Per a very recent article published in the English version of Ziarul Financiar, the top 2 leading Romanian Real Estate agencies are Colliers and respectively Eurisko. Ziarul Financiar also specifies that the 2 agencies have increased their figures from to 22 million euros and 12 million euros respectively. Other 2 Romanian real estate agencies in the top five are Cushman & Wakefield and DTZ Echinox, with figures around 5 million.
Usually top real estate agents in Romania handle the sale of the biggest office and residential developments in Romania such as off-plan apartments etc, area which practically exploded this year. Although according to Ziarul Financiar, the top 2 real estate agencies in Romania plan to a growth of 30% or even more in 2008, there still has to be seen the effect on the market of the new law changing the VAT payment regulations for Romanian real estate properties.
Friday, November 23, 2007
Tuesday, November 6, 2007
VAT to be paid when purchasing property via a Romanian company
It seems that the Fiscal Romanian Law has changed (again) for the worse from the point of view of local and foreign real estate investors. From now on Romanian companies will have pay Value Added Tax when purchasing Romanian property from another local company.
Also for all those foreign investors who already purchased off-plan apartments through a Romanian company and have not already paid the entire amount, will have to pay 19% VAT for the remaining amounts.
The only hope we have is that the law will ... change. Again. Which actually is quite realistic.
Also for all those foreign investors who already purchased off-plan apartments through a Romanian company and have not already paid the entire amount, will have to pay 19% VAT for the remaining amounts.
The only hope we have is that the law will ... change. Again. Which actually is quite realistic.
Monday, November 5, 2007
The guide to middle and small-sized foreign investors in Romania
Making a decision to invest or not to invest a new Eastern European EU member such as Romania is obviously not a problem for large investors. They have the financial power and the logistics to gather information from a variety of sources, including special attention from the local authorities.Things tend however to get more complicated when it comes to small and middle-sized foreign investors. These investors have limited means of gathering information vital for making taking a decision to expand or not to expand to the new Romanian market. This article is a short guide for those who need to find out how they can obtain information about Romania in order to take the right business decision.If you are just thinking about expanding to Romania , then you can start by reading some official documentation on the country on http://www.arisinvest.ro, the website of the Romanian Agency for Foreign Investment. There is some interesting information on public-private partnerships, taxation, information about existing infrastructure, human resources and statistics of foreign direct investment in Romania .Of course, the website only contains general information. Another more useful resource would be http://www.aneir-cpce.ro, the Foreign Trade Promotion Centre S.A., a non-governmental trade promotion organization. This website contains an economic profile of Romania , statistical information on Romanian wages, business environment information and some important Romanian laws in English (such as the Romanian Company Law no. 31/1990). Another place you can find Romanian commercial laws translated in English is http://www.lexadin.nl/wlg/legis/nofr/eur/lxwerom.htm including Romanian Trade Register laws.And that’s about it with official or semi-official resources, time to get some practical help! Once you have a basic idea on how you want to proceed then it’s probably time make a few contacts who help you with the Romanian start-up. An idea would be to visit www.RomanianLawOffice.com, the website of a Romanian Law Firm specialized in assisting foreign investors in the country. Their website also contains quite a few articles on Romanian legislation. Whatever their website does not contain you can probably obtain by dropping them a quick email. They would be able to advise you about on-going costs when owning a Romanian business and related legal aspects. There is also the need of hiring a local Romanian accountant ( send us an email at theromanianclub@yahoo.com to recommend you an accounting company with important experience dealing with foreign investors). There is also another matter to take into account: for some activities the Romanian law requires certain permits from different authorities. An example would be the establishment of recruiting companies in Romania . Obtaining these type or permits is almost never a straightforward experience so it would probably be advisable to hire a Law Firm to handle interactions with the respective authorities.
Obtaining an office address in Bucharest, Romania
Romanian Law requires having a Romanian office address for the formation of any Romanian company, no matter if the shareholders are locals or foreigners. This address obviously has influence on where the company is registered (for example it’s impossible to register a company outside Bucharest with a Bucharest address) and it also has influence over the respective tax administration offices.Downtown Bucharest probably represents the best location for your office if planning to have activity implying interaction with customers. Victoriei Plaza, Romana Plaza, Universitatii Plaza, Unirii Plaza, Constitutiei Plaza (where the “House of the People” is located).
The headquarters may be established in any location (based on a rent, sub-rent, purchase etc).
