Since joining the European Union (EU) in 2007, Romania has enjoyed one of the highest levels of economic growth in the EU over the past decade. Freedom of movement for capital, goods, services and people has been instrumental in its expansion. As such, lower production costs and lower prices provide an attraction for foreign companies and ‘go-getting’ entrepreneurs, looking for opportunities, to move to and invest in this ‘Land of Dracula’. However, although a member of the EU and the European Economic Area, Romania is not a member of the Schengen agreement, as of March 2022, or part of the Eurozone; its currency is the Romanian leu.
For companies, one of the initial steps when expanding into the Romanian market is onboarding staff from the home country or from elsewhere in the world. As with most countries, documentation is required to cross its borders and it is down to the individual or company to make sure they comply with all immigration regulations and laws.
Citizens of the EU, EEA, and Switzerland (as part of the European Free Trade Association) are free to enter, live and work in Romania without visas or work permits, however, there are some administrative procedures required until Romania joins the Schengen area.
Many other countries also have agreements regarding visa-exemption for holidays, visiting friends, business purposes (but not paid employment) and sports events for a period of 90 days in a 180-day period. For those Third Country Nationals (TCNs) who do require a visa for tourism or business, short-stay (C) and long-stay (D) national visas are available. All TCNs require work permits for employment in Romania.
There are numerous options for those joining the Romanian workforce … and understanding the necessary documentation, eligibility and making the right choice for you or your staff takes expert advice. The complexities of ensuring your employees are compliant takes time, research, and money.
What Types of Work Visas, and Permits for Portugal are there?
Romania, as with all countries, requires documentation for foreigners to live or work there, but there are exemptions. As a member of the European Union (EU) and the European Economic Area (EEA), they practice free movement for all members’ nationals – so no visa or work permit is required. However, because Romania as of March 2022 is still not part of the Schengen Agreement, certain documentation is required i.e., a national passport. Also, after being in the country for three months, EU/EEA and Swiss citizens need to register with the local authorities i.e., General Inspectorate for Immigration (IGI) to receive a registration certificate.
Many other countries’ nationals are exempt from applying for a visa for 90 days in a 180-day period. These citizens are allowed to work during the 90 days for certain activities, which is usual for most countries e.g., training, installing, or maintaining machinery.
For those Third Country Nationals (TCNs) who require a visa, Transit, Short Stay (C) or Long Stay (D) visas are available.
Short-Stay (C) Visas are issued for Tourism; Visiting; Business; Sports Activities; Cultural or Scientific Activities. For 90 days in a 180-day period
Long-Stay (D) Visas are issued for 90 days but with the ‘right to request an extension’ and apply for the Residence Permit to: Work (or Study). This is applied for before leaving the home country
Documentation required to enter, live and work in Romania for TCNs.
A Visa. Long-Stay (D) to travel to Romania for work purposes is applied for before the employee leaves their home country and provides temporary residency for 90 days. The National Visa Centre is the authority that accepts applications by TCNs and issues the visas to allow travel to Romania
A Work Permit or Work Authorization a.k.a. Employment or Work Approval. This is applied for by the employer, organization or company offering the position
Residence Permit. If the period of employment exceeds the Long-Stay D Visa (90 days) then employees must apply for the Residence Permit within 30 days of the visa expiring
Note: Delays in processing visa and permits can create problems – so allow plenty of time to avoid hold-ups.
Types of work requiring Long-Stay (D) Visa and Residence Permit
When transferring from company in home country to branch in Romania (D/DT)
When employed by a Romanian company with an employment contract (D/AM)
Companies abroad supplying services to their Romanian customers
Entrepreneurs looking to set up a company
Also, as of December 2021, a new visa was introduced – the Digital Nomad Visa for remote workers without the need for a separate work permit through an employer.
