15 Common Mistakes Foreign Entrepreneurs Make When Registering a Business in Romania

Introduction: Registration Is Easy — Getting It Right Is Harder

Registering a company in Romania is straightforward. A foreign entrepreneur can form an SRL (limited liability company) in five to ten working days with minimal share capital and without being physically present in the country. The Trade Registry (ONRC — Oficiul Național al Registrului Comerțului) processes thousands of incorporations every month, and the procedural steps are well-established.

But procedural simplicity creates a trap. Because registration is easy, many foreign entrepreneurs treat it as a formality — choosing a company structure, selecting CAEN codes, deciding on VAT registration, and setting up shareholder arrangements without fully understanding the legal, tax, and compliance consequences. The result is a company that is legally formed but structurally flawed: paying more tax than necessary, exposed to liabilities that could have been avoided, missing regulatory requirements, or locked into an ownership arrangement that creates problems at the first sign of growth or change.

This guide identifies the 15 most common mistakes foreign entrepreneurs make when registering a business in Romania, explains why each one matters, and provides practical guidance on how to avoid them.

Why Foreign Entrepreneurs Make Mistakes

• Different legal systems. Entrepreneurs from common-law countries (UK, US, Australia) or from countries with very different corporate traditions often assume that Romanian rules work the same way. They do not. Romanian employment law, tax obligations, and corporate governance follow their own logic, and assumptions based on home-country experience are frequently wrong.
• Misunderstanding Romanian tax rules. Romania’s micro-enterprise regime, corporate income tax, dividend withholding tax, and VAT rules interact in ways that are not immediately obvious. A decision that seems tax-efficient on the surface can produce unexpected costs when the full picture is considered.
• Language barriers. Romanian legislation, ONRC forms, and ANAF (tax authority) communications are in Romanian. Foreign entrepreneurs who do not speak the language are dependent on advisers, translations, and online summaries — which may be incomplete, outdated, or simply wrong.
• Outdated online information. Romania changes tax rules, thresholds, and administrative procedures frequently. Blog posts and forum discussions from 2022 or 2023 may describe a tax regime or registration process that no longer exists in 2026. Relying on unverified online information is one of the most common sources of error.
• DIY incorporation. The desire to save money by handling registration without professional advice is understandable but often counterproductive. The cost of correcting a structural mistake — wrong company type, incorrect CAEN codes, missed VAT registration — almost always exceeds the cost of professional advice that would have prevented it.

The 15 Most Common Mistakes

Mistake #1: Choosing the Wrong Legal Structure

The SRL is the correct choice for the vast majority of foreign entrepreneurs in Romania. It offers limited liability, access to the micro-enterprise tax regime (1% on revenue), flexible management, and straightforward administration. Yet some founders register a PFA (which requires Romanian residency and carries unlimited personal liability), an SA (which requires minimum capital of 90,000 RON and a more complex governance structure), or a branch (which does not create a separate legal entity and exposes the parent company to direct liability).

Restructuring from one legal form to another after incorporation is possible but time-consuming, expensive, and disruptive. A PFA that should have been an SRL requires dissolution of the PFA and formation of a new company, with new tax registrations, new bank accounts, and renegotiated contracts. Getting the structure right the first time avoids all of this.

Mistake #2: Registering Without Understanding the Tax Regime

Romania’s tax system offers genuine advantages — but only if the company is structured to access them. The micro-enterprise regime (1% of revenue with at least one employee, 3% without) is one of the most favourable in the EU, but it applies only to companies with annual revenue below €500,000 that meet specific conditions. Companies that do not qualify pay 16% corporate income tax on profit. Dividend withholding tax is 8%. Employer social contributions are 2.25% (CAM), while employees bear CAS (25%), CASS (10%), and income tax (10%).

Entrepreneurs who do not understand how these taxes interact before incorporation may choose a structure that accidentally disqualifies them from the micro regime, fail to plan for dividend extraction costs, or miscalculate the true cost of employment. A common error is incorporating a company that holds shares in another Romanian company without realising that certain ownership configurations can disqualify it from the micro regime. Another frequent mistake is failing to account for the 8% dividend withholding tax when modelling net returns — a company that pays 1% micro tax and then distributes all profits faces a combined burden of approximately 9%, not 1%.

The interaction between employee-side deductions and employer costs also surprises many foreign entrepreneurs. An employee with a gross salary of €1,000 receives approximately €550 net after CAS (25%), CASS (10%), and income tax (10%) are withheld. Understanding the gross-to-net calculation is essential for accurate salary offers, cost planning, and competitive hiring. Tax planning should happen before registration, not after.

