Doing Business in Romania: Guide for Foreign Investors

By Gruia Dufaut & Asociatii

Romania, EU member (since 2007), NATO member (since 2004), and in the final stage of OECD accession, offers an attractive environment for investment. With a strategic location at the crossroads of Europe, a skilled workforce, competitive costs, and access to EU funds, Romania is a dynamic economy in Central and Eastern Europe. Key opportunities exist in manufacturing, energy, IT&C, real estate, agriculture, and infrastructure.

1) Legal & Regulatory Framework

•  Legal System

Civil law jurisdiction. Core corporate law is Law no. 31/1990 on companies, complemented by the Civil Code, Competition Law, and industry-specific regulations. EU law applies directly or through national implementation.

• Foreign Direct Investment (FDI)

The legal framework is governed by Government Emergency Ordinance no. 46/2022, Law no. 164/2023, and subsequent updates.

The legislation applies to both EU and non-EU investors. Any investment in Romania is subject to review by the Commission for the Examination of Foreign Direct Investments (CEISD) if the investment value exceeds EUR 2 million and/or  the investment targets one of the sensitive sectors as defined by CSAT Decision no. 73/2021, such as: citizens’ and community security, border security, energy and transport security, supply of vital resources, critical infrastructure, IT and communications systems, financial/banking/insurance sectors, arms and explosives production and circulation, industrial safety, disaster protection, agriculture and environmental protection, as well as the privatization or management of state-owned enterprises.

The definition of FDI according the Romanian legislation: Any investment made by a foreign investor aimed at establishing or maintaining lasting and direct links with an enterprise in Romania, enabling the conduct of an economic activity. This includes investments granting effective participation in the management or control of such enterprise. FDI also occurs when changes in the ownership structure of a foreign legal entity allow a non-EU person (individual or entity) to exercise direct or indirect control.

Procedure: Clearance must be obtained from CEISD before implementation (standstill obligation).

Sanctions: Breaches of the standstill obligation are subject to fines of up to 10% of the investor’s global turnover.

• Business Entities

Starting in 2026, Romania plans to simplify company law procedures, with faster digital registrations and updated corporate governance rules.

• SRL (Limited Liability Company) – preferred for small and medium businesses, flexible and with low capital requirements.
• SA (Joint Stock Company) – suitable for larger operations, requiring higher capital (RON 90,000 ≈ €18,000+).
• Other structures – branches (has no legal personality and no independence), subsidiaries (the same steps for opening a company must be followed), representative offices, authorized natural person (PFA) are also available.

Registration: at the Trade Registry, usually completed within 5–10 business days. The company will be required to register for VAT and, in certain business fields, additional permitting and licensing may be required.

2) Taxation & Finance

•  General corporate income tax: 16%.
• Personal income tax: flat 10%
• VAT: standard rate increased to 21%; previous reduced rates of 5% and 9% are abolished, with only one reduced rate of 11% maintained for certain goods and services.
• Micro-enterprise regime: turnover threshold for eligibility reduced – EUR 250,000 in 2025, and further down to EUR 100,000 from 1 January 2026, subject to stricter conditions.
• Banking sector: additional turnover tax for credit institutions increased to 4% starting July 2025, extended throughout 2026 (with exceptions for institutions with a market share below 0.2%).
• Excise duties: gradual increases on alcohol, tobacco, and energy products (e.g., gasoline, diesel) from August 2025 and continuing in 2026.
• Transfer Pricing: transactions between related parties must follow transfer pricing rules. Affiliation is defined by ownership or control, and can involve companies, individuals, or both. Romania applies the arm’s length principle, requiring related parties to use market value for their transactions, whether domestic or cross-border. If prices deviate, tax authorities may adjust them, affecting corporate tax and, in some cases, VAT.

3) Labour, Immigration & Employment

EU citizens may work in Romania based on a simple registration, while non-EU nationals require a visa, work permit, and residence permit. Employment relations are governed by the Labour Code (Law 53/2003).

• Minimum wage and working conditions strictly regulated. The employer must establish for each employee at least the minimum gross salary required in Romania, which as of January 1, 2025 is RON 4,050 (≈ €800). , for a normal working schedule of 8 hours per day, 40 hours per week. The minimum gross salary in the construction sector as of January 1, 2025, is RON 4,582 (≈ €902) for a full-time employment contract.
• Hiring Compliance : An employment contract must be in writing and registered in the employees’ registry, along with any amendments or related decisions. Contracts can be signed either in wet ink or electronically (advanced or qualified signature), but both parties must use the same method. The employer cannot force an employee to use an electronic signature. Contracts must be in Romanian, though bilingual versions are often used. In case of discrepancies, the Romanian text prevails.

• Workplace Rules & Collective Agreements: The Internal Regulation is mandatory and sets out company-specific rules beyond the Labour Code. It must be drafted by the employer and communicated to employees on their first day, in paper or electronic form. The Collective Labour Agreement is mandatory for employers with at least 10 employees. Negotiations may be initiated by either the employer or employees’ representatives. Once agreed, the contract must be registered with the labour inspection. It can be concluded only for a fixed term of 12–24 months, with possible extension by mutual consent.

