ROMANIA Law and Practice Contributed by: Monia Dobrescu and Mădălina Trifan, Mușat & Asociații
• limited partnership ( Societate in comandita simpla – SCS); • partnership limited by shares ( Societate in comandita pe actiuni – SCA); • limited liability company ( Societate cu raspun- dere limitata – SRL); or • joint stock company ( Societate pe actiuni – SA). The SRL is the most common form of company incorporated in Romania, mainly due to the lia - bility of shareholders being limited to the amount of share capital subscribed, and to its plain man - agement rules and corporate structure. Investments that entail the holding of real estate assets in Romania may also be carried out via alternative investment funds specialising in real estate. Addressing both retail and professional investors, their incorporation has to take the form of a joint stock company. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity All Romanian companies (as well as certain indi - viduals or other legal entities expressly provided by law) must register with the Romanian Trade Register prior to commencing trading opera - tions, with the date of such registration being the date when the company is granted legal per - sonality by virtue of law. The capacity to establish a company is, never - theless, conditional upon the fulfilment of certain legal requirements: individuals should not have been legally declared unfit, incapable or liable of criminal offences such as breach of trust, for - gery, use of forgery, etc, and must have clean fis - cal records, while legal entities should be legally registered and operating in the country where their main headquarters are located, with clean fiscal and criminal records.
An SRL may be established by one to 50 share - holders, while joint stock companies should have at least two shareholders, with no restriction on the maximum number of shareholders. Bearer shares are not permitted under Romanian law. Generally, income from the transfer of real estate is taxed at the following tax rates applicable on the transaction value, depending on the period for which the property was owned/held: • 3% for constructions of any kind and their related lands, as well as on lands of any kind without constructions, held for a period of up to three years inclusive; and • 1% for such buildings that are held for a period longer than three years. However, natural persons who consistently obtain income from real estate transactions may be required to register as a PFA ( persoana fizica autorizata ), meaning that the natural per - son is authorised to perform economic activity. Under Romanian legislation, this is considered as income from independent activities and will be taxed as follows: • 10% income tax; • social insurance contribution (pension) of 25%; and • health insurance contribution of 10%. If the threshold of RON300,000 is exceeded, a VAT registration will also be required. For SRL/joint stock companies, the applicable corporate tax rate is generally 16%. However, a Romanian legal entity can opt for the applica - tion of micro-company revenue tax in lieu of the standard CIT if it cumulatively meets the follow - ing conditions as of 31 December of the previ - ous year:
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