One way to grow your business in Romania is to set up a subsidiary. Without going through the Romania subsidiary setup process, you will not be able to hire employees, run payroll, or legally conduct business in the country. However, this vital process can take months to complete, thus delaying operations and potentially risking valuable talent.
Instead, partnering with an Employer of Record like G-P can be an effective alternative to establishing a Romania subsidiary. Our worldwide entity infrastructure allows companies to start hiring anywhere in minutes, swiftly and compliantly. However, if you have a lasting commitment to Romania, here’s the essential information you need regarding the subsidiary setup process.
How to set up a Romania subsidiary
If you decide to set up a Romania subsidiary on your own, you’ll need to consider several factors that could impact your operations. You must look at any existing trade relationships and examine the industry you want to break into. These considerations could influence where you base your headquarters in Romania.
Separate regions or cities in the country can have different laws. Try to set up your Romania subsidiary in a location that is best for your industry and is friendly to international businesses.
One of the most common subsidiary structures is a limited liability company or Societate cu Răspundere Limitată (SRL). The steps to set up an SRL include:
- Obtaining RON 200 of minimum share capital
- Obtaining a certificate of good standing of the parent company
- Completing a Memorandum and Articles of Association of the parent company
- Registering a physical office
- Designating an administrator as the signatory for the subsidiary
- Filing documents with the Trade Register to officially register
Romania subsidiary laws
Romania subsidiary laws differ based on the type of company you decide to incorporate. For an SRL, you will need at least 1 shareholder and a director who is not required to live in Romania or the European Union (EU).
Every year, limited liability subsidiaries have to submit financial statements and tax returns to the Romanian tax authority. An audit may be required if your subsidiary has more than 15 shareholders or exceeds specific turnover, asset, or employee thresholds.
Benefits of setting up a Romania subsidiary
Setting up a subsidiary is the first major hurdle to doing business in Romania. Once you incorporate, you’ll be free to operate your subsidiary in the country legally. Next, you can hire employees, set up payroll, and develop a compensation and benefits plan that works for your business.
An SRL offers additional benefits to both the subsidiary and the parent company. Since there is limited liability between both parties, the parent company does not have to worry about any losses or litigation against the subsidiary. On the other hand, the subsidiary is free to operate under its own structure to fit Romania’s work culture and unique business practices.
Other important considerations
If you decide to set up your Romania subsidiary alone, you will need a complete understanding of the country’s subsidiary laws. Certain parts of the process involve various fees, so you will also need to allocate a portion of your budget to that. Also, keep in mind that you may have to travel back and forth to Romania to handle specific documentation and other requirements.
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