• Social contributions mandatory; non-compliance results in   fines. Contributions  due by the employee: Social security (pension, 25%); Health insurance (10%); Income tax (10%). Contributions due by the employer: Insurance contribution for work (2.25%); Disability fund (4% from the average number of employees’ minimum gross salary, due if the average number of employees is at least 50). As an alternative, the employer can hire an equivalent number of persons with disabilities. Also, the employer can purchase products/ services from protected units, as per the provisions stipulated by the law; Social contribution (4% due in case of particular working conditions or 8% due in case of special working conditions).

 4) Real Estate & Property Rights

Buildings in Romania may be purchased without restrictions.

EU and EEA citizens may acquire land, including agricultural land and forests, under the same conditions as Romanian citizens. In practice, this rule applies mainly to EU residents in Romania, while non-residents must establish residence or open a secondary office locally to purchase land. Land outside built-up areas is subject to special laws.

Non-EU/EEA individuals and legal entities may acquire real estate only under international treaties based on reciprocity.

All real estate transactions, including commercial property, must be registered with the Land Book. Zoning rules and construction permits are issued and managed by local authorities.

Property Taxes

• Land tax : Land owners pay a local tax on land per square meter, depending on the locality, the use category and the rank of the area.   
• Building tax : Residential buildings : between 0,08% – 0,20% of the taxable value. Non-residential buildings : between 0,20% – 1,30%. If used in the agriculture a 0,40% rate applies.  

The taxable value can be determined via an authorised evaluation report, by reference to the cost of the construction works (for new buildings) or the purchase price (recent purchases).

• Re-evaluation obligations : For legal persons : unless a re-evaluation of the buildings is performed every 5 years by an authorised expert, an increased taxation rate is applied (e.g. 5%) on the buildings.
• Payments and discounts : Tax on buildings and land is payable in two equal instalments : by March 31 and September 30. A 10% discount is granted if the tax is paid up in full by March 31.
• Special tax on high value assets: Starting from 2024, a 0.3% tax is due on the value exceeding RON 2.5 million for residential buildings owned by natural persons. Likewise, a similar tax is due for vehicles over RON 375,000 for the value exceeding the threshold. (Title X¹, Art. 500^{1 and 2}; (1) a) and b), of the Fiscal code).

5) Licensing & Sector Regulations

Certain industries in Romania operate under sector-specific licensing regimes. Authorisations are required in areas such as energy, telecommunications, financial services, defence, and healthcare. Industrial and infrastructure projects are also subject to environmental permits. Public procurement is aligned with EU directives, providing transparent access to major infrastructure projects.

6) Intellectual Property & Data Protection

Intellectual property rights in Romania are protected under both EU and national legislation. Patents, trademarks, and industrial designs may be registered with national or EU authorities to secure protection. Data protection rules are fully harmonized with the EU General Data Protection Regulation (GDPR), requiring strict compliance from all data controllers and processors operating in Romania.

7) Incentives & Support

Romania offers a wide range of incentives to foster investment and innovation. Research and Development (R&D) activities benefit from tax deductions of up to 50% of eligible expenses, as well as accelerated depreciation for R&D equipment, under the Fiscal Code (Law no. 227/2015).

Additional support is granted in industrial parks and free trade zones, where investors can benefit from exemptions on land tax, building tax, and certain local charges, under Law no. 186/2013 on industrial parks.

Romania also provides access to EU funding tools, including structural and cohesion funds, as well as programs such as Horizon Europe and the National Recovery and Resilience Plan (PNRR), supporting projects in infrastructure, renewable energy, and digitalization.

8) Exit & Repatriation

Foreign investors may exit the Romanian market through share transfers, mergers, or liquidation procedures, regulated by the Companies Law no. 31/1990 and the Civil Code.

Capital gains derived from the sale of shares or real estate in Romania are also taxable in Romania under the Fiscal Code. The effective burden may be reduced or eliminated by applicable Double Tax Treaties (DTTs) to which Romania is a party.

Dividends distributed by Romanian companies to foreign shareholders are generally subject to withholding tax of 10% (2025), increasing to 16% as of  January 1, 2026, under the Fiscal Code (Law no. 227/2015). Exemptions apply under the EU Parent-Subsidiary Directive 2011/96/EU, as transposed into Romanian law, where minimum holding and residency conditions are met. Under Double Tax Treaties (DTTs), the applicable rate may be reduced. For instance, according to the Romania–France DTT, dividends paid to a French resident who is the beneficial owner cannot be taxed in Romania at more than 10% of the gross amount (2025). Thus, taxation may effectively be limited to 0% in France, depending on domestic legislation and credit mechanisms.

This article is provided for general information purposes only and does not constitute legal advice.

For advice tailored to your specific situation, please contact:  https://www.gruiadufaut.com/en/