Mistake #3: Choosing CAEN Codes Incorrectly

Every Romanian company must declare its business activities using CAEN codes (Clasificarea Activităților din Economia Națională) — Romania’s official classification of economic activities. The primary CAEN code determines the company’s main declared activity; secondary codes cover additional activities.

Mistakes with CAEN codes are common and consequential. Selecting a code that does not match the actual activity can trigger problems with licences (some activities require specific authorisations), banking (banks check CAEN codes during account opening), VAT (certain activities have different VAT treatments), and the micro-enterprise regime (some CAEN codes are excluded from the micro regime). Changing CAEN codes after incorporation is possible through the Trade Registry, but it adds time and cost. Choose the right codes from the start.

Mistake #4: Registering Without Understanding VAT Obligations

VAT registration in Romania is mandatory when taxable turnover exceeds RON 300,000 (~€88,500) in a calendar year. Below this threshold, registration is optional. Many foreign entrepreneurs either register for VAT too early (creating monthly filing obligations and pricing complications for B2C sales) or too late (exceeding the threshold without registering, which triggers penalties and back-assessments).

The decision on VAT timing should be deliberate, not accidental. Businesses with significant input VAT (equipment purchases, office costs, inventory) may benefit from early voluntary registration to recover that VAT. Businesses selling primarily to consumers (B2C) may benefit from staying below the threshold as long as possible. Businesses trading with EU counterparts need to understand the reverse-charge mechanism, intra-Community rules, and OSS obligations. VAT is not a box to tick at registration — it is a strategic decision that affects pricing, cash flow, and compliance burden.

Mistake #5: Underestimating Accounting Requirements

Romanian tax law requires professional bookkeeping from the first day of trading. Monthly or quarterly VAT returns, payroll declarations (Declarația 112), SAF-T reporting (D406), mandatory e-invoicing (RO e-Factura), annual financial statements, and corporate tax returns must all be prepared and filed on time. The penalties for late or inaccurate filings range from administrative fines to tax reassessments with interest.

Foreign entrepreneurs often underestimate the volume and complexity of Romanian accounting obligations. Attempting to handle bookkeeping with generic software or a non-Romanian accountant frequently leads to missed deadlines, incorrect filings, and ANAF inquiries. Engaging a qualified Romanian accountant from the outset is not optional — it is a core operating requirement.

Mistake #6: Choosing the Wrong Registered Office

Every Romanian company must have a registered office (sediu social) — a legal address where official correspondence is received and where the company can be contacted by authorities. The registered office must be supported by a valid legal basis: a lease agreement, a property ownership title, or a right-of-use agreement.

Common mistakes include using a residential address without the proper authorisations (which can create issues with the homeowners’ association and local zoning), selecting a virtual office service that does not provide a valid legal basis recognised by the Trade Registry, or choosing an address in a location that does not match the company’s actual activities. Banks also verify the registered office during account opening — a questionable address can delay or prevent account approval. Choose a registered office that is legally valid, practically suitable, and consistent with the company’s genuine activities.

Mistake #7: Ignoring Licensing and Permit Requirements

Most service-based and digital businesses in Romania do not require special licences. However, activities including food production and catering, healthcare, construction, financial services, transport, tourism, recruitment, and certain professional services require specific authorisations from regulatory bodies, health authorities, or local municipalities.

Operating without the required licence or permit is a serious violation that can result in fines, forced closure, and personal liability for the director. The licensing check should happen before registration — not after the company is formed and has already begun trading. If the planned activity requires a licence, confirm the requirements, timeline, and costs before incorporating.

Mistake #8: Failing to Open the Right Business Bank Account

A Romanian SRL needs a corporate bank account for tax payments, salary disbursements, supplier payments, and everyday operations. Major Romanian banks (Banca Transilvania, BRD, BCR, ING Romania, Raiffeisen) offer corporate accounts with online banking, SEPA transfers, and multi-currency capabilities.

Common banking mistakes include failing to prepare adequate KYC documentation (which delays or prevents account opening), choosing a bank that does not support the company’s transaction profile (international payments, high volumes, specific currencies), and underestimating the due diligence requirements for foreign shareholders (banks may require apostilled passports, proof of address, source-of-funds declarations, and business plans). Some entrepreneurs also make the mistake of relying exclusively on fintech solutions (Wise, Revolut Business) without opening a traditional Romanian bank account — while these tools are useful for international payments, ANAF tax payments and certain payroll obligations require a Romanian IBAN. Start the banking process early, prepare documentation thoroughly, and consider which bank best fits the company’s operational needs.

