Romania

Corporate - Branch income

Last reviewed - 21 July 2020

Branch

A foreign company can set up a branch in Romania, as long as the branch only operates in the same field of activity as the parent company. A branch is considered to have the same legal personality as the parent company and is not a separate legal entity (no own share capital, no separate name, etc.).

Profits derived by the branch are taxed at the standard profits tax rate of 16%.

Representative offices

Representative offices are often established as a first step to operating in Romania. A representative office can undertake only auxiliary or preparatory activities, cannot trade in its own name, and cannot engage in any commercial activities. A representative office can perform only a limited range of activities without being considered a PE for profits tax purposes.

A tax on representative offices is due by any foreign legal person with a representative office authorised to operate in Romania according to the law. The tax is paid on an annual basis. The amount to be paid for a fiscal year is RON 18,000. If a representative office is set up or closed  during a tax year, the tax due for that year is pro-rated for the months that the representative office was operational in that fiscal year calculated proportionally with the number of months of its existence in the respective tax year.

The representative office of a foreign legal person should declare and pay the tax to the state budget by the last day of February of the tax year.