When looking for up-and-coming European Union (EU) countries that have started to catch the eye of investors over the last few years, you should take a close look at Romania. In recent years, the country has become a magnet for those attracted by the growing startup ecosystem, especially within large cities like Bucharest and Cluj-Napoca.
Below are 5 reasons main reasons why you should consider doing business in Romania!
Low taxes
The standard corporate income tax rate of 16% is one of the lowest in Europe, well below the EU27 average of 20.71%. In addition, Romania has signed various double taxation agreements through which protect companies and their profits from double taxation. This means that taxes will be paid only once, in the country where the profits are recorded.
At the same time, the Romania Fiscal Code includes a 16% corporate tax relief for profit reinvested in new technological equipment, as well as a personal income tax exemption for IT employees or those who carry out research & development and innovation projects.
Another fiscal incentive in Romania is related to the turnover tax rates used for micro-enterprises. A company (Romanian legal entity) is considered a micro-enterprise if its maximum turnover is up to EUR 1 million at the end of the previous year. According to the current rules, the turnover tax rates used for micro-enterprises are just:
- 1% for micro-enterprises with one or more employees
- 3% for micro-enterprises with no employees
In other words, if you own a start-up or a small to medium company, you should definitely come to Romania and benefit from one of the lowest taxation systems in Europe.
Budget-friendly country
Another advantage for doing business in Romania resides in its potential of highly skilled workforce at competitive prices (third lowest minimum wage in EU). This means that a company incorporated here will benefit from low-cost business operations.
In addition, companies that want to start or bring their business in countries like Romania have much to gain from its economic status. Reduced prices for office rents, salaries and accountant expenses combined with the low corporate taxes, and an important number of double taxation avoidance treaties, make Romania a perfect destination for starting or moving a business from abroad.
Affordable, high-quality professionals
Despite the reduced cost of workforce, Romania has a well-educated workforce with good knowledge of foreign languages. Around 80% of the schools in Romania teach English as a second language, making it the most studied foreign language in the country. Many Romanians also know German, French, Italian, Spanish or Hungarian.
Moreover, there are a lot of highly skilled professionals and motivated graduates. The country has a growing number of shared services, research and development centers and highly talented IT professionals. Romania is the 6th country at global level in terms of number of certified IT specialists.
EU-membership benefits
As an EU, and consequently, the Single European Market – member, Romanian companies can freely trade with any of the that EU countries without facing any barriers.
The main benefits of EU membership to businesses are:
- Increase in market size (a greater number of potential customers) as a result of the freedom of movement of goods and services. Romanian companies can sell their products and offer services to any of the EU – Member States countries without extra costs or restrictions
- Lower administration costs to trade, meaning that businesses do not have to pay extra money to send their goods abroad, other than normal transport costs
- Access to EU government contracts, not just Romanian government contracts, benefiting businesses who sell goods and services to government departments
- Greater access to cheap factors of production like raw materials, technology and labor.. Football clubs have certainly benefited from this!
Geographic position
Romania joined the EU in 2007 and it is also a member of NATO, standing as a pillar of strength in maintaining stability and security in the region.
Its geographical location can be considered strategic for transportation and import/export purposes. It is an easy gateway towards the Middle East and, other European Union markets are also easily accessible. Romania owns 1/3 of the Danube River and it stands also as the most significant gateway to the Black Sea through Constanta Port, the largest and deepest port at the Black Sea.
If you would like to address more questions or if you need a legal consultation, you can contact us at office@rrpb.ro or by accessing our site www.rrpb.ro for more information.
Don’t forget to subscribe to our YouTube Channel where new and updated content is posted monthly on various current topics!
Keep up to date with our latest articles!
- 5 reasons to register your trademark
- 8 curiosities about the Romanian Law
- How to regain your Romanian citizenship in 6 steps
- 5 Romanian Lawyers who changed the face of law – Part I
- 5 Romanian Lawyers who changed the face of law – Part II
