Introduction
When starting a business in Romania, one of the most important decisions is choosing the right legal form. This decision will influence your organizational structure, legal responsibilities, tax obligations, and business management.
In this article, we will analyze the main legal forms available in Romania:
- LLC (Limited Liability Company)
- Micro-enterprise (a tax regime, not a legal form)
- JSC (Joint Stock Company)
- Branch
- Representative Office
By the end, you will understand the differences, advantages, and disadvantages, and which type of legal entity suits your business best.
Table of Contents
1. Why Does the Legal Form Matter?
The chosen legal form determines:
- Financial liability of the shareholders or associates
- Taxation type and associated costs
- Administrative and accounting complexity
- Access to financing sources and business expansion opportunities
2. Limited Liability Company (LLC)
What is an LLC?
A Limited Liability Company (LLC) is the most common legal form in Romania, where shareholders’ liability is limited to the subscribed share capital.
Advantages:
✔ Limited liability (to the amount of share capital, minimum 1 RON)
✔ Flexible management and organization
✔ More credibility in front of partners and clients
Disadvantages:
✖ More complex incorporation process compared to a sole proprietorship
✖ Double-entry accounting required, implying costs for an accountant
Who is it suitable for?
- New entrepreneurs who want to separate personal assets from business assets
- Start-ups looking to attract partners or investors in the medium term
| Characteristic | Details |
|---|---|
|
Liability |
Limited to share capital
|
|
Minimum shareholders |
1 |
|
Maximum shareholders |
50 |
|
Minimum share capital |
1 RON |
|
Accounting |
Double-entry bookkeeping |
3. Micro-enterprise (Tax Regime for Small Businesses)
What is a Micro-enterprise?
A micro-enterprise is not a legal form, but a tax regime applicable to LLCs or other entities meeting specific criteria:
- Turnover below a set threshold (€250,000 for 2025, €100,000 from 2026)
- Minimum of one employee
Advantages:
✔ Low taxation (3% tax on revenue instead of profit taxation)
✔ Best for small businesses with low turnover
Disadvantages:
✖ Revenue limitations – exceeding the threshold means losing tax benefits
✖ Limited growth potential
Who is it suitable for?
- Small businesses and startups with low initial investments
- Freelancers looking to formalize their activity while paying lower taxes
4. Joint Stock Company (JSC)
LLC vs. JSC Comparison Table:
What is an JSC?
A JSC (Joint Stock Company) is a legal form suited for large businesses, allowing them to attract investors through shares issuance and establish complex management structures.
Advantages:
✔ Ability to raise large capital from investors
✔ Enhanced credibility and market presence
✔ Easier transfer of ownership via share trading
Disadvantages:
✖ Complex management and legal requirements
✖ Higher costs for audits and legal compliance
✖ Strict responsibilities for executives
Who is it suitable for?
- Large companies with high growth potential
- Businesses planning to go public or attract significant investment
| Characteristic | LLC | JSC |
|---|---|---|
|
Minimum share capital |
1 RON |
90,000 RON (~€25,000) |
|
Minimum shareholders |
1 |
2 |
|
Stock exchange listing? |
❌ No |
✅ Yes possible |
|
Complexity level |
Moderate |
High |
|
Above 15 shareholders |
– |
Auditor |
|
Mandatory audit? |
❌ No |
✅ Yes |
5. Branch
What is a Branch?
A branch is an extension of a parent company (either Romanian or foreign). It does not have separate legal personality and is fully subordinated to the parent company.
Advantages:
✔ Quick expansion to new locations
✔ No need to establish a separate legal entity
Disadvantages:
✖ The parent company assumes full liability
✖ Limited autonomy in developing an independent brand
Who is it suitable for?
- Established companies expanding into new regions
- Foreign businesses testing the Romanian market without forming a separate company
6. Representative Office
What is a Representative Office?
A representative office is a local branch of a foreign company that cannot engage in direct commercial activities in Romania. It is typically used for market research, marketing, and coordination purposes.
Advantages:
✔ Lower operational costs
✔ Allows businesses to study the market before committing investments
Disadvantages:
✖ Cannot issue invoices or engage in commercial activities
✖ Limited to representation, information, and promotion
Who is it suitable for?
- Foreign businesses exploring the Romanian market
- Companies needing a local presence for marketing and coordination
7. How to Choose the Right Legal Form?
To make an informed decision:
- Analyze your business activity
- Evaluate company size and complexity (estimated turnover, employees, growth plans)
- Assess financial exposure (limited vs. unlimited liability)
- Consider administrative and accounting resources available
Decision Guide:
| Business Situation | Recommended Legal Form |
|---|---|
|
Startup entrepreneur |
LLC (Possible Micro) |
|
Large company aiming for stock exchange listing |
JSC |
|
Business expansion into other cities |
Branch |
|
Market testing without commercial activity |
Representative Office |
8. Conclusion
Choosing the right legal form is a crucial step in developing your business.
- LLC is the most common and flexible choice
- Micro-enterprises offer tax advantages for small businesses
- SA suits large businesses needing significant capital
- Branches and representative offices facilitate expansion and market testing
If you need expert assistance in choosing, registering, or managing your company, contact us – our team of professionals is ready to help.
9. FAQ (Frequently Asked Questions)
1. What is the simplest legal form for start-ups?
The LLC as a micro-enterprise is often the simplest and most advantageous tax option for a start-up.
2. Can I change the legal form of my company over time?
Yes, it is possible
3. Which legal form offers the highest credibility?
A JSC (Joint Stock Company) generally offers increased credibility, especially if you’re aiming for major investments and stock market listing.
