Lawyer’s analysis: Foreign Direct Investments in Romania in the context of the country rating downgrade (Fitch) (Statistics)

Foreign Direct Investments in Romania: Opportunities, Regulations, and Legal Assistance

Foreign direct investments in Romania play an essential role in the country’s economic development, significantly impacting job creation, technology transfer, and the strengthening of key sectors. However, global economic developments and the geopolitical context have influenced the flow of FDI in Romania in recent years. Although a decrease was recorded in 2023, Romania remains an attractive destination for foreign investments in Romania, offering a favorable legal framework and opportunities in various industries. The Romanian Law Firm Pavel, Mărgărit and Associates recommends that investors apply for specific legal consultancy services, including assistance with company formation, business structure optimization, mergers and acquisitions (M&A in Romania), FDI investment in Romania, real estate investing in Romania, intellectual property protection (patents, trademarks, copyrights), managing real estate transactions through a real estate lawyer in Romania, and ensuring compliance with local and international regulations. These services will help protect the interests and foster the development of investors’ businesses in Romania.

Statistics and legal status of Foreign Direct Investments in Romania (FDI investment in Romania)

In 2023, Romania attracted foreign direct investments in Romania worth EUR 6.748 million, marking a 36.3% decrease in the country rating (Fitch) compared to the previous year. This comes after two years of growth, following a record level of EUR 10.587 million in 2022. The negative trend is due to global trends and is mainly influenced by economic uncertainties and geopolitical tensions, generated by the prolonged war in Ukraine and the conflict in the Middle East. In this context, foreign investors in Romania and business investors in Romania have adopted a more cautious strategy regarding international expansion. The decline in FDI in Romania and foreign development investment in Romania brings Romania back to the levels of previous years. Between 2020 and 2022, the foreign investments in Romania increased steadily, from EUR 3.01 billion in 2020 to a peak of EUR 10.58 billion in 2022, followed by a significant decrease in 2023, when they reached EUR 6.74 billion.

Foreigners’ right to own property resulting from foreign direct investments in Romania

Foreign investors in Romania have the right to own and manage property resulting from foreign direct investments in Romania, benefiting from national treatment and free access to the domestic market. Investors can set up and manage businesses, participate in the economic circuit, and enjoy many other benefits. on the ownership of buildings and commercial assets, foreign individuals (foreign investors in Romania and business investors in Romania) cannot own land in Romania, but they can acquire it through a company established in Romania.

A real estate lawyer in Romania from The Romanian Law Firm Pavel, Mărgărit and Associates can offer essential assistance to foreign investors in Romania who wish to purchase, own or manage real estate in Romania. A specialized lawyer offers legal advice to foreign investors regarding the entire legislative framework applicable in Romania to avoid risks in transactions and beyond.

Double taxation conventions regarding FDI investment in Romania

Romania has signed several double taxation avoidance conventions and bilateral investment treaties, including with the United States, to support foreign direct investments in Romania and long term investment in Romania. These agreements provide clear rules for the taxation of income and investor protection, ensuring fair treatment and preventing double taxation.

Guarantees against expropriation and compensation

The legislation regarding foreign investments in Romania guarantees protection in the areas of nationalization, expropriation, and other equivalent actions, offering investors the possibility to choose the competent court for resolving any disputes. However, some claims related to properties nationalized during the communist period have not been resolved, which is why foreign investors in Romania and business investors in Romania should conduct a thorough check of the property titles issued to ensure that the properties are not subject to restitution claims. In the case of expropriation for public utility purposes, an expropriation lawyer in Romania from The Romanian Law Firm Pavel, Mărgărit and Associates can provide legal advice, assist in the correct evaluation of compensation, and represent the investors’ interests before the authorities, ensuring that the process is carried out in accordance with the expropriation law in Romania.

Protection provided to foreign investors through intellectual property rights in Romania

Romania has made significant progress in protecting intellectual property rights in Romania, aligning with European Union legislation and relevant international treaties. Foreign investors in Romania benefit from protection of foreign development investment in Romania for patents, trademarks and copyrights, and the country has adopted measures to improve transparency and enforcement. Romanian authorities work closely with international institutions to combat counterfeiting and protect intellectual property rights in Romania, including coordination with the European Commission and anti-fraud offices.

A corporate lawyer in Romania or business lawyer in Romania provides legal services for investors, including consultancy on business formation and structure, mergers and acquisitions (M&A in Romania), and intellectual property regulations. The team of lawyers at The Romanian Law Firm Pavel, Mărgărit and Associates assists foreign investors in Romania in protecting intellectual property rights, including patents, trademarks, and copyrights, offering solutions to prevent and manage disputes. Additionally, a corporate lawyer in Romania or business lawyer in Romania can provide legal assistance to investors in negotiating and drafting commercial contracts, complying with internal and international regulations, and optimizing business operations, ensuring a safe and compliant business environment for foreign direct investments in Romania and foreign investors in Romania.

Sectors and industries covered by FDI investment in Romania

 In Romania, foreign direct investments in Romania and long term investment in Romania play a significant role in the country’s economic development, contributing to job creation, increased exports, and the transfer of advanced technologies. FDI in Romania covers a wide range of sectors and industries, each having a significant impact on the national economy. Foreign investors in Romania have identified significant opportunities in diverse sectors such as IT, the automotive industry, energy and mineral resources, retail and commerce, healthcare, transportation and logistics and the financial and banking sector.

“Foreign direct investments in Romania are supported by a favorable legal framework that covers key sectors, offering investors a conducive environment for development and legal protection,” said Dr. Radu Pavel, the Managing Partner of The Romanian Law Firm Pavel, Mărgărit and Associates.

Romania continues to offer a favorable environment for foreign direct investments in Romania, through an adapted legislative framework and effective protection measures for investors. With diverse economic sectors and clear regulations regarding intellectual property rights, expropriation, and international treaties, the country remains an attractive place for investors in Romania who wish to expand their businesses. Adequate legal consultancy is essential to navigate these opportunities and minimize legal risks. The Romanian Law Firm Pavel, Mărgărit and Associates recommends turning to the services of a real estate lawyer in Romania, corporate lawyer in Romania, or business lawyer in Romania to ensure specialized legal consultancy tailored to the needs of each investor.

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.