Doing Business in Romania: The Complete Guide for Foreign Companies and Investors (2026)

Last updated: August 2026

Estimated reading time: 18–22 minutes

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Doing Business in Romania

Romania has become one of the most attractive destinations in Central and Eastern Europe for foreign direct investment. Its membership of the European Union, competitive operating costs, skilled workforce and strategic location make it an appealing choice for companies looking to expand into the European market.

However, setting up and running a business in Romania involves much more than registering a company. Foreign investors must navigate company law, taxation, accounting, VAT, payroll, digital reporting obligations and ongoing compliance. Understanding these requirements from the outset can save considerable time, reduce costs and prevent compliance issues later.

This guide is designed specifically for foreign investors, CFOs, finance directors and business owners who are considering establishing or expanding operations in Romania. Rather than simply explaining the legislation, it focuses on the practical decisions businesses need to make before, during and after entering the Romanian market.

By the end of this guide, you will understand:

• why Romania continues to attract international investors;
• which legal structure is best suited to your business;
• how to establish a Romanian company;
• the main corporate tax and VAT rules;
• accounting and payroll obligations;
• Romania’s digital tax reporting systems;
• the most common mistakes made by foreign businesses; and
• when professional advice can reduce risk and simplify compliance.

Throughout the guide, you’ll also find practical recommendations based on the real issues encountered by foreign companies operating in Romania.

TaxOlia Insight: The companies that experience the smoothest market entry are not necessarily those with the largest budgets. They are the ones that align their legal, tax and accounting decisions before they begin trading.

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Why Invest in Romania?

Romania’s Competitive Advantage

Romania combines access to the European Union’s single market with operating costs that remain highly competitive compared with many Western European jurisdictions. Over the last decade, it has attracted multinational manufacturers, technology companies, shared service centres, logistics operators and professional service firms.

For many investors, Romania offers the right balance between cost efficiency and market access.

Key advantages include:

• Access to the EU Single Market.
• A strategic location connecting Central Europe, the Balkans and the Black Sea region.
• A highly educated and multilingual workforce.
• Strong IT and engineering talent.
• Modern telecommunications infrastructure.
• A growing logistics network.
• A stable banking sector.
• An extensive network of double taxation treaties.

Romania is no longer viewed solely as a low-cost manufacturing location. Increasingly, international companies establish regional finance centres, software development teams, engineering hubs and support functions in Romania because of the available talent and business environment.

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Which Businesses Benefit Most?

Romania is particularly attractive for businesses operating in:

• Manufacturing
• Automotive
• Software development
• Artificial Intelligence
• Shared Service Centres (SSC)
• Business Process Outsourcing (BPO)
• Logistics
• Distribution
• E-commerce
• Professional Services
• Renewable Energy

Each sector has different regulatory and tax considerations, making early planning essential.

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Romania at a Glance

Item	Information
EU Member State	Yes
Currency	Romanian Leu (RON)
Capital	Bucharest
Official Language	Romanian
Population	Approx. 19 million
Business Language	English widely used in international business
Accounting Framework	Romanian Accounting Regulations (with IFRS for certain entities)
VAT System	Harmonised with EU VAT Directive

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Choosing the Right Business Structure

Selecting the appropriate legal structure is one of the first strategic decisions a foreign investor must make.

The choice affects:

• liability;
• taxation;
• governance;
• accounting obligations;
• financing;
• future expansion.

For most foreign investors, the preferred structure is the Limited Liability Company (SRL) because it offers flexibility, limited liability and relatively straightforward administration.

However, it is not always the best solution.

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Romanian Limited Liability Company (SRL)

The SRL is the most common legal structure used by foreign investors.

It is suitable for:

• subsidiaries;
• consulting businesses;
• manufacturers;
• technology companies;
• trading businesses;
• logistics operations.

Advantages

✔ Separate legal entity

✔ Limited liability

✔ Widely recognised by customers and suppliers

✔ Flexible ownership structure

✔ Appropriate for SMEs and many multinational subsidiaries

Considerations

Operating an SRL also means complying with:

• accounting regulations;
• corporate tax;
• VAT (where applicable);
• annual financial statements;
• payroll obligations;
• digital reporting systems such as RO e-Factura and SAF-T (where applicable).

