Romania is one of eastern Europe’s most colorful and exciting destinations – but what kind of business advantages does the country offer?
Since it emerged from the communist bloc in the late 1980s, Romania has shaken off a period of economic instability and taken dramatic leaps forward on the world stage. Today, Romania has a reputation as an international business hub, and the government is taking further steps to encourage and develop investment and growth – steps which have translated to a GDP of $186.7 billion, and an impressive growth rate of 8.8%.
In 2017, Romania was confirmed as the fastest-growing economy in the EU – a status which exceeded financial forecasts, and drew plenty of global investment attention. If you’re an entrepreneur looking for business opportunities, you may well be considering Romania as a set-up location – of course, it’s well worth becoming familiar with the shape of the commercial landscape before you make your move…
With that in mind, take a look at some of the best reasons to choose Romania for your business set-up destination…
Most Romanian businesses are set up as Limited Liability Companies (LLC) – which, from a tax perspective, pay the same flat, 16% corporate rate as all other business structures. This means owners setting up in Romania benefit from certain structural advantages including the possibility of 100% foreign ownership, relatively low starting capital requirements (RON 200/ 45 EURO), and of course the assurance that shareholder liabilities are limited to only their capital contributions.
The Romanian government has introduced a range of tax incentives for businesses operating in the country. These incentives include:
– Foreign tax credits: Credits are available for taxes paid to a foreign state, or member-state of the EEA – and may be claimed with appropriate documentation.
– Exemption for reinvested profits: Tax exemption is available for profits reinvested in technological, electronic, or peripheral equipment (including cash registers, software, invoicing machinery and more).
– Local tax exemption: Businesses which are located within industrial parks are exempt from paying property tax.
The Romanian government has placed a special focus on stimulating research and development projects and other science and technology-related business ventures. To this end, a range of incentives exist for businesses engaged in R&D activities:
– A tax deduction of 50% is possible for businesses incurring R&D expenses. The deduction must be applied to eligible R&D activities, which include research and tech-development – and those activities must have been performed in Romania or other EU (or EEA) member-states.
– Further to the possible 50% deduction, businesses which exclusively perform R&D on scientific or tech-development are exempt from tax for their first 10 years of activity.
– Expenses incurred for any kind of professional and technical training are – per specific Romanian education legislation – tax deductible.
Located at on the western shore of the Black Sea, and, bordered by Bulgaria, Ukraine, Hungary, Serbia, and Moldova, starting a business in Romania offers geographic advantages for businesses wishing to gain foothold in eastern Europe and beyond. Romania’s trade connections stretch out into central Europe, the Commonwealth of Independent States (CIS), Russia, and the Middle East – collectively representing a market of tens of millions of consumers. Romania’s transport infrastructure is benefitting from a 1 billion EURO EU investment, and includes rail and road routes into continental Europe, and three international airports.
The Romanian labour force is young educated, literate, and embodies a culture of commitment and integrity. Enrollment in university education has been increasing across Romania since 2011, with the most popular educational disciplines being business, administration and law, construction, and engineering. The Romanian workforce offers employers a highly cost-efficient salary average of around RON 1,250 (275 EURO), and a range of industry specializations, including IT, oil and gas, retail and trade, heavy industry, and financial services.
Romania offers expats a high standard of living, especially in comparison to neighboring nations. While standards in Romania’s rural areas are predictably variable, in the capital city, Bucharest, and other urban centers, living costs are around 50% less than similar European cities, while amenities, schools, and luxuries are plentiful. Employees in Romania live amidst bustling, multicultural urban environments, and in proximity to a variety of breathtaking natural beauty spots – including the stunning Carpathian Mountains – which evoke the country’s history and culture.
Organisations doing business in Romania benefit from a well-developed communication infrastructure, which includes both a reliable telephone network, and country-wide high-speed fiber internet connections. Romania’s internet speed is the best in the region (around 85.Mbps) – facilitated by a range of providers, and a healthy level of competition. 3G and 4G internet connection penetration in Romania reached of 87% in 2016.
Business Processes & Culture
Romania was ranked 45 on the World Bank’s Ease of Doing Business Survey 2018 – out of a possible 190. Incorporation in the country follows a standard and straightforward process: specifically, this means your business must deposit capital in a Romanian bank account, reserve a company name, register with the commercial authority, and set-up payroll and other essential internal services.
While the country’s business-language is English, the wider environment accommodates a wide range of eastern and western social and professional influences, and the cultural landscape is welcoming to outsiders and expats alike.