- Overview: Romania
- Global HR Compliance
- Global PEO and Payroll
- Expand without a company set up
- Contractor vs. Employee: Which Is Better?
- Work Permit for Hiring Expats in Romania via PEO
Global Expansion Guide: How To Grow Fast and Eliminate Risks without a Company Set Up in Romania”
Become an international business and gain a presence in Romania without the risk or expense of setting up a company.
In this guide you’ll learn how to:
- Attract and compliantly pay commission-based sales reps
- Develop international sales and extra revenue opportunities, without setting up own companies overseas
- Enter more markets, test the markets before getting established there, and easily withdraw from the unattractive countries
- Avoid legal and compliance risks
- Design an efficient system of international sales with a strong team of global salesforces
Global PEO & EOR Partner in Romania – the Right Choice for Going Global
At Acumen International, we are committed to helping businesses expand their operations worldwide. With our expertise in global PEO and EOR services, we can help you conquer new markets and achieve your business goals. Our Global EOR service is ideal for companies looking to expand into Romania or other European countries. With our help, you can gain access to a skilled workforce, local knowledge, and competitive pricing.
Learn How You Can Expand Your Business Globally Through Employment Fast, Easily, And Risk-Free!
Risks and Drawbacks of Setting Up a Foreign Entity in Romania
Companies expanding their operations into new markets face the challenge of managing and scaling an employee base across multiple countries that may speak different languages. To successfully expand abroad, companies have several options for enabling hiring in international markets. The most commonly used ways are by doing the following:
- Establishing an overseas entity
- Selecting independent contractors to handle tasks remotely.
- Work with a Global EOR (Employer of Record) partner.
The global traditional expansion approach is setting up a legal entity in another country. The upfront costs are enormous and take months to set up. Setting up a foreign entity can be complex, with too many variables to capture here. Labor law, compliance regulations, company structures with dozens of employees, and economic landscapes can differ significantly when people operate across borders. However, if your aim is to operate in a single country for more than 5 years and employ dozens of staff, this option might be the best choice for you.
Hiring international employees requires you to be familiar with all local employment laws, tax calculations, and resident authorizations to run a successful business. In turn, this leads to more than just high expenses, but also creates additional work for your accounting, legal, and HR departments.
Until recently, the most common approach for global SaaS companies was to set up a foreign entity in every country they wanted to operate. This is still a viable option for companies looking to operate in that country for at least five years, who plan to employ dozens of people there, or who plan to acquire physical assets there. However, recent global trends have led many countries to halt the approval of new foreign entities, effectively shutting out new entrants.
Permanent Establishment Risk in Romania: Addressing the Concerns
You may think you can get away with conducting business overseas without registering a legal entity, but you would be wrong. You might need to register your business even if you're only sending an employee on a temporary assignment or establishing a small promotional office. Failing to do so can result in severe consequences.
Different countries have different laws regarding taxes, and a multinational company must take all of these into account when conducting business. The tax authorities of a particular country can determine which elements of the company's economic activity take place in a particular country and how much profit is attributable to them. This can be a complex process, but ensuring that the company complies with all applicable laws is essential.
Flying Under the Radar of Local Tax Authorities in Romania
An organization's physical presence in a country over a sustained period can trigger a taxable presence, or a "permanent establishment" (PE), in that country. This may occur if the organization generates revenue directly from activities in that country or if the organization's activities contribute to the revenue of a group entity in that country.
As an organization operating overseas, it is essential to be cautious of triggering a Permanent Establishment (PE) under local laws, as this can expose your company to unexpected tax liabilities, fines, and reputational damage. Failure to properly register a Permanent Establishment can have severe consequences for your business, so it is vital to understand the requirements of each country in which you operate.
Although the Organisation of Economic Co-operation and Development's (OECD) base erosion and profit shifting (BEPS) project has had many far-reaching outcomes, one of the most significant is the modification of the definition of a permanent establishment. This change has important implications for businesses operating in multiple jurisdictions, as it may affect their tax liability.
The OECD is using Action 7 of BEPS to tackle common tax-avoidance strategies used by multinational corporations to avoid paying taxes in the countries where they do business. The organization is trying to stop companies from sidestepping local tax authorities by establishing related distributors rather than agencies or commissionaires.
Make a Rapid Market Entry with a Global EOR. No Entity Required in Romania
The popularity of flexible and agile global employment models such as global EOR (Employer of Record) has also led many companies to look for more innovative ways to set up in other countries. Companies that want to establish a legal footprint in a new country are turning to more agile and faster approaches.
A Global Employer of Record allows companies to expand internationally without setting up a legal entity in their target market, including Romania. This makes it easier and less expensive for companies to do business in multiple countries risk-free. There’s no need to spend months or tens of thousands of dollars setting up a local entity in each target country. You can avoid the entity establishment cost, risk, and hassle by leveraging a Global Employer of Record in Romania instead.
