Why Invest in Romania
Why Invest in RomaniaUpdated on Thursday 08th April 2021
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Beautiful, rich and with an enormous potential that is not yet exploited at its maximum capacity – that is what you could say about Romania at a first glance. Romania is currently actively seeking direct investment and has recently taken many proactive steps towards improving and encouraging foreign investment. You can easily start a business in Romania and benefit from complete support offered in terms of investments from our specialists. One of our accountants in Romania can provide in-depth assistance in matters of finances and accounting. Foreigners who want to invest in Romania can get in touch with us.
A good location
Romania joined the European Union in 2007 and it is also a member of NATO. Its geographical location can be considered strategic for transportation and import/export purposes. It is an easy gateway towards the Middle East and, of course, other European Union markets are also easily accessible. There are plenty of high quality natural resources including various mineral deposits, petroleum in particular, natural gas, salt, coal, iron ore, copper, zinc, gold and many others. Timber is also plentiful and the agricultural land is highly fertile. Those who want to invest in Romania are recommended to get in touch with our specialists.
Romania has a talented workforce and the costs for employment are relatively low in comparison to other European countries. English is widely spoken, the population is bilingual or trilingual and there are many high-educated young workers. A number of young and talented entrepreneurs are dedicated to investing their time, passion and resources into the country. With the help of various EU investments, they have chosen to start fresh, sometimes innovative businesses in the county because they believe that investing in Romania is worth it.
Key investment areas
Although Romania is developing and improving as a whole, there are certain sectors that prove to be more lucrative and appealing. Some of these sectors are:
- agriculture and farming;
- information technology;
Romania is a rapidly growing IT market. Progress is constant in the mobile phones and internet sector and the population, both young and old, is receptive to the diversified offer on the market. Tourism is also an interesting although more challenging sector. Investors can choose from a variety of picturesque and charming locations to establish different accommodation facilities for local and foreign tourists.
Although there are still some issues that Romania has failed to address up to this point, such as poor infrastructure, corruption and a complicated fiscal process, the country is constantly developing.
Is it hard to register a company in Romania?
No, there are no harsh formalities for company registration in Romania. The bureaucratic procedures have been simplified in recent years, allowing both local and international entrepreneurs to enjoy a fast start on the market, particularly on the chosen field of interest. You can benefit from complete support offered by one of our specialists in Romania, so make sure you address your inquiries to our team, no matter the type of industry you wish to develop your business. Make sure you ask for assistance and guidance if you want to invest in Romania.
An appealing tax system
The tax structure in Romania is quite appealing to foreign entrepreneurs. A great benefit refers to the corporate income tax of 16% rate, one of the lowest among European countries. Plus, the 5% income tax applies to dividend revenues. In terms of fiscal incentives, the reinvested profits in technological equipment in the firm is exempt from taxation. Romania has one of the lowest VAT rates in Europe, set at 19%, representing a great plus from a tax point of view. Our accountants in Romania can tell you more about the tax regime in Romania and can also help you register for taxation.
Well-developed industrial parks in Romania
There are around 94 industrial parks across Romania that host a series of local and international companies. These are in public and private ownership, yet the same business rules apply. Among the benefits offered to foreigners with companies in Romania’s industrial parks, we mention the tax exemption for buildings and lands owned or rented. There are 19 industrial parks in the central region of Romania, 26 in the south region, while 21 industrial parks are developed in the north region of the country. Looking for investments in Romania? You might want to explore the advantages of the industrial parks available. In terms of accounting for your firm in Romania, you can rely on the support offered by our team of accountants in Romania. Talk to us if you want to invest in Romania.
Investments in the big cities of Romania
Romania is without a doubt and perhaps a suitable destination and extremely appreciated for foreign investments. Even if the authorities continue to improve the legislation and other aspects related to logistics and infrastructure, the business climate is extremely attractive for investors from abroad. Apart from Bucharest, the country's capital, cities such as Cluj, Brasov, Timisoara, Oradea, Sibiu, Arad and Targu Mures are business destinations highly sought after by foreigners and those that put their shoulder on the country's GPD. There are many successful businesses established for many years in the above mentioned cities, and which, regardless of climate change, continue to generate profits and support the country economically. Here are some aspects to consider for future investments in Romania:
- Logistics, employment costs and workspace rental are extremely advantageous for foreigners.
- Accessing advantageous prices for business spaces is possible in any city. This is an extremely appreciated and sought after benefit by foreign investors.
- Retail and FMCG are very good sectors for business and among the most attractive in terms of profit.