The Romanian Trade Register will require a number of documents related to your registered office in Bucharest such as: sale-purchase contract, rental or sub-rental contract or a contract of commodate. It depends on the specific type of building whether they will ask for more when incorporating your company, but if you’re renting or buying in a residential block, you will also have to provide an approval from the building’s administration and approvals from your top/below/left/right neighbors.Usually the rent in Bucharest for older apartments is around 350 EURO / month. Downtown, the price goes higher from 500 up to 2000 EURO. Another choice could be renting an office space in a new building. The starting price for this is about 10 EURO / sqm, and goes up to 20 EURO / sqm in downtown.
If you don’t have the possibility buy or rent a location for your registered head office your Romanian legal counsel can provide this (E.g.: www.RomanianLawOffice.com), in a contract valid for one year. At the end of that year the contract can be prolonged for another year and so on.
The headquarters may be established in any location (based on a rent, sub-rent, purchase etc).
The Romanian Trade Register will require a number of documents related to your registered office in Bucharest such as: sale-purchase contract, rental or sub-rental contract or a contract of commodate. It depends on the specific type of building whether they will ask for more when incorporating your company, but if you’re renting or buying in a residential block, you will also have to provide an approval from the building’s administration and approvals from your top/below/left/right neighbors.Usually the rent in Bucharest for older apartments is around 350 EURO / month. Downtown, the price goes higher from 500 up to 2000 EURO. Another choice could be renting an office space in a new building. The starting price for this is about 10 EURO / sqm, and goes up to 20 EURO / sqm in downtown.
If you don’t have the possibility buy or rent a location for your registered head office your Romanian legal counsel can provide this (E.g.: www.RomanianLawOffice.com), in a contract valid for one year. At the end of that year the contract can be prolonged for another year and so on.
Quick guide when purchasing Romanian real estate
Investing in real estate in a foreign country always implies thorough planning. There are quite a lot of decisions to be taken and many of them have to taken in a short amount of time, often after only one visit to the respective country. There is also not much time to find and compare prices for similar property thus there is a risk of buying an over rated piece of property (among many other risks). It would probably be best to explain the process one step at a time:Choosing the type of real estate. You know you want to buy Romanian property, but you are not yet sure if it’s going to be land for future development, an apartment, a house etc.This depends on a multitude of factors; the most important being how much money you have available. At this type probably the most financially beneficial investment would be building a block of flats or a suburban development somewhere near Bucharest or another large city like Cluj, Iasi etc. Another good investment for the future would be purchasing one or more apartments – off-plan or not - (especially in Bucharest ) or even an old house in the city center for future renovation. Of course all this depends on how much time you are willing to invest in the Romanian project(s).Another decision that has to be taken is what agent you are going to work with. There is the possibility of working with a Romanian real estate agency, a Romanian branch of an international agency or a foreign real estate consulting company. There are quite a few Romanian agents available online through a simple Google search or just check our link page here. A Romanian branch of a foreign agent (like www.colliers.ro) would have the advantage of being trustworthy and more experienced in working with foreigners. The third choice would be working with a foreign consulting company. There are more and more of those working on the Romanian market (an example would be http://www.romanianpropertiesltd.co.uk ). Most of these have the advantage of already having local contacts such as agents, lawyers or even local employees. Obviously the disadvantage is that these intermediaries will charge an extra fee (mostly a percentage of the purchase price). The third decision that would have to take is choosing local lawyers to assist or represent you in the purchase. We can recommend Ionita, Enescu & Cuc for both incorporating a Romanian company and actual assistance. You must note that the presence of the buyer in Romania is not necessary when signing the sell/purchase contract; a lawyer would be able to sign in your name with the help of an official Power of Attorney. Once the contract is signed you will still have to find a local accountant to handle bookkeeping for your Romanian company and decide what to do next with your property. You can email us to provide you with contact details of a local accountancy firm; while deciding how to proceed regarding your property depends on the your type of property:- land for development: supposing you already made due diligence before you purchased the land and know details such as percentage of the land which can be built upon, height limitations (if not you can contact a Romanian real estate Law Firm here) la etc., you will have search for Romanian constructions companies to give you fee quotations. We believe it would be absolutely necessary to travel to Romania and meet with more than a few constructors as prices might significantly differ- apartment in a block of flats: you should probably contact a Romanian real estate management company, they could rent the apartment for you and you could start gaining profit. A company offering this service is http://www.therightmoveabroad.co.uk. - Old house situated in the city center: you would still have to contact a construction company for renovation or even reconstruction of old architectural elements. This latter procedure would prove to be expensive but very much worth it in the near future.
