Business Forms in Romania: SRL vs SA vs PFA vs II

Introduction: The Decision That Shapes Everything Else

Before a company can trade, hire, invoice, or open a bank account in Romania, it must exist in law — and the form in which it exists determines a remarkable amount of what follows. The legal structure you choose sets the boundaries of your personal liability, defines how you are taxed, dictates your accounting and reporting obligations, shapes your ability to attract investors or partners, and influences how banks, clients, and Romanian authorities perceive your business. It is, in practice, the first strategic decision of your Romanian venture — and one of the hardest to reverse once made.

Romanian law offers several forms of business organisation, but four account for the vast majority of commercial activity: the SRL (societate cu răspundere limitată — limited liability company), the SA (societate pe acțiuni — joint-stock company), the PFA (persoană fizică autorizată — authorised natural person), and the II (întreprindere individuală — individual enterprise). Each has a distinct legal personality, a different liability regime, a different tax treatment, and a different administrative burden. The right choice depends on the nature of the business, the planned scale, the number of founders, the need for investment, and — crucially for the readers of this guide — whether the founder is a Romanian resident or a foreign national.

This guide compares all four structures in detail, explains the tax consequences of each, and provides a practical framework for choosing the right one. It is written specifically for foreign entrepreneurs, investors, and international companies entering the Romanian market, with honest assessments of what works, what does not, and why the SRL dominates the landscape for non-residents.

Why Choosing the Right Business Structure Matters

Liability. The most consequential difference between Romanian business forms is whether your personal assets are protected. An SRL or SA limits your liability to the capital you contributed; a PFA or II does not — if the business fails with debts, your personal property is at risk. For any business with significant contracts, employees, or credit exposure, this distinction alone often decides the choice.

Taxation. Romania’s tax regime treats companies and individuals differently, and within the company category the micro-enterprise regime (a turnover-based tax of 1% or 3%, available to qualifying SRLs) creates a powerful incentive. The tax difference between a correctly structured SRL and a PFA can amount to thousands of euros per year on the same income. Understanding the tax implications before choosing is essential.

Investment and growth. An SRL can bring in new shareholders, issue additional share capital, and restructure its ownership relatively easily. An SA can issue shares to the public. A PFA and an II cannot do any of these things — they are tied to a single natural person. If the business plan includes raising capital, taking on partners, or eventually selling the business, the structure must accommodate that from the outset.

Administration and cost. A PFA requires minimal bookkeeping and no statutory audit. An SRL requires proper double-entry accounting and annual financial statements. An SA requires a board of directors, a supervisory board or statutory auditors, and significantly more corporate governance. The administrative burden scales with the complexity of the form, and so does the cost of professional services.

Perception and credibility. Romanian clients, banks, and government agencies treat an SRL or SA differently from a PFA. An SRL is a recognised corporate entity with a registered capital, a registered office, and a legal personality separate from its owner. A PFA is, legally and commercially, a self-employed individual. For B2B services, tenders, and international contracts, the SRL carries more weight.

Overview of Business Forms in Romania

Corporate Forms — Limited Liability

Individual Forms — Unlimited Liability

SRL (Societate cu Răspundere Limitată) — Limited Liability Company

What Is an SRL?

The SRL is Romania’s equivalent of the German GmbH, the French SARL, the British Ltd, or the American LLC. It is a separate legal entity — distinct from its shareholders — with its own assets, liabilities, contracts, and tax obligations. The shareholders’ liability is limited to the capital they have contributed; personal assets are protected. The SRL is by far the most commonly registered business form in Romania and accounts for the overwhelming majority of new company formations by foreign nationals.

Main Characteristics

Shareholders. An SRL can have between one and fifty shareholders. Shareholders can be natural persons or legal entities, Romanian or foreign, resident or non-resident. A single foreign national can be the sole shareholder and sole director of a Romanian SRL — there is no requirement for a local partner or a local director.

