Representative Office in Romania

Foreign companies have several options when deciding the manner in which they will set up their business operations in Romania.
 
The representative office in Romania is not a separate legal entity registered in Romania, it is merely an extension of a foreign company willing to engage in certain activities in the country.
 
The office incorporated in Bucharest or in another Romanian city of choice is regulated by a number of laws, and our team describes the most important legal provisions below.
 
Our Romania company formation specialists answer a number of important questions about the representative office in this article.
 
Foreign investors or corporations ready to enter the Romanian market can reach out to us to find out more about the available options.

What is a representative office in Romania?

A representative office is a Romanian legal form authorized by the authorities to represent companies and foreign economic organizations in Romania.

This is a manner in which a foreign company can promote its commercial interests in Romania, through specialized offices, according to a predetermined agreement.

In most cases, foreign companies register representative offices in order to gather information about their niche, for various product promotions, or for the purpose of meetings the agreements signed with suppliers or partners in Romania.

It is useful to point out that opening a representative office will not allow the company to provide services or engage in any type of production/manufacturing work.

What is the representative office used for in Romania?

According to Romanian legal regulations, the representative office functions as an intermediary agent between mother companies and other external business partners.

In broad terms, it can be considered a broker for the main company. If interested in opening a representative office in Romania, clients should know that such a secondary establishment cannot engage in commercial revenue-generating activities such as concluding contracts and opening of letter of credit.

Any company choosing to set up a representative office in the country may take into consideration some specific roles that can be fulfilled by these business entities. Through these offices, the mother company can promote its brand and it can work with local agencies and distributors.

The representative office has no separate social capital and, if willing to create a representative office in Romania, individuals need to know that this type of business entity must not be registered with the Trade Register Office.

This type of office is not an independent legal entity and therefore the mother company must be held responsible for actions taken by the representative office.

What regulations apply to representative offices in Romania?

Clients interested in opening a representative office in Romania should know that there are specific regulations to follow in this particular case:

• The office is set up on the basis of an operating authorisation issued by the competent ministry under Government Ordinance no. 18/2022, which replaced Decree-Law no. 122/1990; the application is filed online, through a dedicated electronic platform.
• The application states the identification details of the foreign company, the object of activity of the representative office (which must correspond to that of the foreign company), the duration of its operation, the person who will represent it in relation to third parties and the address of the office.
• The authorisation is issued, or the application is rejected with reasons, within 30 days of the submission of the complete file; it is granted for at least one year and can be extended for the same period.
• Within 30 days of its establishment, the representative office must register for tax purposes with the competent tax authority, by filing a fiscal registration form electronically.

Foreign companies that decide to register a representative office can benefit from working with a legal professional who is trained and is familiar with the business environment in the country.

Our company is able to provide comprehensive approaches fitting all expectations and always serving our clients’ best interests. Our lawyers develop unique strategies which will result in great financial rewards.

A representative office is not a legal entity and has no right to engage in trading.

The office only allows a foreign entity to establish a presence in the country and perform minimal activities, as authorized.

How is the representative office registered?

In order to open a representative office in Romania, the foreign company must submit a request. The following documents are filed with the relevant authorities:

• the decision to open the representative office in Romania;
• proof of registered office;
• the representative activity performed in Romania;
• representative office duration or functioning period;
• number of appointed individuals, their name, residence and identification documents;
• a confirmation of the foreign company's creditworthiness issued by the bank through which it carries out its main financial operations;
• the foreign company’s registration certificate, issued by the authorities in its country of origin;
• other documents concerning the foreign company, as may be required for the particular representative activities that will take place in Romania.

The decision to open the representative office as well as the power of attorney for the appointed representative can be drawn up as a single document or as two separate documents.

All documents drawn up in a foreign language must be accompanied by an authorised Romanian translation; as the file is submitted online, the translations are signed with a qualified or advanced electronic signature.

Our team can help you prepare the documents.

Representative offices of foreign credit institutions are also subject to the banking legislation (Government Emergency Ordinance no. 99/2006 on credit institutions) and to the regulations of the National Bank of Romania.

Changing the registered office particulars or closing the office

It is important to keep in mind that any change in the data of the authorisation or in the legal status, object of activity or share capital of the foreign company must be communicated to the competent ministry within 30 days, so that the operating authorisation can be amended.

The extension of the authorisation must be requested through the online platform at least 30 days before the authorisation expires. The following documents are relevant for the extension:

• the extension request form, filled in (original and copy);
• recent authorization;
• registered office representative power of attorney;
• power of attorney for the individual submitting the extension request, if the person is not the appointed representative.

When the registered office changes its registered office, the request will include the application for the registered office change and the relevant documents for the new space (lease or purchase agreement).

In all cases, when the person submitting the request is not the same as the empowered appointed representative, the said individual will need to provide an adequate power of attorney.

As part of the registered office particulars that can be subject to change, we also mention changing the appointed representative or adding another individual to also act in the same capacity. The request will include the request form, along with the power of attorney for the new or changed representative, along with the individual’s identification documents.

The authorization may be withdrawn before expiration in the following cases:

• Exceeding the object of activity that was authorized;
• Violation by the staff of the representative office of the Romanian rules on money laundering and terrorist financing;
• Incompliance with tax obligations;

The process for closing a representative office starts with its tax deregistration with the National Agency for Fiscal Administration, followed by a deregistration request filed with the competent ministry, together with the proof of tax deregistration. The following documents are relevant:

• representative office closure request form;
• the foreign company’s decision to close the Romanian representative office;
• confirmation of having removed the representative office’s appointed tax identification number with the National Agency for Fiscal Administration.

What are the taxes applicable to the representative office?

The representative office in Romania is not a legal entity and does not carry out commercial activities, so it does not pay corporate income tax. Instead, it is subject to a special annual tax on representative offices.

Our team lists the main tax obligations below:

• the representative office must register for tax purposes within 30 days of its establishment; the fiscal identification code issued as a result is used for its tax returns and payments;
• the representative office pays an annual tax of RON 18,000, which is declared and paid by the last day of February of the tax year;
• in the year in which the representative office is established or closed, the tax is calculated in proportion to the number of months of operation and is declared within 30 days of the establishment or closure;
• where the office has employees, the related payroll taxes and social contributions are also due.

The representative office must also keep accounting records in accordance with the Romanian accounting legislation.

Doing business in Romania

The representative office is not the only type of business form available to foreign companies looking to set up their operations in Romania.

The branch and the subsidiary are the two options that also allow a foreign company to engage in the same business activities as the ones being performed in its country of origin and/or other additional ones.

If you wish to know more about the representative office or the other options for entering the Romanian market, please contact us for details.

We assist investors who wish to open micro-companies in Romania as well as other business forms.