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Branch Office

A branch allows a foreign company to operate in Romania without creating a separate legal entity.

It may be appropriate where Romanian activities are closely integrated with those of the parent company.

However, because a branch is not legally independent, the foreign parent remains responsible for its obligations.

This structure also raises important tax considerations, particularly regarding permanent establishment rules.

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Joint Stock Company (SA)

An SA is generally appropriate for larger businesses requiring more sophisticated governance or intending to attract multiple investors.

Although suitable for large-scale projects, it is usually more complex than an SRL and is therefore less common among first-time foreign investors.

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Representative Office

Representative offices are generally used only for promotional and liaison activities.

They are not suitable for ordinary commercial trading.

Businesses intending to generate Romanian revenue should normally consider another structure.

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Which Structure Should You Choose?

For most SMEs and international subsidiaries:

SRL → Recommended.

For large investment projects requiring complex ownership or capital markets access:

SA → Consider.

For temporary extensions of an existing foreign company:

Branch → Analyse carefully.

For market research and promotion only:

Representative Office → Possible.

TaxOlia Insight: We often see businesses choose a legal structure based on what another company in their group has done elsewhere. In practice, the optimal Romanian structure depends on local operations, financing arrangements, VAT profile and long-term commercial objectives—not simply on group precedent.

Company Formation in Romania

Once you have decided that Romania is the right jurisdiction and selected the appropriate legal structure, the next step is incorporating your company. Compared with many other European countries, the incorporation process is generally efficient, provided that the necessary documentation has been prepared correctly.

The biggest mistake foreign investors make is believing that incorporation is the end of the process. In reality, it is only the beginning. Once your company is registered, you still need to consider VAT registration, banking, accounting, payroll, digital reporting and ongoing tax compliance before you can operate effectively.

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Step 1 – Define Your Business Activities

Before registering the company, you should clearly define the activities it will perform in Romania.

Romanian companies use the CAEN classification system (Romanian equivalent of the European NACE classification) to identify their business activities.

Choosing the correct activity codes is more important than it may appear.

These codes can influence:

• licensing requirements;
• VAT implications;
• statistical reporting;
• industry-specific regulations;
• future expansion.

Many businesses choose several activity codes during incorporation to avoid having to amend their constitutional documents later.

TaxOlia Insight: Rather than registering dozens of activities “just in case”, choose the activities that realistically reflect your business plan while allowing reasonable room for growth.

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Step 2 – Prepare the Incorporation Documents

The documentation required depends on the shareholders and directors.

Where foreign corporate shareholders are involved, documentation often needs to be translated and, depending on the country of origin, notarised or apostilled.

Preparing these documents early is one of the easiest ways to avoid unnecessary delays.

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Step 3 – Register the Company

The incorporation application is submitted to the Romanian National Trade Register.

Once approved, the company becomes a separate legal entity and receives its Romanian tax identification number.

However, registration alone does not mean the business is fully operational.

Several important steps still remain.

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Step 4 – Open a Corporate Bank Account

A Romanian company requires an operational bank account to receive payments, pay suppliers, process payroll and settle taxes.

When choosing a bank, foreign investors should consider more than account opening fees.

Important criteria include:

• online banking functionality;
• English-language support;
• international transfers;
• multi-currency accounts;
• integration with accounting software;
• relationship management.

For companies trading internationally, a bank that supports efficient foreign currency operations can significantly improve cash flow management.

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Step 5 – Assess VAT Registration

One of the first tax questions every new business should ask is:

Do we need Romanian VAT registration?

Many businesses incorrectly assume that VAT registration depends only on turnover.

In practice, registration may become necessary much earlier depending on:

• imports;
• intra-EU acquisitions;
• local supplies;
• warehousing;
• cross-border services;
• business model.

A proper VAT analysis before the first invoice is issued can prevent significant compliance issues later.

[Internal Link: VAT Registration in Romania]

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Step 6 – Organise Accounting and Payroll

A Romanian company should have its accounting processes in place before commercial operations begin.

This includes:

• bookkeeping procedures;
• invoice workflows;
• document retention;
• payroll (if employees will be hired);
• VAT coding;
• management reporting.

Many foreign businesses outsource these activities during their first years of operation.

This allows management to concentrate on growing the business rather than understanding local reporting requirements.