Share capital. The minimum share capital is 1 RON (approximately €0.20). While this is legally sufficient, most advisers recommend a minimum of 200 RON (≈€40) for practical reasons — some banks and counterparties view a 1-RON capital as insufficiently serious. The capital is divided into equal shares (părți sociale) with a minimum nominal value of 10 RON each. The capital must be paid in full at the time of registration.

Director (administrator). The SRL must have at least one director, who can be a shareholder or a third party, Romanian or foreign, resident or non-resident. The director is the legal representative of the company and has authority to bind it in contracts, sign documents, and manage day-to-day operations. Multiple directors can be appointed.

Registered office (sediu social). Every SRL must have a registered office in Romania — a physical address where official correspondence is received. This can be a rented office, a co-working space, or even a residential address with the owner’s consent. The registered office does not need to be the same as the operating premises.

Registration. An SRL is registered with the Romanian Trade Registry (Oficiul Registrului Comerțului). The process typically takes five to ten business days and requires the articles of incorporation, identification documents, proof of the registered office, a UBO declaration, and payment of the registration fee.

Best For

Foreign entrepreneurs and investors entering the Romanian market. IT companies, consulting firms, trading businesses, e-commerce operators, service providers, and manufacturing companies. Start-ups planning to raise capital or bring in partners. Any business where limited liability, corporate credibility, and tax efficiency matter — which is to say, almost every business.

SA (Societate pe Acțiuni) — Joint-Stock Company

What Is an SA?

The SA is Romania’s joint-stock company, analogous to the German AG, the French SA, or the British PLC. It is a separate legal entity whose capital is divided into shares (acțiuni) that can, in principle, be freely transferred or even traded on a stock exchange. The SA is designed for large-scale enterprises and is the mandatory form for certain regulated industries.

Main Characteristics

Shareholders. An SA requires a minimum of two shareholders at the time of incorporation (natural persons or legal entities, domestic or foreign). There is no upper limit. Shares can be nominative or bearer (though bearer shares have been effectively phased out under AML regulations), and can be ordinary or preferred.

Share capital. The minimum share capital is 90,000 RON (approximately €18,000). At least 30% must be paid at incorporation, with the remainder paid within 12 months. The minimum nominal value per share is 0.10 RON. This capital threshold is significantly higher than the SRL and reflects the SA’s orientation toward larger ventures.

Corporate governance. An SA can adopt either a one-tier system (board of directors with a minimum of three members, including a chairman) or a two-tier system (management board and supervisory board). At least one statutory auditor or audit firm must be appointed. The general meeting of shareholders is the supreme decision-making body. Corporate-governance requirements are substantially more demanding than those of an SRL.

Reporting. An SA must prepare and file annual financial statements, undergo a statutory audit, and comply with additional reporting requirements if it exceeds certain size thresholds or is publicly listed. Listed SAs are also subject to capital-market regulations and transparency requirements.

Best For

Large enterprises with significant capital. Companies planning a stock-exchange listing (IPO). Regulated industries (banking, insurance, pension funds, investment management). International corporations establishing a major Romanian operation. Projects that require the credibility and structure of a public-company form.

PFA (Persoană Fizică Autorizată) — Authorised Natural Person

What Is a PFA?

A PFA is Romania’s equivalent of a sole trader or self-employed individual. It is not a separate legal entity — the authorised person and the business are one and the same. The PFA trades under its own name (or a trade name), issues invoices, and pays taxes, but all business obligations are the personal obligations of the individual. The PFA is the simplest and cheapest form of business in Romania, but it comes with significant limitations.

Main Characteristics

Registration. A PFA is registered with the Trade Registry, not with the tax authority alone. The process is simpler and cheaper than SRL formation. The applicant must be a natural person with legal capacity and must demonstrate professional qualifications or experience for the intended activity (for certain regulated professions).

