Why choose to invest in Romania

Romania, a member of the European Union and since 2007 and of NATO since 2004, occupies a strategic geographical position with exceptional transportation access for import and export endeavors. Serving as a gateway to the Middle East and other European Union markets, the country offers easy connectivity.

Romania, a country graced with the majesty of the Danube River, hosts a significant portion of its flow, boasting a vital conduit to the Black Sea through the sprawling Constanța Port. As the largest and deepest port on the Black Sea, Constanța Port positions Romania as a prime gateway for maritime trade, particularly benefiting the influx of Asian goods.

Trade opportunities flourish in Romania's strategic geo-strategic locale – it's the convergence point of three pivotal markets: the European Union, the CIS states, and the Middle East. Anchored within the corridors of three crucial pan-European transport routes – corridor no. 4 (West to East), corridor no. 9 (North to South), and corridor no. 7 (Danube facilitation) – Romania stands poised to amplify trade connectivity.

Boasting abundant high-quality natural resources such as minerals, petroleum, natural gas, and more, Romania offers a wealth of opportunities. Its fertile agricultural land, extensive timber resources, and attractive mineral deposits make it a promising destination for investments.

Romania boasts a skilled workforce with comparatively lower employment costs than its European counterparts. English proficiency is widespread, and the bilingual or trilingual population includes numerous highly educated young professionals. The country's landscape is dotted with dedicated and innovative young entrepreneurs who are channeling their energy, passion, and resources into fostering growth. Bolstered by EU investments, these visionary individuals are establishing cutting-edge businesses in Romania, attesting to the country's worthiness as an investment hub.

While Romania undergoes comprehensive development, certain sectors stand out as especially lucrative and appealing for investments. These sectors encompass: agriculture and farming, Information technology (IT), infrastructure, industry, education, tourism.

Romania's landscape is adorned with natural riches, encompassing extensive agricultural expanses and notable mineral reserves like petroleum, natural gas, salt, coal, and gold. Vast tracts of fertile soil foster a robust and diversified food production. Within the EU, Romania stands as a major cereal producer and commands leadership in sunflower seeds, honey, and plum production. The country dedicates nearly 57% of its territory to agriculture, totaling around 13.5 million hectares.

Romania's economy finds substantial support from its software sector within the IT industry. Encouragingly balanced, this sector garners significant foreign investment, particularly from Luxembourg, Germany, the Netherlands, Great Britain, and Cyprus. These players collectively account for around 53% of large software companies' positive equity. Boasting over 110,000 IT professionals, the sector's growth potential remains vast. To tap into this lucrative field, Romania presents unparalleled possibilities for investors.

Despite certain challenges like inadequate infrastructure, corruption, and complex fiscal processes, Romania continues to evolve as an investment destination. Registering a company in Romania is surprisingly straightforward, as recent years have witnessed streamlined bureaucratic procedures. This facilitates a swift entry into the market, particularly in your chosen domain.

Romania houses around 94 industrial parks, a blend of public and private ownership, each adhering to consistent business regulations. Benefits for foreign companies in these parks include tax exemptions for owned or rented buildings and lands. These hubs are strategically distributed, with 19 in the central region, 26 in the south, and 21 in the north.

Apart from Bucharest, cities like Cluj, Brasov, Timisoara, and others have become magnets for foreign investors, significantly contributing to the country's GDP. These urban centers offer advantages such as cost-effective logistics, affordable workspace rentals, and thriving retail and FMCG sectors. Construction is another field experiencing robust growth, with increasing foreign worker support. Despite challenges, Romania's evolving construction sector holds immense potential.

Renowned for its investment allure, Romania offers an array of advantages for both local and foreign businesses. Protection against double taxation is guaranteed through numerous agreements, ensuring taxes are paid only once. This dynamic nation's economy is fortified by a resilient construction sector, the growth of which persists despite challenges. Likewise, Romania's agriculture and IT sector continues to attract foreign investors, signifying sustained growth.

Romania's attractive tax incentives create an environment conducive to investment. These include corporate tax relief on reinvested profits, super-deductions for R&D expenses, corporate tax exemptions for innovation and research activities, personal income tax exemptions for software development employees, incentives for hiring unemployed individuals and protected social categories, as well as provisions for employee education investment.

The standard corporate income tax rate of 16% remained constant over the last 17 years. It is also one of the lowest in Europe, well below the EU27 average of 20.71%.

The current withholding tax rate in Romania is 5%.

In general, the dividends paid are non-taxable if the beneficiary of the dividend had a minimum holding of 10% in the share capital of the distributing company, for an uninterrupted period of at least 1 year.

Non-residents may be eligible for a reduced rate under DTTs (double tax treaty).

The Romanian standard VAT rate is 19%. It has been reduced twice during 2010-2023 period, from 24% to 20% in 2016 and then to 19% in 2017, remaining constant over the last 5 years.

A reduced rate of 9% applies to food, water supply and sewerage, water for irrigation in agriculture, fertilizers and pesticides supply used in agriculture, seeds and other agricultural products for sowing or planting, medicines for human and veterinary use, medical equipment for disabled persons, etc.

Amongst fiscal incentives in Romania, the Fiscal Code includes, for example, a 16% corporate tax relief for profit reinvested in new technological equipment used for business purposes and a personal income tax exemption for salary income for employees in IT or those part of teams that carry out research & development and innovation projects.

The turnover tax rates used for micro-enterprises are:

1% for micro-enterprises with one or more employees.

3% for micro-enterprises with no employees.

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.

However, any company with a minimum subscribed share capital of 45,000 RON and at least 2 employees may opt for applying the corporate income tax in lieu of the mandatory revenue tax, even if its turnover is less than EUR 1 million.

In Romania, the standard personal income tax rate is 10% (with a few variations). It has been reduced twice during the 2004-2023 period, from 40% to 16% in 2005 and then to 10% in 2018.

Dive into Romania's investment landscape armed with key insights:

• In 2019, Romania recorded a total FDI stock of around USD 97 billion.

• The 2020 Doing Business report ranked Romania 55th out of 190 global economies.

• Key investors in Romania include Germany, Austria, the Netherlands, France, Italy, Greece and Cyprus.

• Greenfield investments totaled approximately USD 6 billion in Romania in 2019.