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Company Formation Checklist

[CHECKLIST – Starting Your Romanian Company]

Before trading, ensure that you have:

✓ Selected the appropriate legal structure.

✓ Defined your business activities.

✓ Registered the company.

✓ Opened a corporate bank account.

✓ Assessed VAT registration.

✓ Selected an accounting provider.

✓ Planned payroll (where applicable).

✓ Reviewed digital reporting obligations.

✓ Established internal financial procedures.

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Understanding the Romanian Corporate Tax System

Tax is one of the first considerations for every investor, yet it is also one of the most misunderstood.

The question is rarely:

“What is the Romanian corporate tax rate?”

The more important question is:

“How will my business actually be taxed?”

The answer depends on:

• the legal structure;
• the company’s activities;
• financing arrangements;
• cross-border transactions;
• eligibility for particular tax regimes;
• international tax treaties.

Looking only at the headline corporate tax rate rarely provides the full picture.

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Taxes a Romanian Company May Encounter

Depending on its activities, a Romanian company may be subject to:

• Corporate Income Tax;
• Value Added Tax (VAT);
• Dividend Tax;
• Withholding Tax;
• Salary Tax and Social Contributions;
• Local Taxes;
• Industry-specific taxes (where applicable).

Successful tax planning considers how these taxes interact rather than analysing them individually.

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Corporate Income Tax

Corporate income tax is generally calculated based on taxable profit, not accounting profit.

The starting point is the company’s accounting result, which is then adjusted in accordance with Romanian tax legislation.

Typical adjustments include:

• non-deductible expenses;
• non-taxable income;
• depreciation adjustments;
• tax losses;
• fiscal incentives.

This means two companies with identical accounting profits may ultimately pay different amounts of corporate income tax.

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Deductible Expenses

One of the most common questions from new investors concerns deductible business expenses.

Generally, expenses incurred for the purpose of carrying on the business may be deductible, provided that they satisfy the legal requirements and are appropriately documented.

Typical examples include:

• employee salaries;
• office rent;
• software subscriptions;
• utilities;
• professional services;
• travel;
• marketing;
• depreciation.

However, Romanian legislation also contains specific rules governing partially deductible and non-deductible expenses.

Good accounting records are therefore essential.

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Dividend Distributions

Once a company becomes profitable, shareholders naturally ask how profits can be distributed.

Dividend planning should always consider:

• Romanian domestic legislation;
• double tax treaties;
• EU Parent-Subsidiary rules (where applicable);
• withholding tax implications.

Planning profit distributions before year-end is usually more efficient than considering them only after profits have been generated.

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Transfer Pricing

Multinational groups frequently carry out transactions between related companies.

These may include:

• management services;
• loans;
• royalties;
• software licences;
• shared service arrangements.

Romanian transfer pricing rules require these transactions to reflect arm’s-length conditions.

Businesses should establish transfer pricing policies from the outset rather than waiting for a tax inspection.

[Internal Link: Transfer Pricing in Romania]

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Permanent Establishment

Foreign companies sometimes assume they can operate in Romania without creating any local tax presence.

This is not always the case.

Depending on the nature of the activities carried out in Romania, a foreign company may create a permanent establishment, triggering Romanian tax obligations.

Examples may include:

• maintaining an office;
• employing staff;
• carrying out construction projects;
• concluding contracts locally.

Determining whether a permanent establishment exists often requires analysing both Romanian legislation and the applicable double taxation treaty.

TaxOlia Insight: Permanent establishment issues are among the most expensive tax problems to correct retrospectively. If your Romanian activities extend beyond occasional business visits, obtain tax advice before commencing operations.

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Common Corporate Tax Mistakes

The issues we most frequently encounter include:

• confusing accounting profit with taxable profit;
• overlooking withholding tax;
• failing to document related-party transactions;
• assuming foreign tax treatment also applies in Romania;
• considering tax only after incorporation.

Businesses that integrate tax planning into their market-entry strategy typically avoid these problems altogether.

Value Added Tax (VAT) in Romania

For many foreign investors, VAT is the first significant tax issue they encounter. While Romania’s VAT system is aligned with the EU VAT Directive, its practical application can be complex, particularly when businesses are involved in cross-border trade, imports, exports or digital services.