Types of Work Permit or Authorization are for:
Highly qualified workers
ICT workers (Intra-corporate transfer)
The Work Permit or ’Work Authorization’ is not a ‘general permission to work’ throughout Romania. The work permit is granted for the employer who applied, for the position offered. Work Permits come under the General Inspectorate for Immigration (IGI) where documentation is sent by the employer. Some jobs must go through a Labor Market Test, offering first refusal to local Romanians, EU/EEA/Swiss citizens by advertising through the local media and can be a condition of the work permit. Employees must also:
Have a clean police report showing no criminal activity
Have a certificate demonstrating good health
Be within the work permit quotas for TCNs that can be legally employed by local Romanian companies. For 2022 the number increased to 100,000
Be qualified for the position applied for regarding education and work experience, complying also with any legal tests conducted by the employer
Have not been refused entry or expelled from Romania or from the Schengen Area
Note: Most documentation is in Romanian and many employers expect the minimum language requirements.
Main Work Permits for Permanent employees for companies on contract
Single Work Permit for people working as contracted employees for either indefinite or fixed-term contract, for Romanian registered companies which is for one year, renewable. This can lead to permanent residency. Processing can take 16-20 weeks.
Deployed or posted workers. Employees sent on a temporary basis to supply a service or complete a specific task from a company abroad for one to five years.
Intra-corporate transfer (ICT) to a branch of the same company from a Third Country, for managers and highly skilled workers for up to three years.
EU Blue Card for people who are highly qualified / skilled and is for two years renewable. Can be a pre-requisite for qualifying employees seeking permanent residency. Can take between 16 – 20 weeks to process.
Employers initiate the work permit process for the employees and refer all documentation required to the IGI who processes the work permit within 30 days and for EU Blue Card holders, 15 days. Employers must pay a tax of around RON 500 (€100; US$110) for each permanent TCN employed. The permit should be kept for as long as the period of employment. A copy should be given to the employee as proof, which is needed for the Work (D) Visa application. Residence Permit can be applied for 30 days before their temporary residence, i.e., Long-Stay (D) Visa, expires and can be valid for up to three years.
Bradford Jacobs draws on over 20 years of experience in the front rank of international payroll providers, and we ensure our clients comply with every aspect of tax legislation across the world. Our local knowledge and global experience are vital for international companies expanding into Romania and then further afield into the European Union.
Dealing with tax, payroll, and employment regulations for your staff from overseas always poses complications that demand expert guidance for both personal and corporate taxes.
Foreign companies must incorporate a legal entity in Romania to hire staff and operate their payroll, typically opening a limited liability company (LLC) as a small or medium-sized subsidiary to gain a foothold in the economy. The subsidiary operates as an independent legal entity under Romania’s Companies Law, registering with the revenue and social insurance authorities … the first of many steps in employing staff
Overview of Taxes in Romania
* Romania is a member of the European Union but is not in the Eurozone and uses the leu (RON) as its currency.
Personal Income Tax (PIT): Residents and non-residents pay at a flat rate of 10%.
Social Insurance Taxes: Employees contribute 10% of gross income to healthcare and 25% to social insurance, pensions and unemployment provision. Employers contribute 2.25% of their payroll to labor insurance. Employers do not contribute towards pension social insurance where regular working conditions apply, but 4% is levied for particular working conditions and 8% in the case of special working conditions.
Corporate Income Tax (CIT): Local and foreign companies with a permanent establishment in Romania pay 16% CIT on their profits. Resident companies are taxed on worldwide income unless a double tax treaty applies. Start-ups are automatically considered micro-enterprises with tax rates of 1% or 3%, depending on conditions, until revenue reaches one million euros.
Withholding Tax (WHT): Non-resident companies are liable for 16% WHT on such as dividends, royalties and interest.
Value Added Tax (VAT): The standard rate is 17% on goods and services and all imported goods. Reduced rates of 9% apply to such as medicines and foodstuffs, with 5% applied to newspapers, books, catering, leisure services and other categories. The VAT registration threshold for companies is RON 300,000 (€60,620, US$66,583).
Romania Individual Tax – Single, Married
The tax year is from January 1 until December 31. Married couples submit returns independently as joint returns are not permitted under Romania’s tax laws. Individuals residing for more than 183 days in 12 consecutive months and those domiciled or having their commercial center of interest in Romania are tax residents. Non-residents are considered tax residents from the first day they are domiciled in Romania, or from the first day of the 183-day period once that total has been reached. Withheld taxes and social insurance contributions are remitted to the authorities by the 25th of the following month. Residents are generally taxed on their worldwide income.
