Romania is one of the leading markets in Europe when referring to the IT sector. Thus, businessmen who want to open a company in Romania may consider to set up their business operations in the IT industry, which provides a very attractive environment (from a taxation point of view, as well as for the quality of the Romanian workforce).
Even though the Romanian legal and tax systems have been constantly modified over the last few years, the IT sector has remained one of the top economic industries in this country. The quality of the Romanian IT sector has attracted over the last decade numerous international companies performing IT related activities. Foreign investors interested in operating here can request legal assistance from our team of Romanian lawyers, who can provide step-to-step advice on how to register a local company.
Table of Contents
Why invest in the Romanian IT sector?
The IT sector in Romania provides very attractive conditions. It is estimated that, by 2025, this industry will account for 12% of the country’s gross domestic product (GDP); in 2018, the sector accounted for 6%, being represented mostly by foreign investments.
According to the data provided by the Employers’ Association of the Software and Services Industry (ANIS), more than 70% of the IT activities developed here are under the control of foreign investors; our law firm in Romania can provide more details on the regulations related to foreign investments in this country (that are addressed to the IT sector), but entrepreneurs must also consider the following aspects, which make the Romanian IT market an appealing business destination:
- Romania is seen as the future Silicon Valley of the Eastern Europe;
- the IT sector is a large employer, accounting for approximately 150,000 employees;
- the Romanian IT sector is the largest employer in the Central and Eastern Europe (CEE);
- the local software service providers have a very developed technical expertise;
- IT companies are exempted from paying the salary tax for certain categories of employees, such as software developers.
What are the assets of the Romanian IT workforce?
The Romanian IT sector can be attractive to foreign investors considering the large number of experienced professionals. The country is the largest market in Europe when it comes to the number of IT specialists, who have knowledge of numerous branches of IT. Regardless of the types of specialists a company is interested to hire, in Romania investors will find specialists covering all types of IT activities.
This can be a major advantage for starting a business in Romania, given the fact that having appropriate workforce is one of the main components of any successful company. If you want to hire Romanian employees, you can request information regarding the employment contract from our team of lawyers in Romania.
Then, another advantage of foreign companies setting their business operations in Romania is given by the fact that local workforce is highly educated when it comes to the usage of foreign languages. This is why very well known multinational companies start their activities here, as the talent pool is very large and diversified.
Romanians have top language skills in European languages which are used at a international level, such as English, French, German, Spanish, Italian, but there are also numerous persons who know other European languages which are used mostly at a European level, such as Scandinavian languages for example.
Below, you can watch a short video on the process to open an IT company in Romania:
There are persons who are have solid language skills in other languages as well, such as the languages of the countries that are neighbors of Romania. This can become an advantage for companies which have business relations with these countries. Also, it is important to know that numerous Romanians know more than one foreign language.
Although Romania has had numerous political and economic issues, which implied constant modifications of the tax laws and other laws that are of importance for both local and foreign companies, it is worth knowing that the country does provide a certain level of stability in numerous ways. This is why Romania is seen as a country where investors can have a high level of safety when it comes to their investments.
The time zone of the country is also an important matter. Located on the GMT+2, Romanian companies and other companies operating here can easily communicate in real-time with companies located in other countries with the same time zone, as well as with virtually any other European country, as the time differences assure a very good level of communication.
However, certain companies that operate mostly with other companies located in other time zones, such as the United States of America, will usually hire people to work during night shifts, which are very common in large multinational companies, which generally develop IT business activities or IT related operations.
Over the years, Romania has also modified its legal framework applicable to IT companies, as well as to the general business environment, to make it more stable and suitable for the needs of the market and of the employers. If you want to know more details on the applicable legislation, our team of Romanian lawyers remain at your service.
Our law firm in Romania can present the current tax obligations and benefits applicable to businesses operating in the IT industry and you can also count on our team if you are interested in tax minimization procedures that you can apply to your company.
What are the main types of IT activities available in Romania?
Investors who want to start the procedure of company formation in Romania will need to conclude specific incorporation steps. Besides choosing a suitable legal entity, which, in most of the cases, is represented by the limited liability company, and registering it with the local authorities, IT businesses representatives will also have to select their specific CAEN codes, depending on the business operations that will be carried out here.
In Romania, businessmen can start any type of IT activity, but some of the most developed fields of operations are: customer management, companies providing technology based management systems, security applications, IT services, development services, IT consulting services, system implementation or maintenance. A particularity of the Romanian IT market is given by the qualifications of the local workforce, which is able to provide a wide range of services even for niche IT operations.
What business form should an IT company in Romania have?
The selection of the business form is one of the first steps that have to be decided when opening a company in Romania. An IT company can be registered under one of the business forms available here, but certain legal entities provide the best conditions. For example, the most popular ways to register a Romanian IT company are through limited liability companies or through joint stock companies.
The decision should be based on the size of the future company that will operate in Romania; for example, the limited liability company (LLC) is generally incorporated by businessmen who want to open a small and medium-sized company here, while the joint stock company is addressed to large businesses. Our team of lawyers in Romania can provide an extensive presentation on the documents required when registering these business forms, as well as on their basic characteristics. IT companies registered as LLCs are characterized by the following:
- the Romanian LLC can have full foreign ownership and its investors benefit from limited liability;
- the shareholder’s liability is limited to his or her participation at the company’s capital;
- the LLC can be incorporated in a matter of days, in the case in which all the required documents are prepared as requested by the local law;
- it can be incorporated by a single shareholder and it can have only one director;
- it requires a small share capital, as it can be incorporated with an amount of only RON 200 (approximately EUR 45).
What is the value of the Romanian IT market?
The Romanian IT market is very well developed and investors can rest assured on the fact that this sector has numerous good results. The Romanian market stands out as one of the main destinations investors should choose when thinking to invest in the Central and Eastern Europe. Below, our team of lawyers in Romania have prepared a short list of some of the most important highlights of the industry:
- in 2020, the value of the IT sector accounted for RON 32.3 billion (or EUR 6.8 billion);
- this value took into consideration the financial reports of 23,000 companies operating in Romania and the data was compiled based on the financial reports submitted in that year;
- it must noted that Bucharest remains the central point for IT companies, as this city accounts for 63% of the revenues of the sector;
- it is expected that the IT industry to further expand, and in 2022, the market will account for EUR 7.3 billion;
- by 2025, the market is expected to account for 12% of the country’s gross domestic product (in comparison, in 2020, the industry represented 6% of the gross domestic product);
- at the moment, the country has 8 major regions which are considered to be IT hubs – Bucharest, Cluj-Napoca, Iasi, Timisoara, Oradea, Brasov, Craiova and Sibiu.
Foreign businessmen can request legal assistance on the registration of an IT company from our law firm in Romania; our lawyers may offer more details on the benefits of starting a business in the IT sector here and may also assist when applying for specific business permits and licenses.