Understanding your VAT obligations before issuing your first invoice is one of the most important steps in establishing a compliant Romanian business.

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Do You Need VAT Registration?

One of the biggest misconceptions is that VAT registration only becomes necessary once a company exceeds a turnover threshold.

While this may apply in some domestic situations, many foreign companies are required to register much earlier because of the nature of their activities.

VAT registration may need to be considered where a business:

• imports goods into Romania;
• purchases goods from other EU Member States;
• stores inventory in Romania;
• supplies goods locally;
• provides certain taxable services;
• carries out intra-EU transactions.

For this reason, VAT registration should always be analysed based on the business model rather than turnover alone.

TaxOlia Insight: We frequently advise companies that technically do not exceed the domestic registration threshold but nevertheless require VAT registration because of their international trading activities.

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Romanian VAT Rates

Romania applies:

• a standard VAT rate;
• reduced VAT rates for qualifying goods and services;
• VAT exemptions for specific activities.

The applicable rate depends entirely on the nature of the transaction.

Businesses should never assume that similar products or services are taxed identically in every EU country.

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Reverse Charge

Many international transactions do not require Romanian VAT to be charged on the invoice.

Instead, the reverse charge mechanism may apply.

Determining whether reverse charge is appropriate depends on factors such as:

• where the customer is established;
• the place of supply;
• whether the customer is VAT registered;
• the nature of the goods or services.

Applying reverse charge incorrectly is one of the most common findings during VAT inspections.

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Recovering VAT

VAT registered businesses can generally recover VAT incurred on business purchases where the legal conditions are satisfied.

Examples include:

• office rent;
• equipment;
• software;
• professional services;
• utilities;
• inventory.

However, not every VAT amount shown on an invoice is recoverable.

Businesses should ensure that purchases are both properly documented and connected with taxable business activities.

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Cross-Border Transactions

Romania’s position within the European Union means that many businesses regularly carry out:

• intra-EU acquisitions;
• intra-EU supplies;
• exports;
• imports;
• chain transactions;
• triangular transactions.

Each of these transactions may have different VAT consequences.

As transaction volumes increase, implementing robust VAT procedures becomes increasingly important.

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Common VAT Mistakes

The most frequent VAT issues include:

• registering too late;
• charging Romanian VAT incorrectly;
• misunderstanding the place of supply rules;
• poor invoice documentation;
• incorrect VAT coding in accounting systems.

Most of these issues can be avoided through a VAT review before commercial activities begin.

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Accounting Requirements

Accounting is the backbone of tax compliance.

Every Romanian company must maintain statutory accounting records in accordance with Romanian accounting regulations.

Good bookkeeping supports:

• VAT reporting;
• corporate tax;
• payroll;
• financial statements;
• management reporting;
• tax audits.

Poor bookkeeping increases the likelihood of tax adjustments and penalties.

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Can Foreign Companies Outsource Accounting?

Yes.

Many international businesses appoint a Romanian accounting firm rather than establishing an internal finance department.

Typical outsourced services include:

• bookkeeping;
• VAT compliance;
• payroll;
• financial statements;
• tax reporting;
• management reporting.

This allows management to focus on commercial activities while ensuring local compliance.

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Financial Statements

Romanian companies are generally required to prepare annual statutory financial statements.

Depending on their size, businesses may also become subject to statutory audit requirements.

Companies should not leave year-end reporting until the final weeks of the financial year.

Accurate monthly bookkeeping makes year-end significantly easier.

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Why Accounting Matters

Accounting is not merely a legal obligation.

It provides management with reliable information regarding:

• profitability;
• liquidity;
• operating costs;
• tax liabilities;
• business performance.

Businesses with strong accounting processes usually make better commercial decisions.

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Hiring Employees and Payroll

Romania offers one of the largest pools of skilled professionals in Central and Eastern Europe.

Many foreign companies establish Romanian subsidiaries specifically to recruit engineers, software developers, finance specialists and multilingual customer support teams.

However, employing staff also creates payroll and employment obligations.

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Before Hiring Employees

Employers should establish:

• employment contract templates;
• payroll procedures;
• HR processes;
• employee registration procedures;
• accounting integration.

Preparing these processes before recruitment begins avoids unnecessary administrative pressure later.

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Payroll Responsibilities

Payroll involves much more than calculating salaries.