* Romania is a member of the European Union but is not in the Eurozone and uses the leu (RON) as its currency.
Residents and non-residents Personal Income Tax (PIT): A flat rate of 10% applies to both.
Monthly tax-free allowances are RON 510 (€103, US$113) for individuals with no dependents; RON 670 (€135, US$148) with one dependent; RON 830 (€167, US$184) for two dependents; RON 990 (€200, US$220) for three dependents; RON 1,310 (€264, US$290) for four or more dependents.
Employees’ Social Insurance Taxes: The total employee rate is 35%, comprising 25% into general social insurance and 10% into health insurance.
Establishing a subsidiary in a foreign territory comes with risks. A project that starts as a business adventure can become costly, time-consuming and with no guarantee of success.
Non-resident companies can hire employees in Romania, but they must open a legal entity in order to operate payroll for their staff. The most popular choice is to open a subsidiary as a Limited Liability Company (LLC), known in Romania as a Societate cu Raspundere Limitata or (SRL).
Romania, a member of the European Union (EU) since 2007, has become an increasingly attractive option for international expansion. Its location in southeastern Europe makes it a gateway into the Balkans and further east, with Constanta being the largest and deepest port on the Black Sea.
Romania’s low tax rates – both personal and corporate – have added to the nation’s global competitiveness. Romania’s steadily evolving economy showed strong growth of 6.3% post-pandemic in 2021, having been one of the EU’s least affected members. Romania’s nominal Gross Domestic Product was 287.3 billion US dollars in 2021, ranked 47th in the world, and the EU predicts growth of 4.2% for 2022 and 4.5% in 2023.
However, expanding overseas is a major step, especially for companies opening a legal entity thousands of miles from their home base. If the move fails, companies face the extra expenditure and stress of closing the business, selling property, and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into a new territory.
How to set up a Romanian Subsidiary
Setting up a subsidiary in Romania? This is a legal requirement for international companies planning to run their payroll for their staff. They typically choose to establish a limited liability company (LLC), known in Romania as a Societate cu Raspundere Limitata or (SRL), which operates under the Companies Law.
The Act covers incorporation, shares and shareholder regulations, duties of directors and officers, accounting, audits, and other provisions.
General procedures and requirements include:
Reserve company name and prepare company information before submitting application to the Trade Registry, which can be done electronically through the Registry website
Founder can be either an individual or a legal entity
There is no requirement for minimum share capital of an LLC
The subsidiary has between one and 50 shareholders
Provide Memorandum and Articles of Association for new subsidiary
Provide Articles of Association of the parent company and extracts from Trade Register where shareholders are incorporated verifying their good standing and financial status, plus passport and ID of future directors
Once incorporated, obtain the company fiscal registration number from the National Agency for Fiscal Administration (ANAF). Other registrations may be required for VAT and social insurance contributions
Register a physical office and designate an individual to sign official documents for the subsidiary
Officially register the subsidiary by filing all documents with the Trade Registry
To operate payroll for staff, other procedures include:
Obtaining personal tax identification number (TIN) for foreign nationals, using Form 030 and submitting to the local tax office where they live with required documentation
Verifying the CNP (Codul Numeric Personal) of local employees, which is assigned at birth and doubles as their TIN
Filing social insurance and tax reports and returns for local employees on Form D112
Filing social insurance reports and returns for non-resident foreign employees on Form D112
For non-resident foreign employees, filing tax reports and returns on Form D224 and submitting Form D222 at the beginning and end of their employment
Remitting employees’ contributions by the 25th of the following month to the National Agency of Fiscal Administration (ANAF) and submitting annual tax returns by May 25 of the following year
Registering new employees with the Labor Inspectorate on the Revisal online software one day before they commence work at the latest
Ensuring all new employees receive a written contract before starting work, which must be in Romanian or at least include a version of the terms in Romanian if it is a bi-lingual contract
Benefits of setting up a Subsidiary in Romania
Specific advantages for a foreign company opening a private limited liability company in Romania include that the entity has a separate legal identity from the parent company. The subsidiary operates under Romanian Companies Law and the parent company’s liability is generally limited to the share capital it has invested. The same applies to its shareholders. As a local and legal entity, the subsidiary is eligible for any tax incentive schemes.
