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New Legislation On Representative Offices – Tax Authorities

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1. Overview

On August 4, 2022, Ordinance no. 18/2022 on the authorization
and functioning of representative offices of foreign companies and
economic organizations in Romania (“GO
”) adopted by the Romanian Government has
been published in the Official Gazette.

GO 18/2022 represents the first change of Romanian legislation
on representative offices adopted since 1990, thus bringing much
needed updates in the field, including as regards the means by
which the procedure will be undertaken, namely via a digital

Registering a Romanian representative office implies the payment
of an authorization tax amounting to EUR 1,000 per year.

2. Registration procedure

As anticipated above, the registration of Romanian
representative offices by foreign legal entities will be undertaken
via a digital platform to be set-up by the Romanian Ministry of
Entrepreneurship and Tourism (“MAT”).
Such platform will be put in place within 180 days as of the entry
into force of GO 18/2022.

The procedure implies the submission by the foreign legal entity
registering the representative offices of a request reflecting the
following information:

  1. the name, registered office address and tax code of the foreign
    legal entity;

  2. the business object of the representative office, which will
    need to be in line with that of the legal entity;

  3. the duration of the representative office (minimum one

  4. the representative of the representative office before third

  5. the registered office address of the representative

In addition to the information mentioned above, the registration
request will need to be accompanied by the following documents:

  1. a document issued by the competent authority from the country
    where the legal entity setting up the representative office is
    headquartered reflecting the identification details of such entity,
    its business object and share capital along with an authorized
    translation thereof bearing a qualified or an advanced electronic
    signature; such document should normally consist of company
    excerpts issued by the competent company/trade registry;

  2. the articles of association of the legal entity accompanied
    also by an authorized translation bearing a qualified or an
    advanced electronic signature;

  3. the power of attorney for the individual appointed to represent
    the representative office;

  4. the proof of payment of the aforementioned EUR 1,000
    authorization tax;

  5. a letter of creditworthiness issued by the legal entity’s
    main bank;

  6. proof of the registered office of the representative office;
    normally this should consist of a (free) lease agreement regarding
    the relevant premises where the representative office’s
    registered office will be established.

The entire registration procedure (including potential requests
from the MAT to supplement/amend the registration documents) will
be undertaken via the above-mentioned digital platform, including
the issue of the representative office’s functioning permit
to be issued by the Ministry.

3. Liability

GO 18/2022 also provides liability rules in connection to
Romanian representative offices, as follows:

  1. the foreign company/economic organization setting-up the
    representative office will be liable for the legal acts and
    activity of its representative; while not expressly provided under
    GO 18/2022, this is the result of representative offices not having
    legal personality;

  2. in addition to the above, the foreign company/economic
    organization will be jointly and severally liable with employees of
    the representative office as regards damages resulting from illicit
    acts of such employees as part of the representative office’s

4. Tax registration

Same as prior to the enactment of GO 18/2022, representative
offices need to be fiscally registered before the Romanian tax
authorities and pay taxes. Currently, the taxes imposed upon
representative offices amounts to a pre-determined yearly amount of
RON 18,000 (approximately EUR 3,600) though it remains to be seen
whether the same will be updated in the Romanian Tax Code.

5. Other relevant aspects

In addition to the above, GO 18/2022 contains few other relevant
provisions for representative offices, such as:

  1. MAT can decide to revoke the functioning permit in case the
    same do not comply with Romanian legislation on money laundering
    and terrorism financing, with their business object or with their
    tax obligations;

  2. the de-registration of a representative office implies two
    steps, first being the de-registration from the tax
    authority’s database followed by submission of the proof
    thereof before MAT.

6. Conclusions

GO 18/2022 significantly reduces bureaucracy for setting up
Romanian representative offices, especially as it seems that entire
registration and de-registration procedure will be undertaken by
digital means.

This should normally encourage foreign companies to set up
representative office in Romania where their activity therein can
be achieved without setting up a distinct Romanian company.

As GO 18/2022 will be followed by enforcement guidelines to be
issued by MAT within 60 days as of the entry into force of the
Ordinance, it remains to be seen how the same will impact the
registration and functioning of such entities.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.


UK Tax Round Up

Proskauer Rose LLP

Welcome to July’s edition of the UK Tax Round Up. This month has seen an interesting decision of the First-tier Tribunal on the salaried member rules as they apply to asset manager LLPs,

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