Residency requirement. This is the critical point for foreign readers: to register a PFA, the applicant must have a domicile or residence in Romania. A non-resident foreign national cannot register a PFA without first obtaining Romanian residency. This effectively excludes the PFA as an option for most foreign entrepreneurs at the outset.

Liability. Unlimited personal liability. The PFA holder is personally liable for all business debts with their entire personal patrimony. There is no separation between business assets and personal assets.

Employees. A PFA can employ up to three persons under certain conditions, but the form is fundamentally designed for solo operation. If the business needs a team, an SRL or II is more appropriate.

Taxation. A PFA pays income tax at 10% on net income (revenue minus deductible expenses) and mandatory social contributions (pension: 25% of net income, capped; health: 10% of net income, capped). Alternatively, a PFA can opt for the income-norm system (norma de venit) for certain activities, where tax is calculated on a fixed deemed income regardless of actual earnings — potentially very advantageous for high earners in eligible activities.

Best For

Romanian-resident freelancers, independent consultants, translators, designers, software developers, and other solo professionals. Individuals with low overheads and no plans to scale beyond a one-person operation. Activities eligible for the income-norm system where the tax advantage is significant.

II (Întreprindere Individuală) — Individual Enterprise

What Is an Individual Enterprise?

The II is a step above the PFA in terms of organisational flexibility. Like the PFA, it is not a separate legal entity — the holder bears unlimited personal liability. However, the II can hire employees (including non-family members) and can carry on a wider range of activities. It occupies a middle ground between the simplicity of the PFA and the corporate structure of the SRL.

Main Characteristics

Residency requirement. Like the PFA, the II holder must have a domicile or residence in Romania. Non-residents cannot register an II.

Employees. An II can hire employees — both family members and third parties — without the restrictions that apply to the PFA. This makes it suitable for small businesses that need a team but want to avoid the corporate overhead of an SRL.

Liability. Unlimited personal liability, identical to the PFA. The holder’s personal assets are at risk for all business obligations.

Taxation. Taxed in the same way as a PFA: 10% income tax on net income, plus social contributions. The income-norm option may be available for certain activities.

Best For

Small family businesses, local retail, craft workshops, agricultural operations, and service providers that need employees but prefer to avoid corporate formalities. Romanian-resident individuals building a local business with a small team.

Head-to-Head Comparisons

SRL vs SA

SRL vs PFA

PFA vs II

Taxation of Different Business Forms

Taxation is one of the primary factors driving the choice of structure, and Romania’s regime creates meaningful differences between the forms.

Liability and Asset Protection

The distinction between limited and unlimited liability is the most fundamental difference between the corporate forms (SRL, SA) and the individual forms (PFA, II), and it deserves emphasis.

SRL and SA: limited liability. The shareholders’ risk is limited to the capital they have contributed. If the company incurs debts it cannot pay, creditors can claim against the company’s assets but not against the shareholders’ personal property — unless the shareholders have given personal guarantees, engaged in fraud, or allowed the company to trade while insolvent without taking appropriate action. The director has statutory personal liability in specific circumstances (failure to file for insolvency, tax debts arising from wilful misconduct), but in normal operations the corporate veil provides genuine protection.

PFA and II: unlimited liability. The business and the individual are the same legal person. All business debts are personal debts. If the business fails, creditors can pursue the individual’s personal assets — bank accounts, real estate, vehicles, everything. There is no corporate veil. For any business that carries meaningful financial risk — contracts with penalties, employee obligations, product liability, credit exposure — unlimited liability is a serious and often unacceptable risk.

Registration Requirements

Which Business Structure Is Best for Foreign Investors?

For the vast majority of foreign entrepreneurs, investors, and international companies, the answer is the SRL. The reasons are practical and cumulative.