Through its subsidiary the parent company has the advantage of maximizing opportunities of expanding further into European Union (EU) economies. With its Black Sea coastline, Romania is also an ideal steppingstone for expansion into Asia.
Other benefits for a subsidiary:
Easier to obtain potential benefits and incentives and enter contracts with other Romanian and EU companies
More impact with clients and suppliers, as subsidiaries imply more permanency than branches
Employees feel there is more stability and job security than from being with a branch
In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by Balkan and Eastern European economies in the region.
Romania’s rich heritage is allied to a growth economy that is increasingly attracting foreign companies with an eye on international expansion.
Away from the workplace, Romania offers a land with intriguing history and natural beauty. Romania has mountain ranges – the Carpathians and Transylvanian Alps – with the name Transylvania forever associated with vampires and the infamous Count Dracula. There are forests and immense rolling plains.
Romania’s steadily evolving economy showed strong growth of 6.3% post-pandemic in 2021, having been one of the EU’s least affected members. Romania’s nominal Gross Domestic Product was 287.3 billion US dollars in 2021, ranked 47th in the world.
As a member of the European Union (EU) since 2007, Romania enjoys freedom of movement for workers and capital with the economy predicted to grow by 4.2% in 2022 and 4.5% in 2023. Romania’s low tax rates – both personal and corporate – have added to the nation’s global competitiveness.
As always there are complications to be dealt with. For example, international companies hiring staff must give preference to local employees, then those from the EU or the European Economic Area (EEA). Additionally, foreign companies who intend running payroll for their hired staff must set up a legal entity subsidiary in Romania.
The most popular choice is to open a limited liability company, known in Romania as a Societate cu Raspundere Limitata or (SRL). All entities in Romania operate under the Companies Law, which regulates incorporation, dealing with shares, directors and officers, accounts, and other provisions. Registration procedures and requirements include:
A company name reserved with the Trade Registry, either in person or via their website and a founder, which can be either an individual or a legal entity
The Memorandum of Incorporation and Articles of Association for the new company
The Articles of Association for the parent company and extracts from the Trade Registry of the home country, verifying the financial status of the shareholders
The new company’s fiscal registration number from the National Agency for Fiscal Administration (ANAF). Other registrations may be required for VAT and social insurance contributions
A registered physical office and a designated local official authorized to sign documents
Expanding Business into Portugal
Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions. There are other issues, too. Where will you find manufacturers, offices, and distributors?
Romania Business Facts
Capital – Bucharest
Population – 19.29 million (2020)
Regions – Nord-Est, Sud-Est, Sud, Sud-Vest (Oltenia), Vest, Nord-Vest, Centru, Bucharest-Ilfov. There are 41 administrative divisions
Leading sectors by GDP – Manufacturing 62.6%, services 32%, agriculture 4.2%
Main exports include – Cereals, rubber and products, iron and steel and products, vehicles and vehicle parts, insulated wiring, and control boards
Main imports include – Vehicle parts, pharmaceuticals, crude petroleum, textiles, machinery, foodstuffs
Main trading partners – Germany, Italy, France, and Hungary
Government – Parliamentary republic, unitary state, semi-presidential
Currency – Leu
Advantages and Challenges of the Romania Market
Advantages of expanding into the Romanian market include:
Location: Romania is ideally placed at the heart of three economic groups; the European Union (EU), the Commonwealth of Independent States (CIS) and the Middle East. It is crossed by transport corridors linking east to west, north to south, while 600 miles of the River Danube flows into the Black Sea to provide a maritime gateway to further expansion.
Taxation: Comparatively low rates at both personal, indirect and corporate levels have boosted international competitiveness.
Business: Cost-effective environment includes incentives for incoming businesses with re-invested profits being tax exempt.
Workforce: Well-educated and skilled, often multi-lingual from living at a cultural crossroads between east and west.
