Why Set Up Business in Romania?

Why Set Up Your Business in Romania?

Considering the location, Romania has a good position for why set up a business in Romania. Located in the continent of Europe, Romania is the 83^rd most abundant nation in the world with a total area of 238,391 square kilometres. Bordering Bulgaria, Hungary, Moldova, Serbia and Ukraine, Romania is a country in East-Central Europe with a population of 19.5 million.

Romania is part of the European Union (EU) single market. The Romanian economy is currently the 10^th largest in the EU by total nominal GDP and the 8^th largest based on purchasing power parity. In the recent World Bank’s Ease of Doing Business Survey 2018, Romania ranked 45^th out of 190 countries. The high ranking means that the incorporation process in the country is easy and straightforward. It is an essential factor that attracts global investors to do business in the country.

Strategic Location

Romania’s strategic location offers geographic advantages for businesses wanting to traipse into the eastern European markets and beyond. Its position is at the western shore of the Black Sea. Romania’s trade connections link central Europe, the Commonwealth of Independent States (CIS), Russia, and the Middle East, representing a vast market of millions of consumers.

Corporate Benefits

In Romania, Limited Liability Companies (LLC) is the most common business vehicle. Romanian LLCs pay the same flat, 16% corporate rate, like all other business vehicles. On top of that, Romania allows 100% foreign ownership to LLC owners and imposes relatively low starting capital requirements (RON 200/ 45 EURO).

Tax Incentive

To create a robust investment environment in the country, the Romanian government has set out a slew of tax incentives for businesses operating in the country.

1. Foreign tax credits:

• The foreign tax credit is available if the tax paid overseas for the income generated abroad was paid directly by the natural person or by their legal representative.
• Tax paid abroad must be justified with relevant official documents (as issued by the foreign country’s tax authorities).

2. Exemption for reinvested profits

For-profits reinvested in technological, electronic, or peripheral equipment (including cash registers, software, invoicing machinery and more), they grant tax exemption under the Romanian Fiscal Code.

3. Local tax exemption

For businesses that are located/developed within industrial parks, they are free from paying property tax. Under this tax incentive, land within industrial parks is also free from land tax.

Skilled Workforce

Romania has a young, educated, and highly skilled workforce. The highly cost-efficient labour force is appealing to employers, workforces that have professional skills and a range of industry specialisations. It is also another reason that attracts investors.

According to data by the Romanian National Bank (BNR) and UNCTAD, Romania recorded USD 5.1 billion in its FDI in 2017. It is a 3% increment compared to the same period of 2016. Also, Romania has a strong industrial tradition. It has a cost-efficient of the labour force in Europe as well as the low tax regime that favours industrial investment and start-up initiatives. Romania is one of the ideal investment destinations that you can gain a strong foothold in European Union markets. 3E accounting can guide you to start a business in Romania, contact us now.