The SRL requires no Romanian residency or citizenship — a foreign national from any country can be the sole shareholder and sole director. It offers limited liability, protecting personal assets. It is eligible for the micro-enterprise regime, offering among the lowest effective tax rates in the EU. It provides full corporate credibility with banks, clients, and Romanian authorities. It can bring in additional shareholders, raise capital, and be sold or restructured. And its administration, while more complex than a PFA, is manageable and affordable with a competent Romanian accountant.

The SA makes sense when the business requires a high minimum capital, plans to list shares, or operates in a sector where the SA form is mandatory (banking, insurance). For a standard foreign-owned business — IT, consulting, trading, e-commerce, services, real estate investment — the SA is unnecessary overhead.

The PFA and II are not available to non-residents and are therefore not an option for most foreign entrepreneurs at the point of market entry. A foreign national who later obtains Romanian residency could register a PFA for freelance work, but in practice the SRL remains the better choice in almost all cases because of limited liability and the micro-enterprise tax regime.

Common Mistakes When Choosing a Business Structure

• • Choosing based on tax alone. The micro-enterprise regime makes the SRL attractive, and the PFA’s income-norm system appeals to freelancers — but tax should not be the only criterion. A PFA with unlimited liability and no ability to scale may save on accounting fees today and cost far more in personal liability tomorrow.
• • No long-term plan. Registering a PFA because it is quick and cheap, only to convert to an SRL two years later when the business grows, wastes time and money. If the business has any ambition beyond solo freelancing, starting as an SRL avoids the conversion process entirely.
• • Underestimating liability. First-time entrepreneurs, particularly those coming from jurisdictions where sole-trader liability is not well understood, sometimes choose a PFA or II without fully appreciating the personal financial exposure.
• • Ignoring investor requirements. If the business plan includes raising venture capital or angel investment, the structure must be compatible. Investors invest in SRLs or SAs with clean cap tables, documented governance, and auditable accounts — not in PFAs.
• • Wrong form for international business. A PFA or II registered at a Romanian residential address does not present well to international clients, partner companies, or foreign banks. For any business with a cross-border dimension, the SRL’s corporate identity is a meaningful asset.
• • Underestimating administration. Some entrepreneurs choose an SA for prestige without understanding the governance obligations — three-member boards, statutory auditors, formal meeting minutes, additional filings. If the business does not require an SA, the overhead is pure waste.

How to Change Your Business Structure Later

Romanian law permits the transformation (transformare) of one business form into another, but the process is neither instantaneous nor free.

PFA or II → SRL. This is the most common conversion. The PFA or II is closed (deregistered), and a new SRL is registered. Assets and contracts can be transferred to the new SRL, but this requires careful planning — especially for ongoing contracts, licences, and client relationships. The tax authority must be notified, and any outstanding tax or social-contribution obligations of the PFA/II must be settled. Timeline: two to six weeks, depending on complexity.

SRL → SA. An SRL can be transformed into an SA by a shareholders’ resolution amending the articles of incorporation, increasing the capital to the SA minimum (90,000 RON), and appointing the required governance bodies. The trade registry registers the transformation. Timeline: four to eight weeks.

SA → SRL. Possible but less common. Requires a general-meeting resolution, capital reduction (if the SA capital exceeds what is needed), and amendment of the articles. Creditor-protection rules may apply.

Tax consequences. Transformation can trigger tax events — particularly if assets are revalued, capital is increased or reduced, or the tax regime changes (e.g. from PFA income tax to SRL micro-enterprise tax). Professional tax advice before the conversion is strongly recommended.

Frequently Asked Questions

Methodology and data note

Tax rates, capital requirements, social-contribution thresholds, and registration procedures in this guide reflect Romanian legislation as of mid-2026. Romania revises tax rules frequently — the micro-enterprise regime, social-contribution thresholds, and VAT registration rules have all changed multiple times in recent years. Verify anything decision-critical against current legislation or with a specialist adviser before acting. Exchange-rate conversions use the approximate rate of 1 euro ≈ 5 Romanian lei. This material is for information only and does not constitute legal, tax, or financial advice.