Advances: Developed from largely agricultural and manufacturing focus into a technologically enterprising economy.
Challenges of expanding into the Romanian market include:
Bureaucracy: Reflecting the former Communist regime, ‘red tape’ and state-owned enterprises can still dominate some industries and restrict access to supply chains and customers.
Currency: Subject to exchange rate fluctuations as Romania uses the leu as its monetary unit, not being in the Eurozone despite membership of the EU.
Labor force: Comparatively low wage rates can lead to skills shortages in some sectors as Romanians move to work in other EU countries for higher pay.
Concerns: A 2020 survey listed healthcare, inflation and pension provision among the major worries for the workforce.
Limited Company / Subsidiary or Branch in Romania?
To operate payroll for their hired staff, foreign companies expanding into Romania must establish a legal entity. The most popular choice is to open a limited liability company as a subsidiary, which is known in Romania as a Societate cu Raspundere Limitata or (SRL). Another option is to open a branch, or Sucursala, but there are differences in how they are registered and operate.
Foreign companies planning to hire employees in Romania must operate within a strict framework of legislation that gives significant safeguards and entitlements to the workforce. Companies must primarily comply with the Labor Code, the Fiscal Code and the Companies Law. Romanian employees and foreign workers are covered by the regulations.
Drawing up a contract with your new employee is an essential part of the recruitment process. Contracts must comply with regulations laid down by the Order of the Ministry of Employment. Once Bradford Jacobs’ Professional Employer Organisation (PEO) recruitment networks have located the best talent for your company, we step in to handle this crucial element of recruitment.
General requirements from the Labor Code apply to all contracts. These include:
Contracts must be completed in writing the day before work is due to start and presented to the employee
Contracts must be electronically registered via the Revisal online system in the General Register of Employees
Contracts must be concluded in Romanian. Bi-lingual contracts are permitted but must incorporate a Romanian version
Minimum contract terms must include Full names and addresses of employer and employee; the duration (if fixed term); any probation period or notice period; salary and paid vacation entitlements
Employment Contracts in Romania
Employers are legally required to provide the new employee with a written contract at least one day before they begin work. The contract must be in Romanian and a bi-lingual contract must include a Romanian version of the terms. Mandatory minimum information must be included in the contract – full names and addresses of the parties; duration of a fixed-term contract; any probation or notice periods; salary, paid vacation, and any other entitlements. A pre-employment medical check is mandatory, carried out by the company’s occupational health department, or else paid for by the employer.
Contracts must be electronically registered via the Revisal online system in the General Register of Employees.
Main contract types include:
Permanent Employment Contracts: (Contract individual de muncă pe durată nedeterminată). Romania employment law assumes all contracts are open-ended and indefinite, which can be terminated by either party in accordance with statutory procedures.
Fixed-term Employment Contracts: (Contract individual de muncă pe durată determinata). These are permitted only in specific situations as determined by the Labor Code. Contracts can be renewed twice but cannot exceed 36 months in total. Fixed-term contracts that exceed three years, or are renewed a third time, automatically become open-ended and indefinite.
Part-time Employment Contracts: (Contract individual de muncă cu timp partial). These can be either open-ended or fixed term.
Probation Periods: These can be included in a contract, only once per employment. They are generally for 90 days, although can be shorter if applied to fixed-term contracts or temporary employees. Probation periods for executives and managers can be extended to 120 days.
Collective Bargaining Agreements: Collective agreements can be concluded through negotiations between employers, employees and their representatives or trade unions. All employees in Romania have the constitutional right to belong to a trade or labor union which, in turn, has equal rights to represent workers in any dispute with their employer or employers’ organizations. The Social Dialogue Act of 2011 removed the right to negotiate agreements at national level. Therefore, collective agreements are concluded at industry level or with individual companies or groups of companies. According to the Ministry of Labor between 20% and 25% of employees have union membership.
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Romania might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Iceland including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.
What are the Employee Benefits in Romania?
Benefits and entitlements in Romania are generally covered by the Labour Code. Foreign companies hiring employees must comply with legislation which provides safeguards and guarantees for the workforce, while also detailing the responsibilities of employers. Improved terms can be applied by collective agreements at the industry or company level as well as by contracts. However, absolute minimums apply to such as:
Termination, severance, and notice periods
Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Romania?
