📊 Tax

Running a Romanian SRL From Abroad: Tax Residency and Effective Management

Nobody at ONRC will ask where you live when you register a Romanian SRL, and nobody at ANAF will call you when you fly home and start running it from Berlin, Tel Aviv or Austin. That silence is the problem. Under Romanian law your SRL is a Romanian tax resident from the day it is incorporated — but the country where you actually sit and make decisions may reach the opposite conclusion under its own law, and it will do so years later, with interest and penalties attached.

This article is about that gap: what “place of effective management” means in practice, when a second country can claim your Romanian company, and what substance actually holds up versus what merely looks reassuring on a website.

Under Romanian law, the answer is simple

A company incorporated in Romania is a Romanian legal person and a Romanian tax resident. It pays Romanian corporate tax on its worldwide profit — 1% of turnover under the micro regime, or 16% of profit otherwise — files in Romania, keeps Romanian statutory accounts, and can obtain a certificate of fiscal residence from ANAF.

There is also no requirement that the administrator be Romanian or resident in Romania. A single non-resident shareholder-director is a perfectly ordinary structure, and we set them up routinely — see opening a company in Romania as a non-resident.

So the Romanian side of the question is closed. Everything that follows is about the other side.

The mirror rule: how Romania itself claims foreign companies

The most useful description of what “effective management” means is Romania’s own rule for the opposite case. Article 8^1 of the Fiscal Code lets ANAF treat a foreign company as a Romanian tax resident when its place of effective management is in Romania.

The evidence ANAF looks at is instructive, because it is the same evidence every other tax administration looks at:

• decisions of the shareholders or board establishing where management is exercised, and where those decisions are physically taken;
• actual use of premises in the country where management is claimed to be exercised;
• contracts with the executive directors or board members who exercise that management;
• the constitutive documents and an extract from the commercial register.

The process is formal: the company completes a questionnaire (introduced by Order 577/2021), ANAF analyses it and then notifies whether the company keeps its foreign residence or becomes Romanian resident. If it becomes Romanian resident, it must register with the tax authority within 30 days of that notification, keep Romanian accounting records and financial statements, register as a profit-tax payer, and maintain that residence for at least one fiscal year.

There is one more line in the Romanian rules worth quoting back at yourself: establishing tax residence in Romania must not be based on artificial arrangements designed to reduce tax that would otherwise be due in the other state. Read in reverse, that is exactly what a foreign tax authority will test when it looks at your Romanian SRL.

Where the real risk sits: dual residence

If you incorporate in Romania but manage from country X, two things can be true at once:

• Romania treats the company as resident because it was incorporated there.
• Country X treats the company as resident because it is managed and controlled there — the standard test in the UK, Ireland, Israel, Germany, Spain and many others, under various names.

That is dual residence, and it is resolved not by preference but by the double tax treaty between the two states.

Historically, the corporate tie-breaker in most treaties was a single objective test: the company is resident where its place of effective management is situated. Romania has, however, ratified the OECD Multilateral Instrument (Law 5/2022, instrument deposited on 28 February 2022) and the Ministry of Finance has published synthesised texts for dozens of Romania’s treaties. Under the MLI, the corporate tie-breaker in a covered treaty can be replaced by a mutual agreement procedure — the two tax authorities decide, case by case, taking effective management, place of incorporation and other factors into account, and until they agree the company may get no treaty relief at all.

Whether that change applies to your treaty depends on the positions both states took when signing. Do not assume either version. Check the synthesised text of the specific Romania–country X treaty before you build anything on the answer.

The quieter problem: permanent establishment

Dual residence is the dramatic scenario. The far more common one is a permanent establishment (PE).

Here the company stays Romanian resident — nobody disputes that — but because you carry on its business from a fixed place in country X, or because someone habitually concludes contracts there on its behalf, a part of the profit becomes taxable in country X as well. You then have Romanian corporate tax on the whole and foreign tax on the attributable slice, with relief mechanics that are rarely as clean in practice as they look in the treaty.

Typical fact patterns that create it:

• the sole director works every day from an apartment or co-working desk abroad;
• staff or long-term contractors are physically located abroad and do the core work there;
• sales are negotiated and closed abroad, with Romania only signing;
• a warehouse or workshop abroad does more than store goods.

A PE also brings foreign registration, filing and often payroll obligations. This is not exotic: it is the single most common way a “Romanian company” quietly becomes a compliance problem in the owner’s home country.