Mistake #9: Poor Shareholder and Director Planning

The articles of association (actul constitutiv) of a Romanian SRL define the rights and obligations of shareholders, the powers of directors, and the rules for decision-making. Many foreign entrepreneurs treat the articles as a formality and use standard templates without considering the implications.

Issues that arise from poor shareholder planning include deadlock between 50/50 shareholders with no tie-breaking mechanism, inadequate protection for minority shareholders, lack of clarity on profit distribution, and no provisions for share transfer or exit. For sole-shareholder companies, the key consideration is continuity — what happens if the sole shareholder is unable to manage the company? A shareholders’ agreement (separate from the articles of association) is strongly recommended for any company with more than one shareholder.

Mistake #10: Ignoring Employment Law Before Hiring Staff

Romanian employment law (Codul Muncii — Labour Code, Law 53/2003) is strongly employee-protective. Every employee must have a written individual employment contract (contract individual de muncă) registered in the Revisal system before the employee’s first day of work. The contract must specify the position, salary, working hours, workplace, and other mandatory elements. At-will termination does not exist in Romania — dismissal requires legally defined grounds, a formal procedure, and mandatory notice periods.

Foreign entrepreneurs who hire before understanding these rules expose themselves to significant risk. Employing a worker without a registered contract is one of the most heavily penalised infractions in Romanian labour law (fines of RON 20,000 per unregistered employee). Misclassifying an employee as an independent contractor triggers reclassification, back-payment of all social contributions, and penalties. Terminating an employee without legal grounds invites a labour court challenge that the employer is likely to lose. Learn the employment rules before the first hire, not after.

Mistake #11: Starting Operations Without Proper Contracts

Many foreign entrepreneurs begin trading on the basis of verbal agreements, informal emails, or generic contract templates downloaded from the internet. In Romania, as in any EU jurisdiction, a proper contractual framework is essential for managing risk, protecting rights, and ensuring enforceability.

• Shareholders’ agreement. Defines the relationship between shareholders, covering decision-making, profit distribution, exit rights, non-compete obligations, and deadlock resolution. Essential for any company with more than one shareholder.
• Service and commercial contracts. Define the scope, pricing, payment terms, liability, and termination conditions for client and supplier relationships. Should be drafted or reviewed by a Romanian lawyer to ensure enforceability under Romanian law.
• Employment contracts. Mandatory under Romanian law, with specific content requirements.
• Data protection clauses. GDPR compliance requires data-processing agreements with any third party that processes personal data on the company’s behalf, and privacy notices for employees and customers.

Mistake #12: Not Protecting Intellectual Property

Foreign entrepreneurs often defer IP protection until they have ‘more time’ or ‘more revenue.’ This is a mistake. In Romania, as in most EU jurisdictions, trademark rights are established through registration, not through use. A company name registered with the Trade Registry is not the same as a registered trademark — another business can register your brand name as a trademark, and you will have limited recourse.

Key IP actions at or near incorporation include registering the company’s trading name as a trademark (with OSIM — the Romanian State Office for Inventions and Trademarks, or through EUIPO for EU-wide protection), securing relevant domain names (.ro, .com, .eu), and ensuring that employment contracts and service agreements include clear IP assignment provisions so that software, designs, and creative work produced by employees and contractors belong to the company, not the individual creator. Under Romanian law, copyright in software created by an employee in the course of their duties generally belongs to the employer, but this should be explicitly confirmed in the employment contract. For contractor-created work, IP does not transfer automatically — a written assignment is required.

Mistake #13: Ignoring Ongoing Corporate Compliance

Company registration is not the end of the compliance journey — it is the beginning. Romanian companies have ongoing obligations that must be met every year:

• Annual financial statements. Must be prepared and filed with ANAF and the Trade Registry by the statutory deadline.
• Corporate tax return. Filed annually (or quarterly for advance payments).
• VAT returns. Monthly or quarterly, depending on turnover.
• SAF-T reporting (D406). Electronic reporting of accounting data, being extended to all taxpayers.
• Beneficial ownership declaration. Must be filed with the Trade Registry and updated whenever beneficial ownership changes.
• Shareholder and director changes. Any change in shareholders, directors, registered office, or articles of association must be registered with the Trade Registry.

Missing these obligations triggers fines, can result in the company being struck off the Trade Registry, and creates problems when the company needs to do anything that requires a clean compliance record — such as obtaining a bank loan, winning a public contract, or selling the business.