Romania’s Labor Code covers most aspects of employment regulations relating to compensation and entitlements. The Romanian Constitution also protects individuals against such as harassment or discrimination at work, gender equality and equal rights in terms of pay. European Union Directives, such as the General Data Protection Regulation (GDPR), can also apply. Disputes are dealt with by regional tribunals or appeal courts.
In addition to the Labor Code, the following are also likely to apply:
The Labor Union Law
The Fiscal Code
The Companies Law
In Romania, it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties or facing sanctions for ignoring these responsibilities.
Minimum compensation and entitlements cover such as maternity and paternity leave, sick leave, termination, severance, overtime, paid vacations, notice periods and probation.
Maternity, Paternity, Parental Leave: Maternity leave of 126 days includes a mandatory 42 days post-natal, but generally 63 days are taken equally before and after the birth. Benefit is 85% of average salary over the previous six months for the 126 days. Fathers receive a minimum five days paid paternity leave within eight weeks of the birth at 100% salary. Parental leave is for two years from the birth if the employee has contributed to social insurance and had taxable income for the previous 12 months. Benefit is 85% of average salary over the previous 12 months
Sick Leave: Entitlement is up to 183 days a year but can be extended and is up to 18 months specifically in the case of tuberculosis. Employees receive from their employer 75% of their average salary over the previous six months. Compensation can be 100% if the individual needs surgery or has a contagious disease
Minimum Wages: In January 2022 the minimum for full-time employees was increased to RON 2,250 per month (€515, US$566), equating to RON 30,600 (€6,184, US$6,795) a year. Employees in the construction sector stayed at a monthly minimum of RON 3,000 (€606, US$666), the same as before January 2022
Probation Periods: Only one trial period is permitted per employment, and they are generally for 90 days. They can be shorter for fixed-term or temporary employees, while managers or executives can have up to 120 days
Working Hours and Breaks: The Labor Code restricts hours to eight per day and 40 each week, with a weekly limit of 48 including overtime. ‘Averaging agreements’ between employers and employees’ representatives can allow for 48 hours a week over four months, and in some cases averaged up to 12 months. Breaks, generally unpaid, are stipulated in contracts or collective agreements
Overtime: Compensation is usually as paid days off, taken within 60 days of working the extra hours, unless impractical in which case employees receive no less than 75% above their normal hourly wage. Employees must give written agreement to work overtime
Notice Periods: The statutory minimum is 20 days, although contracts and collective agreements can allow for more
Termination, Severance, Redundancies: Termination must strictly comply with mandatory procedures and is prohibited on discriminatory grounds, for taking the right to strike, and during pregnancy, temporary illness or while on vacation. Termination regulations apply equally to all employees regardless of seniority. No statutory minimum levels apply to severance, which usually depends on contracts or collective agreements.
Multiple redundancies involve strict consultation procedures if the following apply: 10 redundancies out of between 21 and 99 employees; 10% of employees in company employing between 100 and 299 staff; 30 employees in companies employing more than 300
Paid Vacations: The Labor Code stipulates 20 days of paid vacation per year, adjusted pro rata for having worked less. Unused vacation should be used in the first six months of the following year
Locating and recruiting top talent in any overseas territory puts many barriers in the way of companies building their international profile. This certainly applies to Romania, a developing economy with many attractions but one where the employment market poses questions.
A member of the European Union (EU) and European Economic Area (EEA) since 2007, as part of the EEA Enlargement Agreement, Romania was expected to be integrated into the Schengen Area by the end of 2022 and the European Travel Information and Authorization System (ETIAS).
As a member of the EU, Romania is part of the ‘freedom of movement for workers’ principle. Statistics from the EU in 2020 showed that Romania had the highest percentage of non-Romanian EU citizens in its workforce at just over 18%. Consequently, the recruitment route into Romania is smoother for EU and EEA citizens, who can also sidestep some of the red tape in terms of work permits. Romania’s natural beauty and rich heritage are primed for a developing tourist industry and services sector, while construction, architecture and design, software and hardware development are among the areas expected to generate the most employment opportunities.
