Last updated: 29 August 2022
The legal framework regulating the registration and operation of representative offices of foreign economic entities was aligned to the economic and digital reality by the Ordinance of the Government no. 18/2022, published in the Official Gazette no. 799 of August 4, 2022.
This is the first time the Romanian legislation regulating representative offices, enacted in 1990, is amended – a most welcomed update of procedures in this field, including the electronic platform to be used for registration.
For the record, the representative office of a foreign entity in Romania is a structure lacking legal personality, acting as an intermediary between the parent company and its contractual partners based in Romania. The performance of the representative office, in the name of the foreign company, is limited to legal deeds and activities required for its own operation in Romania (promoting and advertising, representation, marketing, conclusion and follow up of contracts, etc.) and shall not exceed the scope of business set under the operating permit. Also, the company is not allowed to pursue, in its own name, a commercial activity (manufacture, trade or service provision).
Hereafter, the main provisions of the GO no. 18/2022, in force as of August 7, 2022.
Formalities for issuing the operating permit
Foreign companies wishing to set up a representative office shall apply for registration thereof online, to the Ministry of Entrepreneurship and Tourism (MET), by using a dedicated electronic platform intended to become operational within maximum 180 days from the entry into force of the GO no. 18/2022.
By the time the said electronic platform is implemented, the registration requests shall be filed and processed according to the procedure prior to the GO.
According to the new normative act, the MET shall issue the operating permit, upon request, against consideration, within 30 days since the filing of the complete file or since having completed it as required by the MET.
The operating permit is issued for a minimum 1-year term, opened for extension for the same term against payment of an annual fee of 1,000 euros (equivalent in Lei, at the exchange rate of the National Bank of Romania in force at the date of payment). The Operating permit can be extended by filing a request to this end at least 30 days before expiry thereof, provided that the registration fee has been paid up.
The registration request for a representative office shall be accompanied by the following documents :
- Documents related to the parent company (a Trade registry excerpt – K-bis excerpt or equivalent), the articles of incorporation, the delegation of authority to the person appointed to represent the representative office, etc.) ;
- Proof of payment of the registration fee amounting to 1,000 euros ;
- A letter of good standing issued by the bank through which the foreign company carries its main financial operations ;
- The proof of the headquarter of the representative office in the Romanian territory (lease / bailment agreement) concluded for a term at least equalling the term of the operating permit or the term for which extension thereof is requested.
Any change in relation to the data in the Operating permit or to the legal status, the scope of business, the share capital or the registered headquarter of the foreign entity shall be communicated to MET within 30 days since their occurrence.
Registration of tax purposes and taxation of the representative office
The representative offices carrying out their activity in Romania shall apply for registration for tax purposes and pay duties and taxes according to the Romanian Fiscal Code.
The annual tax on the representative office is in the fixed amount of 18,000 Lei (approximatively 3,686 Euros).
The deadline for filing the tax return and payment of the tax on representative offices shall be the last day of the month of February, and for the representative offices registered during the fiscal year – 30 days since the registration. The tax is payable in two equal instalments, until June 25 at the latest, and December 25.
Withdrawal of the operating permit of the representative office
The MET can withdraw the operating permit :
- BY DEFAULT : within 30 days since expiry, if the extension thereof was not filed for ;
- FOR LEGITIMATE REASON : upon request of the inspection authorities for whichever of the following reasons :
- Breach of the legal provisions on money laundering and terrorist financing by the represented entity ;
- Incompliance with the scope of business provided for in the operating permit and the conditions for the performance thereof ;
- Incompliance with tax related obligations.
Deregistration of the representative office
The same electronic platform managed by MET is also used for the deregistration of the representative office. Proof o deregistration from the tax authorities and the underlying documents issued by the represented entity shall be required for completing the deregistration process.
The deregistration application is processed within 30 days from the filing date / the date when the file is completed as requested by the MET, as the case may be.
Liability for the representative office
The GO no. 18/2022 also provides for rules related to liability for the representative offices in Romania, as following:
- As the representative office lacks legal personality, the parent company shall be liable for the legal deeds and the activity of its representative office in Romania ;
- The foreign company shall be liable jointly with the employees of the representative office for any damage resulting from illegal acts of such employees in their activity within the representative office.
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Therefore, the GO no. 18/2022 significantly reduces bureaucracy when it comes to registering a representative office of a foreign company in Romania, especially due to the digitisation of the registration procedure. This should be an incentive for the foreign companies wishing to set up a representative office in Romania, which is often the first option of cautious investors who seek first to feel the market before setting up a subsidiary or a branch in Romania.
As already mentioned, the GO no. 18/2022 will be followed by enforcement norms to be issued by the MET within the 60 days since entry into force of the Ordinance, which will give us a better image on the registration and operation of such entities.