Substance that actually helps

Substance is not a logo on a door. What tends to matter, in rough order of weight:

1. Decisions taken in Romania, evidenced. Board and shareholder resolutions dated and signed in Romania, with minutes that show who was physically present. A resolution signed by DocuSign from another country proves the opposite of what you intended.
2. A director who is genuinely in Romania for the decisions that matter — either you, regularly and provably, or a real Romanian director with actual authority and remuneration.
3. Real premises. Not just a registered office address for service of documents, but space the company actually uses, if it claims management is exercised there.
4. People and function in Romania. The micro regime already forces at least one employee; if that employee performs real work in Romania, it helps twice.
5. Local banking, local contracts, local operations. Where the company bank account is opened and operated, where suppliers and customers are, where invoices are issued.
6. A residence certificate obtained and used, so that the Romanian position is documented before any dispute arises.

And what does not help: a nominee director who signs whatever is emailed to them, a virtual office used by four hundred companies, or board minutes written retrospectively in a single batch. Every one of those reads, to an inspector, as evidence for the other country.

Where this actually bites

Three practical situations, in ascending order of exposure:

Low. A genuinely Romanian operation — staff, customers, office in Romania — owned by a foreign shareholder who is not the operational manager. Ownership abroad does not move management abroad.

Medium. A one-person consulting or IT company where the owner-director splits time between Romania and another country. The outcome depends on facts and days, and it is worth documenting from the start rather than reconstructing later. If this is your setup, read micro-company vs profit tax alongside this — the tax saving you are protecting may be smaller than you think.

High. A holding or IP structure created specifically because Romanian rates are lower, with no people, no premises and no decisions in Romania. This is the profile that both the anti-artificial-arrangement wording and the treaty anti-abuse rules were written for. If you are building a Romanian holding company, build it with real function.

The other direction: your foreign company managed from Romania

The rule runs both ways, and this catches people who move to Romania while keeping a company elsewhere. If you relocate to Bucharest or Cluj and continue directing your Estonian, Cypriot or Delaware company from there, article 8^1 is aimed squarely at you: ANAF can determine that the company’s place of effective management is in Romania, require registration within 30 days of notification, impose Romanian accounting and profit-tax obligations, and hold that residence for at least a fiscal year.

Relocating your own life is therefore also a corporate tax event. Deal with it deliberately, not by hoping nobody notices the change of address.

Key takeaways

• An SRL incorporated in Romania is a Romanian tax resident and pays Romanian tax on worldwide profit; there is no Romanian-resident-director requirement.
• The exposure comes from the other country, which may claim residence based on where the company is managed and controlled.
• Dual residence is resolved by the treaty tie-breaker — and under the MLI, that tie-breaker may now be a mutual agreement between authorities rather than an automatic “effective management” test. Check the synthesised text of your treaty.
• Permanent establishment is the more common problem: the company stays Romanian, but part of the profit becomes taxable abroad.
• Romania applies the same logic in reverse under article 8^1, with a questionnaire, a notification and a 30-day registration deadline.
• Substance means decisions, people and premises in Romania, evidenced contemporaneously — not a nominee and an address.

Frequently asked questions

Do I need a Romanian director to open an SRL? No. A non-resident can be sole shareholder and sole administrator. The question in this article is not whether it is permitted, but where the resulting company is taxed.

Does spending a certain number of days in Romania solve it? Day counts are the test for individuals, not companies. For a company the test is where management is genuinely exercised — though in a one-person company your own presence is obviously part of the evidence.

Will ANAF tell me if there is a problem? Unlikely. The claim normally comes from the other tax authority, often triggered by your personal filings there, by automatic exchange of information, or by a bank’s reporting.

Can I get a Romanian certificate of fiscal residence for the company? Yes, ANAF issues one on request for a Romanian resident company. It documents the Romanian position — it does not by itself defeat a foreign residence claim, but you will need it in any treaty discussion.

Is this just a problem for aggressive structures? No. The most frequent cases we see are ordinary one-person service companies whose owner moved abroad and changed nothing else.

Get the structure to match the reality

The cheapest version of this conversation happens before incorporation, not after a foreign assessment. We set up Romanian companies for non-residents with the governance, premises and documentation that support the position you actually intend to take — see company formation in Romania and what compliance looks like after formation. Start here.