Challenges of the Knowledge Society (Jul 2015)
TAX OPTIMIZATION FOR BUSINESS START-UPS IN ROMANIA
Abstract
One of the most important early decisions for an entrepreneur is choosing the optimal form of organization for his business. According to the data provided by the Registry of Commerce, Romanian entrepreneurs usually choose between: Limited Liability Company (LLC) and Authorized Natural Person (ANP). LLCs offer liability protection for its owner. This advantage has made the LLC a popular business form for smaller companies, who don't plan to grow the business significantly. Newly set-up companies in Romania are required to apply the micro-companies revenues tax system starting with their first year of operation. For next years, this system is applied only if annual turnover does not exceed EUR 65,000. An individual can pursue an economic activity as an ANP. An advantage of the ANP is the reduced number of tax returns field. In adition, in certain circumstances, an ANP may opt for a very advantageous system of taxation of personal income tax, based on predetermined fixed income. Each one of these entities involves fiscal advantages and disadvantages, which we will try to highlight in this paper.
