Law Firm Adela Diaconescu - Real Estate Acquisitions

Investing in Romania
Real Estate Acquisitions
Debt Collection
Accounting Rules
Taxation
Payroll Issues

I. REAL ESTATES

1. Houses/apartments: A foreign entity can buy houses or apartments, with only a right of use on the land underneath, without any restriction. However, this is not a usual case, because most of the properties are sold all together, both house and land, as the owner has no interest in keeping the land with no charge for the house-owner.

2. Lands:
2.1. Residential (including lands underneath the houses/apartments, used for residential purposes by persons or for secondary office by companies): Law no.312/2005 mentions that foreign entities non- residents in Romania can own this kind of land in Romania only 5 years after Romania joining the E.U. The foreign citizens rezidents in Romania (having a residence permit) can own residential lands in conditions similar to that appliable to the Romanian citizens.

2.2. Agricultural (including forests): The same law mentions a 7 year term, after Romania joining the E.U., in order for the foreign entities, either residents or non-residents in Romania, to own this kind of land in Romania.

II INVESTMENT VEHICLE

Therefore, in order for a foreign entities to invest in Romania by buying real estate, we advise them to establish a company in Romania, which will be a Romanian entity owned entirely by the foreign entity.

Otherwise, if you can justify another purpose for staying in Romania for more than 90 days, you may get a residence permit, allowing you to own residential lands in Romania

We present you below a few things you should know related to the setting up and running a company in Romania, with the mention that we refer only to the SRL companies (limited liability companies).
There are also SA companies, but we do not find them appropriate for the purpose of small investments; these are large companies, listed on the stock exchange, with specific requirements regarding the share capital, the administration of the company, and also various reports to state institution. Of course, if an investor is interested in this kind of endeavour (getting money from the stock exchange) we can present him with everything needed for this purpose.

1.For the setting up of a company, one needs:
a. A name (not similar to the names of other Romanian companies);
b. A shareholder (at least 1 and at most 50). It is more efficient to have a natural person as a shareholder, but we can use also foreign companies. Also, you must know that you can be sole shareholder only in one Romanian company.
c. A share capital (minimum 200 RON, which is around 70 EUR).
d. Head Office: you may rent a place from someone you know in Romania, or we may find someone to rent you a place for a minimum amount (around 20 EUR/month). HO will only be set for the purpose of setting up the company; no activity will take place there. If you envisage to actually running an activity in Romania you must change HO to a proper place.
e. An administrator: the shareholders may be administrators, all or only one of them; companies may be administrators of a company, but they must appoint a natural person as representative. The administrator is the one responsible for the company, signing the financial statements, the contracts, and any document of the company.

The time limit for setting up a company is 10 days since the day you have all the documents requested by the lawyer.

Last, but not least, for a more efficient procedure, it is better for you to come to Romania for two or three days in order to personally sign all the requested documents.

2. After the company is established, you will face some issues, as follows:
a. The bookkeeping: the company, even if it has no activity other than buying real estate, must keep its books, periodically report to the state institutions, operate the accounts, etc. For this purpose, you must appoint an accountant. The cost of the accountancy work, for a company without any other activity, will be around 50 EUR.

b. Buying real estate: there are two things of interest for you as a foreign investor:
     i. The investment itself: you will have to transfer the money to your Romanian company, who will then pay the price. For this purpose, you need to sign a loan contract with your company that will be reported to the National Bank of Romania, as a foreign currency loan. There are other ways of transferring the money to the company (as share capital increase, etc.) but we will advise you on every individual case.
     ii. The sale and purchase contract: you may be here in person or you may want to give someone a POA to buy or sell for you properties in Romania. The POA must be as large or limited as you want (regarding the price limit, the nature of the real estate, etc.). Also, it is advisable to have a lawyer counselling on the transaction.

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