Romania: Significant changes to the authorisation framework of the Romanian representative offices of foreign companies
Opinion by Noerr lawyers Denisa Loredana Moldovan and Andrei Balus
The legal framework regarding representative offices of foreign companies in Romania was recently amended with the publication in the Official Gazette of Romania, Part I, no. 779 of 4 August 2022, of Ordinance no. 18/2022 on the authorisation and operation in Romania of representative offices of foreign companies and business entities (“Ordinance“).
The Ordinance entered into force on 07 August 2022 and amends the legal and institutional framework governing the authorisation and operation in Romania of foreign companies and business entities (“Represented Entities“), expressly regulating the various related formalities.
In order to briefly present the recent legal provisions implemented by the Ordinance, we mention below some of the most important aspects to be noted on this matter:
1. Aspects of issuing an operating permit
The authorisation procedure of the representative offices will be carried out in front of the Ministry of Entrepreneurship and Tourism (“MET“) in a simplified manner, exclusively online.
The MET will issue the operating permits based on a request sent via an electronic platform within 30 days of the submission of a complete file, or when the MET considers it to be complete.
From a formal standpoint, the applications submitted to the MET must contain the following standard set of information:
(i) the name, registered office and tax registration code of the Represented Entities;
(ii) the business activity of the representative offices;
(ii) duration of the business operations;
(iii) the identity of the persons appointed by the representative offices for dealing with third parties;
(iv) the registered office of the representative offices.
Under the Ordinance, future applications which will be submitted to the MET must also be accompanied by the following types of documents:
(i) various corporate documents pertaining to the Represented Entities (e.g. excerpts from the relevant authorities, constitutive documents, powers of attorney), as well as letters of good standing from a credit institution;
(ii) proof of the existence of the representative office’s headquarters in Romania;
(iii) proof of payment of the authorisation fee (i.e. EUR 1,000 per year).
Following the completion of the abovementioned formalities, the MET may either issue the operating permit or reject the registration of the representative office, based on grounded reasons, within a maximum of 30 days from the date of application for registration or, where applicable, from the date of completion of the application as requested by MET.
The operating permits granted by MET are valid for a minimum of one year, with the possibility of extension for the same period, subject to payment of the authorisation fee.
2. Amendment and extension of the operating permit
According to the Ordinance, Represented Entities are obliged to notify the MET of any changes in its data, including those appearing on the operating permit, within 30 days of the date of their occurrence, and the Represented Entities must request that the operating permit be updated accordingly if necessary.
Within 30 days from the date of receipt of the application with the complete documentation, the MET will update the operating permit if the changes concern the items included on it.
It is important to note that the operating permit can only be extended at the request of the representative office filed at least 30 days before the expiry date.
3. Issuance and rescission of operating permits, deregistration of representative offices
Operating permits may also be rescinded by the MET at the request of supervisory authorities for any of the following reasons:
(i) violation of the provisions on money laundering and terrorist financing by the representative office staff;
(ii) failure to comply with the business activity stated in the operating permit and the conditions for carrying it out;
(iii) non-compliance with tax obligations.
Deregistration of representative offices from the MET records may also requested through the electronic platform developed as per the Ordinance, based on proof of prior removal from the records of the tax authority and supporting documents issued by the Represented Entities.
The MET will process deregistration requests within 30 days of submission of the file or, as the case may be, its completion as required by the MET.
On a separate note, operating permits may be withdrawn ex officio 30 days after they expire when no extension has been requested.
4. Limitations and obligations
It is important to emphasize that the activity of representative offices in Romania must be carried out as per the business activity established under the operating permit and that business activities are never to be carried out in the representative office’s own name. Accordingly, it is important to note that the Represented Entities and the employees of the representative office are jointly liable for any damage incurred due to any unlawful acts committed in the course of the activity of the representative offices.
In addition to the obligation to obtain a operating permit, representative offices in Romania must register for tax purposes and pay the taxes and duties established by the Romanian Fiscal Code.
The Ordinance specifies that the representative offices’ financial-banking activities may be carried out only through bank accounts opened with credit institutions legally established on Romanian territory.
It is worth mentioning that the operating permits issued to representative offices before the entry into force of the Ordinance remain valid, as provided by the previous regulations.
Until the electronic platform developed under the Ordinance becomes operational, applications will be submitted and processed pursuant to the former legal formalities.
The guidelines related to the Ordinance shall be drawn up by 60 days after its entry into force (i.e. 7 August 2022). Also, the new electronic platform must be fully operational by 180 days after such date.