- The field of constructions is in full development, and the investments are commensurate.
Protection offered for profit taxation
Romania has signed many double taxation agreements through which businesses and especially their profits are protected against tax evasion. This means that taxes will be paid only once, in the country where the profits are recorded. If the taxes are paid both in the country where the business takes place, but also in the country of origin, then a loan can be offered to cover the payment of taxes twice. Find out from our team of Romanian accountants what the tax rules for local and foreign business are. We are at your disposal with complete details about the accounting services necessary for the business you have in Romania.
Trends and figures in the construction sector in Romania
Even if the year 2020 was quite demanding, not only from a sanitary point of view, the construction field continues on an upward trend in 2021. The challenges in the sector have not stopped its development, on the contrary, many projects have come to life lately. In terms of figures, the construction sector contributed about 7.8% to the country's GDP, with a value of over EUR 20 billion in 2020. Residential and non-residential buildings, plus engineering constructions were among the most developed projects in Romania. Thus, according to the specialists, the confidence in the construction field is maintained, a sector considered by the specialist to be extremely balanced and structured, even if difficulties are found in terms of various formalities. Even the labor force has gained strength lately in this field, because the sector benefits from the support of foreign workers. However, there is room for much better, according to specialists in the field who emphasize that the construction sector in Romania must be supported by doubling the workforce, for optimal results in the future.
The IT sector continues to impress foreign investors
A less known thing refers to the fact that the Romanian economy is largely supported by the IT industry, especially the software sector. Being an extremely balanced industry, it is not surprising that investment specialists continue to support the idea of development in this important sector. Investors from Luxembourg, Germany, Great Britain, the Netherlands, and Cyprus are among the important players in the software field in Romania, registering around 53% of the positive equity of the big software companies in the country. According to surveys in this field, the IT sector has the best chances for development in the future, the interest of those who want to work in this field being more and more accentuated. Thus, over 110,000 employees in the IT field were registered in 2018, but according to specialists, much more workforce is needed in this sector.
Romania is certainly an extremely popular destination in terms of investments, and foreigners can benefit from a number of advantages for their operations and business. It is also important to support in terms of taxes, registration, payments and much more, help that can be provided by a team with experience in the field of accounting. If you are ready to invest in Romania, feel free to ask for guidance and assistance.
Investment tips for foreigners in Romania
The business climate in Romania is quite challenging and exciting, hence it is recommended to make some verifications in the first place and stay up to date for a better understanding of the commercial activities and related legislation. Here are some business tips for international entrepreneurs interested in making investments in Romania:
- Romania is a great investment destination, and you should explore the possibilities in the first place.
- Even though the legislation changes quite frequently, this doesn’t mean you cannot align with the new rule. You can always discuss with a business expert.
- Try to know your customer and consumer to provide the optimal services and products on the market.
- Try to understand the collaborators and the business relationship before negotiating the business terms.
Top 5 reasons to invest in Romania
1. Easy company formation
The company registration in Romania is quite simple. For a good experience in this matter, international entrepreneurs are suggested to ask for the support of an experienced agent in business incorporation in Romania.
2. Appealing business sectors
Romania presents a series of business opportunities in developed sectors like manufacturing, textile, real estate, tourism, education, to give a few examples. Many large companies already thrive in Romania’s excellent industries.
3. An attractive tax system
The tax structure of a country is always in the attention of foreign investors who want to cut the amount of taxes in the firm. The corporate income tax of 16% rate in Romania is one of the lowest in Europe according to investromania.gov.ro.
4. Excellent incentives
Holding companies in Romania benefit from tax exemptions for acquired capital gains, dividends, share sales, etc. You can talk to our accountants in Romania for tax matters applicable to your firm.
5. A skilled labor force
Even if the workforce in Romania is cheap compared to other countries, this doesn’t mean is not well prepared. Foreign entrepreneurs can benefit from an experienced and multilingual labor force available in Romania. You might want to explore the following facts and figures about Romania’s economic and business direction:
- About USD 97 billion was the total FDI stock for Romania in 2019.
- Romania ranks 55th out of 190 economies in the world, according to the 2020 Doing Business report.
- Austria, Germany, the Netherlands, Cyprus, and Italy are the main investors of Romania.
- Around USD 6 billion was the total value of the greenfield investments in Romania in 2019.
If you wish to start a business in Romania and need more information about the Romanian legislation on foreign investments, our Romanian accountants can help you with all of your inquiries. Please feel free to contact us if you want to invest in Romania.