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A Romanian (Commercial) Authorized Physical Person

by Vlad Cuc

PFA stands for Authorized Physical Person and refers to the a natural person authorized to conduct commercial activity. If an individual wants to pursue an economic activity as the authorized individual must file a specific request with the Trade Register. The application for registration in the Commercial Register is submitted to the Trade Register of the Court of the county where the applicant establishes his professional headquarters.

According to Government Emergency Ordinance no. 44 of 2008 on commercial activities by physical commercial person/ authorized individuals, individual enterprises and family enterprises, physical commercial person/ authorized individuals is the person who conducted any form of commercial activity permitted by law, using mainly its workforce.

The purpose of performing the activity for which it was authorized, physical commercial person/ authorized individuals can collaborate with other freelancers as physical commercial person, enterprising individuals in possession of individual enterprises or representatives of family businesses or other natural or legal persons.

Economic activities can be conducted/ developed in all areas, trades, occupations or professions that the law does not expressly prohibit them for entrepreneurship/ the free initiative. Provisions apply to activities covered by NACE code – the classification of national economic activities.


Authorized Physical Person versus Limited Liability Company – advantages and disadvantages


The main difference between the two forms of business registration is the liability of the owner: in case of limited liability companies (LLC), the owner is responsible in front of creditors, whether it comes to state and private, with company property.


On the other hand, authorized individuals (PFA)/ physical commercial persons / respond with personal wealth. It is important to know that you can not activate as a PFA/ physical commercial person in any field of activity for which you are not trained. No qualifications are necessary for Limited Liability Companies.


An advantage of the Authorized Physical Person is that you do not need an accountant to sign your balance because you can keep track of income and expenditure alone.

Who pays less tax?


Authorized Physical Persons only pay 16% of net income/profit. In case of Limited Liability Companies, one must also consider dividend tax.

There are a series of conditions for the creation of this type of Romanian business, respectively: the person requesting the registration is over 18 years of age, he/she does not have a fiscal record, he/she have a professional domicile, he/she fulfills the conditions in areas such as sanitary, veterinary, protection of the environment and of labor law.

The request to register a Romanian Individual Enterprise is filed with the Trade Register of the respective county. The Individual Enterprise is able to hire other persons through an Individual Labor Agreement, registered with the Territorial Labor Inspectorate and can collaborate with PFA Enterprises, with other individual enterprises or other legal entities. Also the natural person owning an Individual Enterprise can also be an employee of a third party activating in the same or any other field of activity.

There are a series of differences between the Romanian Individual Enterprise and the PFA (Persoana Fizica Autorizata), respectively:


– the PFA cannot hire employees;
– the PFA cannot be considered an employee of a third party, even if the collaboration is exclusive;
– the person owning the Individual Enterprise in Romania is considered a business entity since the date he/she is registered with the Trade Register, however this entity does not have legal personality in the sense of the Romanian law;
– The person owning an Individual Enterprise can also be employed by a third party;
– The Individual Enterprise is able to hire employees.  

In order to fully understand the difference between a Romanian Individual enterprise, a PFA and a Romanian SRL with one shareholder (Limited Liability Company) please read our articles regarding to the creation and functioning of the PFA as well as the SRL.