by Vlad Cuc
Per the Romanian law, secondary headquarters are those offices of commercial companies without individual legal personality. These will be mentioned in the company’s articles of association filed with the Trade Register corresponding with the Romanian main office. The following are considered secondary headquarters: branches, agencies, representative offices, work points, or other similar legal entities.
Quick Facts | |
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Applicable legislation (home country/foreign country) | Romanian Civil Code and Companies Act |
Best used for | Developing the same business activities as the ones of the parent company, by replicating the same business model (banking institutions usually use branches to expand on foreign markets) |
Minimum share capital (YES/NO) | No |
Time frame for the incorporation (approx.) | Basic registration procedures are completed in 3-5 working days, but the entire process can take longer (few weeks) |
Documents to be filed by parent company | – the parent company’s documents (articles of association, certificate of incorporation, etc), – the parent company’s decision to establish a branch, – documents presenting the financial situation of the parent company, – notarized translations where necessary, – the power of attorney issued for the branch representative |
Management (Local/Foreign) | Local (the branch manager can be a foreign citizen as well) |
Legal representative required (YES/NO) | Yes |
Local bank account (YES/NO) | Yes |
Independence from the parent company | No |
Liability of the parent company | Full liability |
Corporate tax rate | 16% |
Annual accounts filing requirements | Yes |
Possibility of hiring local staff (YES/NO) | Yes |
Travel requirements for incorporating branch/subsidiary (YES/NO) | Investors do not have to travel to Romania for this purpose, they can appoint a representative to handle the incorporation procedure in their name. |
Double tax treaty access (YES/NO) | Yes |
The following documents must be filed with the Trade Register for the formation of Romanian secondary headquarters: a company decision, documenting attesting the right to use the respective location and a special declaration. ‘Sucursala’ branches represent entities without legal personality of commercial companies which have to be registered, before starting their activity, with the Trade Registry in the county they will operate.
IMPORTANT: If the ‘sucursala’ branch is opened in a locality of the same county or in the same locality with the company, it will be registered in the same Trade Register, but distinct, as a separate registration. Our Romanian law firm can provide more information on this matter and we can also advise on the procedure for VAT registration in Romania, where required.
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The registration request of the ‘sucursala’ branch set up by a company having its headquarters in Romania will be accompanied by the Associates’ General Assembly decision for setting up the ‘sucursala’ branch which has to include the secondary headquarters, the activity object, the IDs of the persons empowered to represent the ‘sucursala’ branch and the conferred mandate’s limits, in original. The following are also required:
The registration request of the Romanian branch set up by a foreign legal person must be accompanied by the following documents: the Articles of Association of the foreign legal person which set it up, in translated and authenticated copies, and the decision of the competent statutory authority of the legal person, concerning the set up of the ‘sucursala’ branch, indicating the headquarters of the Romanian branch, the activity object, the empowered to represent the ‘sucursala’ branch persons’ IDs and the conferred mandate’s limits, as well as:
The branch office represents an entity liable to the payment of various corporate taxes in Romania, but only for the income obtained from economic activities developed on the Romanian territory. This means that the branch must submit tax returns in accordance with the financial calendar.
Below, we invite you to watch a short video presenting how to register a branch or a representative office in Romania:
The companies and the foreign economic organizations may be represented in Romania based on authorization issued by the Ministry of Foreign Trade. NOTE: the company which requests the issuance of an authorization to represent will mention in the request to the Ministry of Foreign Trade the following:
NECESSARY DOCUMENTS: the authorization request will be accompanied by a set of documents, which are presented in the list below; for more details related to this subject, you can always address to our team of lawyers in Romania, who can assist you in the process of registering a representative office:
Given that most of the branch offices and the representative offices that are registered in this country are set up by foreign companies, in the list below, our team of Romanian lawyers have prepared few highlights regarding the data on foreign companies operating here and other information concerning foreign direct investment (FDI) in Romania:
Foreign businessmen who want to invest in Romania in 2024 must know that the country has attracted many foreign investments throughout the years and that many businesses have full foreign ownership or partial foreign ownership. At the end of 2023, it is shown that there were 251,226 companies with foreign capital, which accounted for a total capital of approximately $70 billion.
According to the National Trade Register Office, around 7,000 foreign companies were registered in Romania in 2023, the majority developing business activities in the retail and wholesale sectors. The largest number of foreign companies are incorporated by Italian investors. However, the largest capital inflow can be observed in the case of companies set up in Romania by Dutch investors.
The representative office represents a subdivision of the parent company abroad. It is different from the branch office in numerous ways, although both structures are dependent on their parent company and have limited managerial rights and limited rights to taking corporate decisions, as they will generally need the approval of the parent company.
Unlike the branch office, the representative office is not entitled to developing commercial activities from which the company can make a profit. They can, however, enter a set of business activities that are necessary for the foreign company. For instance, a representative office can develop activities through which the parent company can obtain information on the consumer market in Romania and the niche in which the company operates.
In other words, the representative office can be an ideal vehicle to choose for company formation in Romania in the phases prior to starting a commercial activity in this country. The representative office can study the local market, the competitors, the possible clients, establish business partnerships with local businesses and others, but it can’t enter commercial activities.
An advantage of the representative office is that the structure will, therefore, not be liable to the payment of multiple taxes as most of the Romanian taxes charged to companies derive from the taxation of commercial activities and obtaining profits from various types of incomes.
The representative office does not have as a purpose obtaining a profit, thus the parent company will have a limited investment in this structure – the registration costs, the costs for renting an office and the costs for the company’s employees (the representative office must have at least one employee working in the office that will be set up in Romania).
Our team of lawyers in Romania can provide more details on the types of taxes that are applied to the representative office and can also assist you in the process of registering the employee(s) for the payment of employment taxes. The representative office has to be registered with the Trade Register, but it also needs an approval from the Ministry of Economy, Commerce and Business Environment.
Here, the investors must submit a set of documents, in accordance with the Decree – Law No. 122/1990. Foreign investors must also be aware that they will be liable for the payment of an annual tax for the representative office set up in Romania. Given that there are numerous other regulations that must be respected, we advise you to address to our law firm in Romania for advice.
Our team of lawyers in Romania can help you register a branch office or a representative office and investors can also receive advice on the tax obligations imposed to each type of structure, as prescribed by the Romanian Tax Code. For more information, please contact our Romanian lawyers.