Mistake #14: Failing to Plan for Business Growth

The structure decisions made at incorporation — company type, share capital, shareholder arrangements, articles of association — shape how easily the company can grow, raise investment, add shareholders, and expand internationally. Entrepreneurs who choose a structure based solely on day-one needs often find themselves constrained when the business evolves.

• Future investment. A standard SRL with generic articles of association may not accommodate the share classes, anti-dilution protections, or governance provisions that investors require. If fundraising is planned, structure the company with investor-ready governance from the start.
• International expansion. A Romanian SRL that will eventually hold subsidiaries in other countries should consider transfer-pricing documentation, holding-company structures, and intercompany agreements from an early stage.
• Exit strategy. If the founder plans to sell the business, the share-transfer provisions, valuation methodology, and tax treatment of capital gains should be considered at incorporation — not at the point of sale.

Mistake #15: Trying to Save Money by Avoiding Professional Advice

This is the mistake that enables all the others. Professional advice — from a Romanian lawyer, a qualified accountant, and a tax adviser — costs money. For a standard SRL incorporation with proper structuring, the total cost of professional advice is typically €500 to €2,000. The cost of correcting a poorly structured company — wrong legal form, incorrect tax registration, missed VAT obligations, non-compliant employment contracts, inadequate IP protection — can easily reach €5,000 to €50,000 or more, plus the time and disruption involved.

The arithmetic is simple. Professional advice at the formation stage is an investment that pays for itself many times over. A lawyer who reviews the articles of association catches the governance gap before it creates a deadlock. An accountant who advises on micro-enterprise eligibility saves the founder from an annual tax bill that could be 90% lower. A tax adviser who models the dividend extraction path prevents the founder from discovering the 8% withholding tax as an unwelcome surprise. Professional advice is the single most effective way to avoid every mistake described in this guide.

Practical Checklist Before Registering a Company in Romania

• 1. Choose the correct legal structure. SRL for most foreign entrepreneurs. Confirm that the chosen form supports the planned activities, tax regime, and growth path.
• 2. Plan the tax position. Confirm micro-enterprise eligibility, model the tax burden (corporate tax, dividends, VAT, social contributions), and plan before registering.
• 3. Select the correct CAEN codes. Primary and secondary activity codes that accurately reflect the business activities, including any regulated activities.
• 4. Decide on VAT registration. Mandatory if turnover will exceed RON 300,000. Voluntary if input VAT recovery or EU trading requirements justify earlier registration.
• 5. Secure a registered office. With a valid legal basis (lease or ownership), suitable for the business activities, and acceptable to banks and authorities.
• 6. Prepare incorporation documents. Articles of association, shareholder declarations, director appointments, beneficial ownership declaration, and any required powers of attorney.
• 7. Arrange banking. Identify the bank, prepare KYC documentation, and confirm account-opening requirements before or immediately after registration.
• 8. Engage a Romanian accountant. From day one. Monthly bookkeeping, VAT returns, payroll, and annual reporting require a qualified local professional.
• 9. Obtain required licences. Confirm whether the planned activity requires authorisations and begin the process in parallel with registration.
• 10. Prepare internal documents. Shareholders’ agreement, service contracts, employment templates, data-processing agreements, and IP assignment clauses.

Frequently Asked Questions

Conclusion

Registering a company in Romania is fast, inexpensive, and accessible to foreign entrepreneurs of any nationality. But speed and simplicity do not eliminate the need for proper planning. The 15 mistakes described in this guide — from choosing the wrong legal structure to skipping professional advice — are avoidable, and avoiding them is far cheaper than correcting them after the fact.

Every mistake in this guide has been made by real entrepreneurs — companies that chose a PFA when they needed an SRL, founders who discovered the micro-enterprise disqualification rules after their first annual return, businesses that hired employees without Revisal registration and received five-figure fines, and companies that traded for months above the VAT threshold without registering and faced ANAF reassessments covering the entire unregistered period.

The entrepreneurs who succeed in Romania are not those who register the fastest. They are those who take the time to understand the tax regime, choose the right structure, comply with employment and corporate law, protect their intellectual property, and build a foundation that supports growth. Romania offers genuine competitive advantages — a 1% effective tax rate, a deep talent pool, a large domestic market, and EU-wide market access. But those advantages are only realised by companies that are structured correctly from day one. Professional advice at the formation stage is the single best investment a foreign entrepreneur can make when starting a business in Romania.

Methodology and data note

Tax rates, registration procedures, and compliance requirements in this guide reflect Romanian legislation as of mid-2026. Romania revises tax rules and administrative procedures regularly. 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.