The Recruitment Process in Romania
It is vital for foreign companies taking their first steps into Romania’s economy to have a clear plan when it comes to recruitment, as they will have operated within certain regulations.
Foreign companies looking to fill positions must first advertise them through the European Union’s EURES network, to ensure they are available to citizens from the EU and European Economic Area, as well as to Romanian nationals. Companies from other EU nations must take the first steps via their own EURES network.
Statistics from the EU in 2020 showed that Romania had the highest percentage of non-Romanian EU citizens in its workforce at just over 18%. In January 2022, the Ministries of Internal Affairs (General Inspectorate for Immigration) and Foreign Affairs announced proposals to make 100,000 visas available for foreign workers.
Recruitment is the first stage of making your company operational and competitive in Romania. But bureaucracy complicates moving staff into the country – in addition to the complexities of obtaining work permits and visas, which generally must be undertaken by the employer. To avoid these issues, it is vital to know where to locate the finest talent in Romania to be the perfect fit for your company’s global expansion plans.
Once recruited, companies must then consider the implications of handling payroll for their staff and dealing with the revenue and social insurance authorities. Foreign companies must establish a subsidiary to undertake these responsibilities, with strict registration procedures to be followed. These include:
Obtaining personal tax identification number (TIN) for foreign nationals, if required, using Form 030 with the individual’s passport, copy of contract, lease agreement or deed of ownership. These must be submitted to the relevant local tax office
Verifying the CNP (Codul Numeric Personal) of local employees, which is assigned at birth and doubles as their TIN
Filing social insurance and tax reports and returns for Romanian staff on Form D112
Filing social insurance reports and returns for non-resident foreign employees on Form D112 and their tax reports and returns on Form D224. Form D222 must be completed for non-resident foreign employees at the start and end of employment
Computing and remitting all employee contributions by the 25th of the following month to the National Agency of Fiscal Administration (ANAF) and submitting annual tax returns by May 25 of the following year
Registering new employees with the Labor Inspectorate on the Revisal online software at the latest one day before they commence work
Ensuring all new employees receive a written contract before starting work
Legal Checks on Employees in Romania
Scope: Most pre-hire checks need the applicant’s permission to proceed.
Medical checks: Employers must ask permission to have a medical check carried out by their occupational physician or pay for the examination. The appraisal should be confined to confirming the candidate is fit for the position in question.
Criminal record checks: No general legal requirement, however they can be mandatory for certain specified roles in which case the employer asks for the candidate to provide evidence of a clean criminal record. It is prohibited for employers to process any criminal record data.
Education and reference checks: Can be requested with the applicant’s permission.
Required: That the applicant has the necessary work permit, visas, and residency qualification
Basic Facts on Hiring in Romania
The rights of employees and obligations of employers are largely governed by Romania’s Labor Code. Provisions include:
Employment contracts must be completed in writing the day before work is due to start and handed to the employee
The contract must be electronically registered in the General Register of Employees via the Revisal system
Contracts must be drawn up in the Romanian language. Bi-lingual contracts are permitted but must incorporate a Romanian version
Minimum contract terms must include Full names and addresses of employer and employee; duration (if fixed term); any probation period or notice period; salary and paid vacation entitlements
Employers must publish company policies and regulations in an employee handbook after consultation with relevant representative committees
Employers must have policies to deal with equality and harassment
After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.
Employers’ responsibilities include:
Verifying the CNP (Codul Numeric Personal) of local employees, which doubles as their personal tax identification number (TIN)
Obtaining the TIN for foreign employees by using Form 03
Filing social insurance and tax returns for Romanian nationals on Form D112
Using Form D112 to file social insurance returns for foreign employees and Form D224 for tax reports and returns
Submitting Form D222 at the start and end of employment for non-resident foreign employees
Computing and remitting all employees’ contributions by the 25th of the following month to the National Agency of Fiscal Administration (ANAF) and annual tax returns by May 25 of the following year
Registering new employees with the Labor Inspectorate and General Register of Employees on the Revisal online software at the latest one day before they commence work
Ensuring all new employees receive a contract before starting work
To succeed in business in Romania, it is vital for both employers and employees to have a strong understanding of the business culture.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Romanian work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Romania to start your expansion well-informed.
