What is a representative office?
A representative office is a Romanian legal form authorized by the Ministry of Foreign Trade to represent companies and foreign economic organization in Romania.
This way, they can promote their commercial interests here through specialized offices, on contract.
Usually, most foreign companies are looking for representative offices in order to gather information about their niche, product promotions or prosecution of contract that were signed with suppliers or partners in Romania.
On the other hand, opening a representative office will not allow the company to perform provision of services or works or production activities.
A representative office is not a legal entity and has no right to perform trades.
It will only allow the foreign company to perform activities according to the activity object authorized. The headquarters company is responsible for its representative office activity in Romania. The permits are issued by the Ministry of Economy, Trade and Tourism. In order to open a representative office in Romania, the foreign company must submit a request and the proper documentation at the authorized bodies, as following:
- Registered office proof
- Subject of representative activity
- Functioning period of the representative office
- Number of functions of the person that will be in charge of the representative office, name, residence and identification document
- Bank confirmation regarding the creditworthiness of the foreign company
- Original certificate from the Chamber of Commerce or other authority from the state in which the company resides, to confirm the legal existence, social capital and object of activity
- Authenticated credentials of the representative office
- Status providing the form of organization and operation modality
It is very important to know that any change that occurs in the legal status of the company during the authorized period for the representative office must be communicated to the Ministry of Economy, Trade and tourism in 30 days in order to change the operating license.
The authorization may be withdrawn before expiration in the following cases:
- Exceeding the object of activity that was authorized
- Violation of legal provisions by the staff of the representative office
- Incompliance with tax obligations
If one of the above cases occurs, the Ministry of Economy, Trade and Tourism will notify the company of the authorization 90 days before liquidation.
Another important issue that requires attention is tax registration, as the person in charge for the representative office must register with the tax office (form 010) within 15 days from when the authorization has been issued.
In addition, a fiscal declaration on the establishment or abolition of a representative office during the fiscal year must be submitted to the competent tax authority in maximum 30 days after the representative office was abolished or established.
In 30 days after submitting the declaration, the authority will recalculate the taxes that must be paid.
Representative office fall under the regulation of law no 571/2013 of the Tax Code.
According to this law, the representative office must pay a tax of 4.000 euro per year, calculated in the local currency in the day of the payment.
This tax is calculated proportionally to the period of time in the fiscal year in which it was established or abolished.
Also, the tax is equally split in two rates of 2.000 euro each, one payable until 25th of June and the other until 25th of December.
Moreover, the company that owe a tax for the representative office must submit and annual statement for representative office taxes to the competent tax authority until the last day of February of the year of taxation.
Regarding the accounting of the representative office, it depends on their specifics of activity and can be held in single or double entry.
f they opt for double entry accounting, they won’t have to prepare financial statements regulates by the European directives ad they lead their own accounts at trial balance.