micro enterprise and pay 3% taxes per income, instead of 16% per profit.

TAXATION REGIME FOR MICROENTEPRISES IN ROMANIA

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

A micro company must pay 3% taxes calculated from incomes to the Romanian state, and the amount is calculates once at 3 months.

Also, the 65.000 euro limit is evaluated based on different sources, but costs for: stock production, developing services, gains from intangible or tangible production assets, operational subsidies, reserves or adjustments for value loss or depreciation, cancellation or reimbursement of penalties or interests, will not be taken into account, as they are considered non-deductible expenses for recovery of damages.

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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