What is the difference between a branch and a subsidiary in Romania?

A branch (sucursală) is an extension of the parent company — it has no separate legal personality and the parent bears unlimited liability. A subsidiary (filială, typically an SRL) is a separate legal entity with limited liability, its own tax registration, and independent management. The subsidiary protects the parent from Romanian liabilities.

What should a jurisdiction assessment consider?

An individual assessment considers activities, governance, residency, registration requirements and the applicable tax rules.

Can a Romanian branch benefit from the 1% micro-enterprise tax?

No. Branches of foreign companies are taxed at the standard 16% CIT rate. Only Romanian-incorporated entities (SRL, SA) can qualify for the 1% micro-enterprise regime. This makes subsidiaries significantly more tax-efficient for most foreign investors.

When should I choose a branch over a subsidiary in Romania?

A branch is preferred when: (1) the activity is temporary or project-based, (2) you need to consolidate profits directly with the parent, (3) the parent company can offset Romanian losses against home-country profits, or (4) regulatory requirements demand a branch structure (e.g., certain banking/insurance activities).

What are the tax implications of a branch vs subsidiary in Romania?

Subsidiary (SRL): 1% micro tax (under €100K revenue) or 16% CIT + 16% dividend WHT. Branch: 16% CIT on Romanian-source income, profits can be repatriated without dividend WHT but may be subject to PE taxation in the parent's country. DTAs affect both structures differently.

Can I convert a branch to a subsidiary later?

There is no direct legal conversion mechanism. You would need to incorporate a new SRL, transfer assets/contracts from the branch to the subsidiary, and then deregister the branch. We handle this transition process regularly for foreign clients — typical timeline is 4-6 weeks.

2026 Guide

Decision Framework

Branch vs Subsidiary in Romania

The structure you choose affects your tax rate, liability exposure, and operational flexibility. Only subsidiaries qualify for Romania's 1% micro-enterprise tax.

Branch vs Subsidiary — Key Differences

Feature	Branch	Subsidiary (SRL)
Legal Personality	None (extension of parent)	Independent entity
Parent Liability	Unlimited	Limited to capital
Corporate Tax	16% CIT only	1% micro or 16% CIT
Micro-Enterprise Eligible	No	Yes (under €100K)
Min Capital Required	None (parent's capital)	RON 1 (€0.20)
Formation Time	2-4 weeks	3-5 business days
Document Requirements	Heavy (apostille, translations)	Minimal
Profit Repatriation	Direct (no WHT)	16% dividend WHT
Loss Offset with Parent	Possible (via DTA)	Not possible
Best For	Temporary/project-based	Permanent operations

When to Choose Each Structure

Choose a Branch When:

Activity is temporary or project-based (under 2 years)
You need to consolidate Romanian losses with parent profits
Regulatory requirements mandate a branch structure
You want direct profit repatriation without dividend WHT
The parent company can absorb potential unlimited liability

Choose a Subsidiary When:

You want the 1% micro-enterprise tax (16x lower than branch CIT)
Liability protection is important for the parent company
The Romania presence will be permanent
You need independent contracts, IP ownership, or local partnerships
Revenue will be under €100K (micro-enterprise eligibility)

How to Decide: Step-by-Step

Assess your business objectives

Determine if your Romania presence is permanent or temporary. Evaluate liability exposure, tax optimization needs, and whether you need independent legal personality.

Compare tax implications

Subsidiary: 1% micro tax (if eligible) vs Branch: 16% CIT. Factor in dividend WHT (16% for subsidiary, reducible via DTA), transfer pricing rules, and DTA provisions with your home country.

Evaluate liability and governance

Subsidiary limits parent liability to invested capital. Branch exposes parent to unlimited liability for Romanian operations. Consider IP protection and contractual isolation.

Review regulatory requirements

Some industries (banking, insurance, certain EU licenses) may require specific structures. Check if your sector has branch or subsidiary mandates in Romania.

Prepare documentation

Subsidiary: Articles of Association, shareholder resolution. Branch: Parent company registration documents, board resolution, apostilled translations. Both need a Romanian registered office.

Register and become operational

Subsidiary: 3-5 business days at Trade Registry. Branch: 2-4 weeks including document legalization. Both require fiscal registration and potentially VAT registration.