Romania Economy Overview

Currency

Romanian Leu (RON)

Working hours

40 hours/week

Public/bank holidays

15 public holidays

Capital

Bucharest

Languages

Romanian

Population

19 million

Minimum hourly salary

RON 15.25 (varies slightly depending on industry and specific agreements)

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Employers in Romania who misclassify employees as independent contractors may face substantial penalties, including the requirement to pay back taxes, fines, and additional charges.

Fun fact

Romania is home to the world’s heaviest building, the Palace of the Parliament in Bucharest, which holds this title in the Guinness World Records.

Home to almost 20 million people and a skilled labor force of over eight million, Romania is a Balkan state that gained independence from the communist Soviet Union after a revolution in 1989. The 35 years since have seen the free market economy in Romania develop quickly. The country became a member of the EU in 2007, giving it access to the largest single market in the world, with a population of more than 440 million. In 2024, Romania also joined the Schengen area, allowing borderless travel between 29 countries and over 1.7 million square miles of land.

It is geographically located between the EU nations, Eurasia, and the Middle East. It is home to the Danube Delta’s southern portion and has the Black Sea’s largest harbor. Significant EU investment has been committed to improving the infrastructure of Romania by 2027, alongside initiatives to improve the country through tax reform, fiscal strengthening, and the transition to green energy and decarbonization.

Overview of Romania's Economy

With a GDP of $351 billion, Romania is the 12th biggest economy in the EU. Except for 2020, when the COVID-19 pandemic impacted the global economy, its GDP has grown yearly since 2011. Though the last two years have seen a slight slowing in this growth, Romania is expected to regain momentum in 2024 after stimulating significant private investment and joining Europe’s borderless Schengen area.

Romania enjoys a high-income economy that blends both public and private investment and ranks in the top third of the world on the United Nations Human Development Index. 

Economic SectorSignificance
ExportsRomania’s exports are a major driver of economic growth, led by electrical machinery, automotive components, mineral fuels, and metals such as iron and steel. The country’s strong industrial base and strategic location in Eastern Europe make it a key exporter to EU markets.
IndustryIndustry remains one of the pillars of Romania’s economy, contributing significantly to GDP and employment. Key areas include automotive manufacturing, machinery, energy production, and chemical processing.
AgricultureAgriculture plays an important role in both domestic consumption and exports, with Romania being one of Europe’s leading producers of grains, fruits, and livestock. The sector also benefits from EU agricultural subsidies and modernization initiatives.
TourismTourism is steadily expanding, supported by Romania’s cultural heritage, medieval towns, and natural attractions such as the Carpathian Mountains and the Black Sea coast. Continued investment in infrastructure and hospitality is boosting its international appeal.

Taxes

Employer Tax: 2.25%

Labor Insurance Contribution

2.25%

Employee Tax: 35%

Labor Insurance Contribution

25%

Health Insurance Contribution

10%

Income Tax

Romania has a flat income tax rate of 10% on all income

Business Regulation in Romania

Supplemented by EU regulations, the Labor Code of Romania provides a framework of guidelines that govern all business and employment regulations within the country. These regulations are designed to allow free enterprise while protecting the rights of workers employed by both local and global businesses. In addition to a minimum wage, which rose to RON 3,300 (approx. $750) per month in 2023, businesses in Romania are obliged to make social security contributions on behalf of every employee, including pension contributions totaling 25% of gross salaries. They must also pay 2.25% in health insurance contributions, 10% for unemployment, and 0.5% toward work accident and occupational disease insurance.

Romanian employees are legally entitled to paid leave for public holidays, sickness, maternity, paternity, marriage, bereavement, and at least 20 days of vacation every year. The standard working week is set by Article 115 of the Labor Code of Romania at 48 hours every seven days, and overtime is capped at eight hours. In addition to its obligations towards employees, every business in Romania is subject to corporate income tax of 16% and VAT of 19%, though these can be reduced in certain circumstances as incentives for, among other things, reinvesting profits and driving innovation.

Benefits of Doing Business in Romania

As a growing economy with full EU membership and borderless travel within the Schengen area, Romania has many advantages for businesses seeking to expand into Europe. It is well connected, with several ports and easy access to both Europe and Central Asia. It also boasts low average wages and low living costs, which aids with cost-effective recruiting and relocation for global employees.

Romania is fiscally stable and has one of the smallest corporate tax burdens in Europe, particularly for small companies with low turnovers. It has a well-connected infrastructure, including high internet speeds, and is committed to the continued development of its transport networks. For investors seeking to establish a business in a relatively low-cost location with a well-educated labor force and access to the world’s largest trading bloc, Romania is a nation with huge and growing potential.