Employers are responsible for:

• calculating salary taxes;
• calculating mandatory social contributions;
• preparing payroll reports;
• maintaining employment documentation;
• submitting statutory declarations;
• paying employees;
• paying payroll taxes.

Payroll therefore sits at the intersection of HR, accounting and taxation.

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Employee Benefits

Many employers provide benefits such as:

• meal vouchers;
• private medical insurance;
• performance bonuses;
• pension contributions;
• training programmes.

Each benefit may have different tax consequences.

Employers should therefore review compensation packages before implementation.

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Common Payroll Mistakes

Typical issues include:

• late employee registration;
• incorrect payroll calculations;
• incomplete employment documentation;
• treating payroll as purely an HR activity.

Successful businesses integrate payroll with accounting and tax compliance from the outset.

TaxOlia Insight: Payroll compliance is one of the areas where legislation changes most frequently. Businesses should review payroll processes regularly rather than assuming previous rules continue to apply.

[Internal Link: Payroll Guide for Foreign Companies]

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Digital Tax Compliance

Romania has invested heavily in digital tax administration.

Today, businesses may be affected by:

• RO e-Factura;
• SAF-T reporting;
• RO e-Transport;
• electronic communication with ANAF.

These reporting systems increasingly rely on structured accounting data rather than traditional tax returns.

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Why This Matters

Digital reporting affects much more than the finance department.

Implementation frequently requires collaboration between:

• accounting;
• tax;
• IT;
• logistics;
• procurement;
• ERP specialists.

Companies should therefore consider digital reporting requirements when selecting accounting software and designing internal processes.

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Preparing Your Business

Before operations begin, businesses should review:

✓ ERP capabilities

✓ invoice workflows

✓ customer master data

✓ supplier master data

✓ VAT coding

✓ accounting mappings

✓ document retention procedures

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Practical Recommendation

Digital tax reporting is no longer a future consideration—it is an operational reality.

Businesses that integrate accounting, VAT and ERP implementation from the beginning generally experience fewer compliance issues and are better prepared for future legislative changes.

Banking and Financial Operations

Opening a Romanian company is only the first step. To begin operating efficiently, businesses need a banking structure that supports day-to-day transactions, tax payments, payroll, international transfers and future growth.

Romania has a modern banking system, with both local and international banks offering corporate banking services. Most foreign investors will have no difficulty opening a business account, provided they are prepared for the documentation and due diligence required by financial institutions.

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Opening a Corporate Bank Account

Once your company has been incorporated, opening a corporate bank account should be one of your immediate priorities.

Banks will typically request information regarding:

• the company registration documents;
• shareholders and ultimate beneficial owners (UBOs);
• directors and authorised signatories;
• the company’s intended business activities;
• expected transaction volumes;
• source of funds.

Because Romanian banks are subject to strict Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, foreign shareholders should expect additional verification procedures, particularly where the ownership structure involves several jurisdictions.

TaxOlia Insight: Many foreign investors underestimate the time required for bank onboarding. Preparing shareholder documentation before incorporation often saves several days or even weeks.

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Choosing the Right Bank

While fees are important, they should not be the deciding factor.

When comparing banks, consider:

• English-speaking relationship managers;
• online banking functionality;
• multi-currency accounts;
• SEPA and international payments;
• integration with accounting software;
• financing options;
• trade finance capabilities;
• responsiveness of customer support.

A bank that understands international businesses can significantly simplify day-to-day operations.

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Managing Cash Flow

Many businesses focus on profitability but overlook liquidity.

Cash flow management should include regular monitoring of:

• customer collections;
• supplier payments;
• payroll;
• VAT liabilities;
• corporate tax payments;
• foreign exchange exposure.

Even profitable companies can encounter financial difficulties if cash inflows and outflows are not properly managed.

Preparing monthly cash flow forecasts is considered best practice for businesses of all sizes.

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Banking and Accounting Integration

Modern accounting software can automate many banking processes, including:

• bank reconciliations;
• payment matching;
• supplier payments;
• customer receipts;
• exchange rate calculations.

Automation reduces manual work, improves accuracy and provides management with real-time financial information.

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[CHECKLIST: Banking Setup for Foreign Investors]

Before trading, ensure that you have:

✓ Opened operational bank accounts.

