Romanian legislation related to foreign investments

Foreign direct investment, known as FDI, has experienced an increase in the past years, as Romania has become a very interesting target for foreign investors. The country offers cheap, yet skilled work force, low taxes, that include a 16 percent corporate tax and a 10 percent personal income tax. In addition, the country has a liberal labor code and most important, it has a good geographic position. 

Romanian law that governs foreign investments

In 1991, the Romanian Parliament issued Law no. 35/1991 on foreign investments; it was replaced in 1997, and foreign investors now receive the same treatment as Romanian investors (with FDI screening under GEO no. 46/2022). It contains the dispositions that can ensure guarantees to foreign investors, as well as the integral and unlimited use of the results.

What are the companies a foreign investor can open in Romania?

This law refers to new companies such as limited liability companies or branches, with a foreign capital or made by association with a Romanian national, but it also refers to companies that are open by foreign investors who participate to the enlargement of the capital of an existing company. 

According to the Romanian law regarding foreign investments, the involvement of a foreign investor can be regarding the contribution to the company’s capital, to the machines or any other goods of the company, services or industrial property rights, such as licenses.

Who are the foreign investors who can develop business in Romania?

The Romanian law issued in 1991 mentioned that a foreign investor could be a natural person, as well as a legal entity, with an office in a foreign country, that makes investments in Romania, in any of the methods explained by the law. 

In order to find out more on how to invest in Romania, contact our Romanian accountants and you will receive all the information regarding the law that governs the foreign investments in Romania. 

What are the fields where a foreigner can invest in Romania?

Foreign investments can be made in the many fields, such as natural resource industry, agriculture, infrastructure and communication, as well as civil and industrial construction sector. However, they must be sure that they do not break the laws governing the environment, and they do not bring infringement to the national security. 

Tax exemptions for foreign investments

Under the original Law no. 35/1991 (no longer in force), foreign investors did not have to pay corporate income tax if the investment is made in industries such as agriculture or construction, but for a period of five years. If the investment is made in natural resources sector, then the company did not have to pay income tax for three years. The last investment that is exempt from income tax is the one made in commerce, tourism, banking or insurance sectors. The period granted was two years. These tax holidays no longer apply: foreign-owned companies now pay the standard 16% profit tax (or the micro-enterprise tax).