Business Expansion Options in Romania

In recent years, Romania has refined the process of starting a business within its borders. Sometimes, this can be completed within just a few days. Several different entities can be established in Romania, but the most common are limited liability companies (LLCs) and branch offices. Each has its benefits and restrictions, as well as specific registration requirements.

Romania Employer of Record (EOR)

An EOR is a complete service that acts as a recruitment agency and human resources manager and as a surrogate entity within Romania. This allows a business to outsource its hiring operations, including all liability for compliance with regulations, while also avoiding the need to establish an entity of its own. 

An EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to focus on their core activities. They may also provide additional services, such as visa support. 

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Recruitment Agencies

Recruitment agencies in Romania help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Romanian labor laws.

For businesses looking to grow in Romania, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

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Romania Professional Employer Organization (PEO)

While Romania has taken steps to facilitate foreign business investment and simplify the registration process for any kind of company entity, the combination of evolving local laws and wider EU regulations can create some challenges. Rather than dedicate the significant resources needed to navigate this independently, many businesses choose to work with a specialist service such as a Romania Employer of Record (EOR) or Professional Employer Organization (PEO).

Partnering with a Professional Employer Organization (PEO) allows companies to employ local staff in Romania without the need to establish a legal entity. This approach is quicker and less expensive, making it ideal for businesses testing the Chinese market or those with limited operations. PEOs handle administrative tasks and ensure that companies comply with Chinese regulations, reducing the complexity and risk associated with hiring local employees. 

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Subsidiary Incorporation

Known in Romania as a societate cu raspundere limitata (SRL), an LLC can be formed with a minimum of one shareholder and a maximum of 50. Capital should be divided into equal shares, each with a value of at least RON 1. Romania does not require the directors of an LLC to be citizens of the country, making it a popular choice for foreign businesses.

An LLC is often chosen as it allows the company to operate freely within Romania and, by extension, the EU while protecting its shareholders and any parent company from liability for the company’s debt beyond their investment.

Branch Registration

Basic registration for a branch in Romania should only take a few days but can sometimes stretch to two or three weeks. However, there are fewer requirements for establishing a branch.

For instance, a branch does not need share capital or shareholders. The person(s) opening it must simply submit a special declaration, a company decision, and proof of rights to use the chosen premises to the Trade Registry.  A branch must operate in line with the activities of its parent company, whose shareholders and directors will be held wholly liable for any and all debts accrued by the branch within Romania.

Business Opportunities in Romania

Having transitioned relatively recently from being part of the Soviet Union to a free market, Romania is a continually growing economy that has been boosted in the 21st century by joining the EU and, more recently, the visa-free Schengen area.

With a large skilled labor force, a relatively low average wave, and a strategic position on the Danube’s Black Sea Delta between Europe and Central Asia, it makes an ideal entry point for global businesses seeking to expand into Europe.

Business OpportunityReasons
IT and Software DevelopmentRomania has emerged as a leading destination for IT and software development outsourcing, thanks to its highly skilled and multilingual IT workforce, competitive labor costs, and strong technical education system. The country’s thriving tech startup scene, coupled with government support for innovation and digital transformation, presents opportunities for investors in areas such as blockchain, AI, and cybersecurity.
Automotive ManufacturingRomania has a well-established automotive manufacturing industry, with a strong presence of global car makers and suppliers. The country’s strategic location, competitive costs, and skilled labor force make it an attractive location for automotive investment. There are opportunities in vehicle assembly, component manufacturing, and R&D, particularly in the growing field of electric and autonomous vehicles.
Renewable EnergyRomania has significant potential for renewable energy development, particularly in wind, solar, and biomass. The country’s favorable geographic conditions, coupled with supportive government policies and EU funding, present opportunities for investors in renewable energy projects, equipment manufacturing, and energy services.
Agriculture and Food ProcessingRomania’s vast agricultural land and diverse climatic conditions make it a prime location for agribusiness investment. The country is a major producer and exporter of grains, oilseeds, and livestock, and there are opportunities for value-added food processing and organic farming. The growing demand for sustainable and healthy food products in Europe presents further potential for investors in this sector.
Tourism and HospitalityRomania’s stunning natural beauty, rich cultural heritage, and improving infrastructure have boosted its appeal as a tourist destination. There are opportunities for investors in various segments of the tourism industry, such as luxury hotels, eco-tourism, and adventure tourism. The country’s growing popularity among international travelers, coupled with government efforts to promote tourism, present significant potential for growth in this sector.

A low tax policy and well-connected infrastructure add to the advantages for foreign businesses looking to do business in Romania and, by extension, the wider European markets.