✓ Activated online banking.

✓ Established payment approval procedures.

✓ Connected bank accounts to your accounting software.

✓ Defined cash flow reporting procedures.

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Annual Compliance Calendar

One of the most common surprises for foreign investors is that compliance does not end after company formation.

Romanian businesses have ongoing obligations throughout the year.

Understanding these obligations from the outset allows companies to allocate resources appropriately and avoid unnecessary penalties.

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Monthly Obligations

Most companies will typically perform the following activities each month:

Accounting

• record accounting transactions;
• reconcile bank accounts;
• review supporting documentation;
• prepare management reports.

VAT

Where applicable:

• review VAT transactions;
• prepare VAT returns;
• submit statutory declarations.

Payroll

If employees are engaged:

• process payroll;
• calculate taxes and social contributions;
• submit payroll declarations;
• pay salaries.

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Quarterly Reviews

Good governance also includes periodic reviews of:

• tax position;
• financial performance;
• transfer pricing;
• compliance procedures;
• internal controls.

Quarterly reviews often identify issues before they become year-end problems.

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Annual Responsibilities

Every year, businesses should plan for:

• preparation of financial statements;
• corporate income tax reporting;
• inventory procedures;
• statutory audit (where applicable);
• review of accounting policies;
• review of tax risks.

Rather than treating year-end as a single deadline, successful businesses prepare continuously throughout the year.

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Common Mistakes Foreign Companies Make

After advising numerous international investors, we have found that most compliance issues arise from a relatively small number of recurring mistakes.

Understanding these risks before entering the Romanian market can save considerable time and cost.

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1. Treating Incorporation as the Final Step

Company registration is only the beginning.

Businesses should also prepare for:

• accounting;
• VAT;
• payroll;
• digital reporting;
• banking;
• ongoing tax compliance.

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2. Delaying VAT Analysis

Many companies only consider VAT after issuing their first invoice.

By then, registration may already have been required.

A VAT assessment should be completed before trading begins.

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3. Choosing the Wrong Business Structure

Selecting a legal structure based solely on what another group company uses in another country is rarely the best approach.

Each investment should be evaluated individually.

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4. Poor Documentation

Romanian tax compliance depends heavily on documentary evidence.

Maintaining complete and organised records significantly reduces audit risks.

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5. Ignoring Digital Reporting

Systems such as RO e-Factura and SAF-T require high-quality accounting data.

Businesses should prepare their ERP systems before reporting becomes mandatory.

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6. Viewing Accounting as an Administrative Cost

Accounting provides management with valuable information regarding profitability, liquidity and business performance.

Companies that invest in accurate accounting usually make better commercial decisions.

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7. Seeking Tax Advice Too Late

Professional advice is most valuable before major business decisions are made.

Reviewing tax implications after transactions have already occurred often limits the available options.

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TaxOlia Insight: The majority of expensive tax problems we encounter could have been prevented through a short planning meeting before the business entered the Romanian market.

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Final Thoughts

Romania offers an attractive environment for international investors seeking access to the European market. Its strategic location, skilled workforce, competitive operating costs and EU membership continue to attract companies across a wide range of industries.

However, a successful investment requires more than registering a company. Businesses should carefully consider their legal structure, tax position, VAT obligations, accounting systems, payroll processes and digital reporting requirements before commencing operations.

Companies that establish robust compliance procedures from the outset are better positioned to focus on growth, reduce administrative risk and build long-term success in the Romanian market.

At TaxOlia, we work with foreign investors throughout every stage of their Romanian journey—from company incorporation and VAT registration to accounting, payroll, tax advisory, transfer pricing and ongoing compliance. Our role is not simply to help clients comply with Romanian legislation, but to provide practical, commercially focused advice that supports confident business decisions.

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Ready to Expand into Romania?

Whether you are exploring the Romanian market or already operating locally, our team can help you establish a compliant and efficient business structure.

Our services include:

• Company Formation
• Accounting & Bookkeeping
• VAT Registration & Compliance
• Corporate Tax Advisory
• Payroll Services
• Transfer Pricing
• SAF-T & e-Factura Implementation
• Tax Audit Assistance
• Ongoing Compliance Support

Contact TaxOlia for an initial consultation and discover how we can support your business in Romania.