Changing customer behavior and economic downturns have also made using the global EOR (Employer of Record) solution more efficient and expanding into local markets as needed. With this lightweight approach, you can launch your product directly into the Romanian market while avoiding tax and compliance risks and creating sustainable margins with reduced go-to-market costs.
A Global Employer of Record can help test the new markets without risk and unnecessary cost. Leveraging a global EOR arrangement gives companies the confidence to pursue growth opportunities internationally, knowing they can quickly exit any market if needed.
After you’ve decided to expand in Romania, hiring people to represent your company in the country is your next step. Employee onboarding and payroll in Romania bring with them specific legal procedures and norms that need to be observed by both employers. The legal procedure of company setup in Romania generally takes around 3 months. An important thing you need to consider is liquidation which might be needed if you find the market unattractive and want to withdraw. In some countries, the procedure is much more complicated than opening a business entity.
Top 3 Reasons to Choose Acumen Global Employer of Record & PEO in Romania
1. Legal Guidance by Acumen Global EOR & PEO Partner in Romania
As a business owner operating across national boundaries, you must know the employment-related aspects of business in a foreign country. There are multiple layers of regulation governing employee activities, which can be costly and time-consuming to navigate, particularly for small businesses. Ensuring the correct application of these laws will help reduce your company’s risks and costs – and ensure that you comply with the labor regulations. Acumen provides business advisory services to companies planning to expand into the Romanian market and assists global organizations in setting up, maintaining, and transitioning their operations in Romania.
2. Misclassification Risk Prevention with a Global Employer of Record in Romania
A global Employer of Record can help you prevent Employee misclassification risk in Romania and avoid expensive fines and lawsuits in Greece, so you can run ahead of changing regulations globally.
If you expand your business by hiring international independent contractors, be aware that their work might be too similar to what’s required of full-time employees according to local government regulations. This could put you at risk of violating employment and tax laws. To avoid penalties, consider hiring a global EOR (Employer of Record) company to manage your contractors in compliance with all applicable regulations in Romania.
Our team of HR professionals and legal experts will help you stay compliant, no matter where your employees or contractors are from.
3. Global PEO & EOR Services – 100% Global Employment Compliance in Romania
Hiring the right talent is a highly important procedure that’s why you need to be informed about local laws and regulations, maintain compliance with the labor, tax laws, and immigration regulations and ensure your business complies with local labor laws in Romania.
Addressing all these challenges would get your business off to a good start if solved correctly. That’s what you get with hiring via Acumen International, our Global Employer of Record and Professional Employment Organization (PEO). We help facilitate an extension of your HR department in Romania and solve all hiring-related issues. Our team helps you take care of employee setup, such as providing compliant employment contracts, payment processing, ensuring compliance, helping in communication with your newly hired employee, payroll management, etc., that helps you focus on what’s most important: the accomplishment of your business goals.
If you use an Employer of Record in Romania, regulation changes will not necessarily affect your ability to hire talent globally. No matter what changes come about, you can protect your company by leveraging a Global Employer of Record solution. This way, your employees can live where they are legally allowed to work and stay with your company.
7. Compliant Employment Contracts in Romania
Suppose you plan to expand business operations into Romania or the EU. In that case, you will inevitably need help creating compliant employment contracts for your workforce in Romania. If you want to learn about employment-related tax requirements, Acumen can provide comprehensive legal advice to help avoid legal pitfalls. Our service includes comprehensive employment consulting, including legal assistance with employment contract creation, according to Romanian labor law and tax regulations, mandatory employee benefits, vacations, social security contributions, tax deductions, withholdings, and more. By partnering with Acumen Global PEO & EOR, you reduce your dependence on local infrastructure and experts in these areas. Additionally, we offer assistance with other services that can reduce your expansion costs and hiring time by up to 80%.
Acumen International Employer of Record (EOR) in Romania can ensure that new hires comply with local laws and regulations and handle all contracting issues. With a Global Employer of Record, you can hire local and foreign workforce with locally compliant contracts and know that your intellectual property is protected.
Global Employment Services: How a Global PEO can Help You in Business Transition
Acumen International PEO offers a unique blend of experience and service suite, providing global employment opportunities that are genuinely global-ready. If your company is working in transition, such as going through an acquisition or merger, or if you are experiencing a company liquidation, Acumen International can find a legal and compliant solution to hire your employees—anywhere in the world! Many companies struggle with handling the employees being left behind during these times of transition. It's common for employees to feel insecure about their future employment prospects, particularly when they have been forced out of their positions.
This can also be problematic for companies, who will likely have open positions that need filling but still have lingering contracts to fulfill. In both cases, having a resource like Acumen International PEO can ensure that the company's business continues without being negatively affected by the change. When you're working with Acumen International, we take care of all the paperwork and legal obligations so that you can focus on completing your transition plans. We also handle everything from payroll, benefits, and even full payroll tax administration for all our employees worldwide. This gives employers peace of mind that all of their global obligations are fulfilled while allowing them to focus on their transition plans.