Fiscal measures package 2: New cases when companies can be declared inactive in Romania

Major risks for companies: lack of a bank account or failure to increase share capital lead to tax inactivity in Romania

Fiscal Measures Package 2 has introduced new situations in which a company can be declared inactivity. According to the Fiscal Procedure Code and the adopted amendments, the lack of an active bank account, failure to fulfill declarative obligations, or missing deadlines for submitting financial statements can lead to inactivity for a romanian company. This is particularly relevant for entrepreneurs who are at the initial stage of starting up your own business or the process of start a business in Romania, as the new rules affect not only large companies, but also small firms or a newly formed SRL.

Concepts such as company formation in Romania, starting up your own business, or even set up a company are no longer mere administrative procedures, as they now require compliance with new fiscal legislation. In this context, consulting a business lawyer or commercial lawyer is essential, as they can guide entrepreneurs throughout the entire company formation in Romania process and explain the long-term impact of these new regulations.

One of the most important changes for entrepreneurs is the obligation to open and maintain an active bank account. Failure to maintain a bank account can result in the company being declared inactivity, triggering serious fiscal consequences. Similarly, failure to properly perform share capital contributions or comply with share capital increase requirements can turn a functional romanian company into a financially blocked entity.

To mitigate these risks, entrepreneurs must understand that maintaining the minimum share capital and complying with the deadlines set by tax attorney authorities such as ANAF are mandatory. Consulting a business attorney or a lawyer for taxes can provide practical solutions to prevent potential blockages. For those engaging in starting up your own business, whether via company formation in Romania, infiintare PFA, or start a business in Romania, it is crucial to complete all initial formalities to avoid entering a state of fiscal inactivity. Similarly, the process of share capital reduction must be managed carefully to avoid losing fiscal status.

Obligation to open and maintain an active bank account – reason for tax inactivity

New fiscal changes stipulate that start a business in Romania or company formation in Romania must be accompanied by the opening of a bank account. Failure to comply is sufficient for ANAF to declare a company as inactivity. It is important to maintain this bank account active for the entire existence of the company, to avoid fiscal consequences.

Having an active bank account is essential for participating in tenders, conducting transactions, and accessing loans. Any romanian company, whether in set up a company or expanding an existing business, must comply with this requirement. Consulting a corporate lawyer or a business attorney is necessary to fully understand the legal framework and the mechanisms to avoid being declared inactivity by ANAF.

Share capital increase in three stages – penalties for non-compliance

Another new provision of Fiscal Measures Package 2 is the obligation to increase share capital based on the company’s annual turnover. The government has established an exception: existing romanian companies are not required to immediately increase share capital, but only when their annual turnover exceeds 400,000 RON. For newly formed companies, the new rules for minimum share capital apply: 500 RON for microenterprises and 5,000 RON for companies exceeding this threshold.

Legislation also allows for gradual increases of share capital, up to 90,000 RON for large companies. The process of share capital contribution and meeting compliance deadlines are strict requirements. Any company failing to comply can be declared inactivity.

For those at the beginning of their journey, whether starting up your own business, company formation in Romania it is essential to be aware of all recent changes. A business lawyer or commercial lawyer can explain the steps, including proper share capital contribution and necessary filings with the Trade Register.

Other causes of tax inactivity: expired registered office, lack of statutory bodies, inactivity declared at the Trade Register

Beyond the lack of a bank account or failure to comply with share capital increase, there are other causes for inactivity. These include an expired registered office, absence of statutory bodies, or a declared pause in the Trade Register. Non-compliance with declarative obligations for a semester also leads to being declared inactivity.

Expiration of the registered office is one of the most frequent causes of inactivity for an SRL. When a lease or property title used for starting up your own business or company formation in Romania reaches its term, it must be renewed and updated in the Trade Register. Without this update, ANAF may consider the company invalid and list it as inactivity. This can affect operations and even prevent bank account opening.

Similarly, statutory bodies are crucial. A romanian company without administrators or required boards cannot operate legally. Failure to maintain these, if not updated in the Trade Register, leads to inactivity. These rules concern not only large companies but also a newly formed SRL where timely reporting of administrators is required.

Regular document updates and consultation with a business attorney or corporate lawyer are recommended to ensure a company remains compliant. Periodic tax attorney checks and lawyer for taxes guidance help prevent fiscal blockages and ensure proper filings in the Trade Register

Consequences of being declared inactive – VAT code cancellation, inability to deduct expenses, and risk of deregistration

Being declared a company inactivity produces immediate consequences. One major effect is the cancellation of the VAT code, which restricts commercial activities and financial transactions. Authorities may revoke VAT registration ex officio in specific legal circumstances.

A company becomes inactivity if it fails to submit obligations, evades fiscal inspections, or provides inaccurate fiscal domicile information. The VAT cancellation date corresponds to the notification of the inactivity decision by ANAF.

“In the context of new regulations regarding share capital increase and obligations to open a bank account, as well as the consequences of being declared inactivity, companies must strictly adhere to all legal deadlines and procedures. Non-compliance may result in VAT code loss, inability to deduct expenses, and even deregistration from the trade registry. Observing these requirements is not merely formal but a crucial protection against fiscal and administrative risks,” said Coordinating Lawyer of the Romanian Law Firm Pavel, Mărgărit & Associates, Dr. Radu Pavel.

Companies can regain VAT status if the cause of cancellation ceases. Reactivation occurs through a fiscal authority decision or by registering the resumption in the Trade Register. A periodic tax attorney or lawyer for taxes check ensures that all fiscal obligations are cleared before reactivation.

Furthermore, a company cannot deduct expenses incurred during inactivity, impacting profitability and financial planning. Long-term inactivity risks deregistration from the Trade Register, bank account blocking, and inability to conduct commercial transactions. Entrepreneurs engaged in company formation in Romania, starting up your own business, or start a business in Romania are advised to work closely with a business lawyer, commercial lawyer, or tax attorney.

Pavel, Margarit and Associates Law Firm is one of the top law firms in Romania, providing high-quality legal services. The firm’s clients include multinational and domestic companies of great magnitude. In 2024, the law firm’s success stories brought it international recognition from the most prestigious international guides and publications in the field. As a result, Pavel, Margarit and Associates Law Firm ranked 3rd in Romania in the Legal 500’s ranking of business law firms with the most relevant expertise. The law firm is internationally recognized by the IFLR 1000 Financial and Corporate 2024 guide. Additionally, Pavel, Margarit and Associates Law Firm is the only law firm in Romania recommended by the international director of Global Law Experts in London in the Dispute Resolution practice area. All relevant information about Pavel, Margarit and Associates Law Firm can be found on the website www.avocatpavel.com.