Romania has the highest percentage of non-local European Union citizens in its workforce at 18% – a significant proportion of foreigners alongside Romanians that underlines the country’s attraction for international jobseekers.
In the southeastern corner of Europe, Romania is the region’s second-largest country and borders Bulgaria, Serbia, Hungary, Moldova, and the Ukraine. The Danube, one of the world’s iconic rivers, flows for 600 miles through the country into its delta on the western shores of the Black Sea.
Romania has mountain ranges – the Carpathians and Transylvanian Alps – with the name Transylvania forever associated with vampires and the infamous Count Dracula. There are forests and immense rolling plains.
The name ‘Romania’ was first used in 1859 and reflects the Roman Empire’s influence, which also stretches into the language’s Latin roots. Slavic, Greek, Turkish and Roma influences is also found in the official language.
As a member of the EU, Romania is part of the ‘freedom of movement for workers’ principle. Statistics from the EU in 2020 showed that Romania had the highest percentage of non-Romanian EU citizens in its workforce at just over 18%.
Romania’s natural beauty and rich heritage are primed for a developing tourist industry and services sector, while construction, architecture and design, IT, software, and hardware development are among the areas expected to generate the most employment opportunities.
Ready for the challenge? Now is the time to get down to business. So here are a few tips on taking the best steps and clearing those cultural barriers … and Romania has some unique etiquette nuances that could catch out western employees.
Language: Romanian is a Latin language, so has similarities with French, Italian, Spanish and Portuguese, while they are also familiar with English. Check beforehand the ‘business language’ for your meeting and engage an interpreter if deemed necessary
Punctuality: Being reasonably early will be appreciated for displaying a business-like attitude
Business Attitudes: Formal and largely hierarchical, showing respect for elders and superiors
Negotiations: Decisions tend to come down from the upper managerial levels. Although the collective view is valued, decision-makers will hold sway. Romanians are extremely business-savvy at the international level and will prepare meticulously for meetings and expect their counterparts to do the same. Be ready and be professional – they will be!
Greetings: Shaking hands, maintaining eye contact, and issuing a friendly ‘Buna ziua’ (Good day) is a suitable way to begin proceedings
Business Cards: Part of the introductory rituals
Dress Code: Initially, men and women should dress conservatively but this will relax to ‘business casual’ as the relationship develops, particularly for business lunches
Gift Giving: Modest but thoughtful gifts from the home country will be taken as showing an appreciation for international cooperation
Out of Hours: Business dinners, whether during negotiations or after sealing the deal can still be quite formal. Behave according to usual etiquette and if ordering a la carte do not go for the most expensive. Drink sensibly, or avoid alcohol altogether
Romania’s Minimum Wage
From January 2022 the minimum for full-time employees is RON 2,250 per month (€515, US$566), equating to RON 30,600 (€6,184, US$6,795) a year. Employees in the construction sector stayed at a monthly minimum of RON 3,000 (€606, US$666), the same as before January 2022.
Probation Periods in Romania
Permitted only once for each employment. Generally, for 90 days, they can be shorter if applied to fixed-term contracts or temporary employees. Probation periods for executives and managers can be for 120 days.
Working Hours in Romania
The working week is 40 hours over five eight-hour days and cannot normally exceed 48 including overtime unless there is an averaging agreement for no more than 48 over a four-month period. Workers must have 12 hours rest between successive working days and two successive rest days per week. Daily breaks are not generally paid, with their length determined by contract or collective agreement. In March 2022, proposals were announced to allow full-time employees to work four 10-hour days.
Overtime in Romania
Employers need employees’ written agreement to work overtime. Compensation is generally as paid days off within 60 days of working. Where impractical, employees are compensated financially at not less than 75% above their normal hourly pay rate. Overtime cannot exceed 48 hours per week and after working a 12-hour shift, employees must have 24 hours off. Under-18s, part-timers and pregnant employees cannot work overtime.
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