Recruiting Romanian personnel
There probably are 3 important types of foreign investors in Romania: those interested in real estate, those interested in Romania’s market potential and those looking to reduce costs by expanding into low salary zones such as Eastern Europe. For this last type of investor there are some questions to be raised:
Is it worth it? What are the real salaries in the field I am interested in?
What are the same salaries in other similar countries?
How can I gather information before making a decision?
Do I have the big picture?
Of course we won’t be able to offer you complete answers in this article. We will be more realistic than that: we will just give you some information that hopefully you would find helpful for taking the right business decision.
The lowest salary in Romania is 440 Lei/month. That would be less than 150 Euros. Perhaps a more useful piece of information would be that a Romania student (of Economics for instance) would be paid around 250 Euros at his first job (in Bucharest). However amounts will quickly rise for an employee with a degree and 1-3 years of experience. (Some Romanian recruiting companies refer to entry-level employees as below 3 years of experience and mid-level, over 3 years of experience. In reality however it would be quite hard to find an employee with 2 years of experience whose financial requirements are specific to “entry-level” positions. This is largely because in Bucharest it is quite hard to find trained and experienced employees in some areas.)
*Note: Please keep in mind that differences in salaries are quite important between Bucharest and the province. An article dated from October 2006 published in the financial magazine “Banii Nostri” claimed that an average employee of a Bucharest-based company earns a salary of 2,600 Lei (about 750 Euros) with about 1,000 Lei over the country’s average. The Bucharest top salaries for highly trained (top) specialists are as follows: 1. marketing specialists – around 1,600 Euros; 2. legal specialists – 1,300 Euros; 3. Human Resources – 1,100 Euros (these are gross amounts).
Salaries have quickly risen because of the lack of specialists in some areas. Examples would be the banking sector, IT (Software), Legal sector, constructions. Because of the same reason an employer will also have a hard time keeping a trained employee and not losing him over to the competition (quite a common practice in Romania).
What are the same salaries in other similar countries?
If we were to trust the Internet and the rest of the press as a reliable source of information the differences between salaries in Eastern-European countries in the same stages of development are insignificant (Romania and Bulgaria for instance). Whatever relative difference between the two it can quickly decrease importance when compared to differences between other legislation and taxation issues.
How can I gather information before making a decision?
The best way to gather information would definitely be to interact with employers and employees in specific areas. The quickest way to do that is check out www.ejobs.ro and www.bestjobs.ro, the biggest online databases of employees in Romania. Here you can surf some of the offers (get some raw information on the quantum of salaries – if you are really patient as most of the offers do not contain a salary estimation) and even place your own offers. One very important thing to keep in mind (that is also perhaps very specific to the Romanian Human Resources market) is that most times less then 50% are truly interested in your job ad and show up at the actual interview.
Of course there is a number of Romanian specialists in certain areas, top-management etc. that will be very difficult to find on the Internet or at least on common job-search websites. The best way to go about solving this problem would be to either contact a Recruiting company (some are specialized in certain areas) or place an ad in Romanian business newspapers or magazines (like Capital www.capital.ro).
Do I have the big picture?
Romanian salaries are substantially lower than those in Western Europe. This is a fact however the big picture must not be overlooked. What is the big picture? It is a conclusion after analyzing the taxes, the laws, the infrastructure, the level of employee training. Some good advice would be to contact a local law firm to give you an idea on the legislation and taxes, contact a recruiting company, an accountant then make a pertinent decision.
Is it worth it? What are the real salaries in the field I am interested in?
What are the same salaries in other similar countries?
How can I gather information before making a decision?
Do I have the big picture?
Of course we won’t be able to offer you complete answers in this article. We will be more realistic than that: we will just give you some information that hopefully you would find helpful for taking the right business decision.
The lowest salary in Romania is 440 Lei/month. That would be less than 150 Euros. Perhaps a more useful piece of information would be that a Romania student (of Economics for instance) would be paid around 250 Euros at his first job (in Bucharest). However amounts will quickly rise for an employee with a degree and 1-3 years of experience. (Some Romanian recruiting companies refer to entry-level employees as below 3 years of experience and mid-level, over 3 years of experience. In reality however it would be quite hard to find an employee with 2 years of experience whose financial requirements are specific to “entry-level” positions. This is largely because in Bucharest it is quite hard to find trained and experienced employees in some areas.)
*Note: Please keep in mind that differences in salaries are quite important between Bucharest and the province. An article dated from October 2006 published in the financial magazine “Banii Nostri” claimed that an average employee of a Bucharest-based company earns a salary of 2,600 Lei (about 750 Euros) with about 1,000 Lei over the country’s average. The Bucharest top salaries for highly trained (top) specialists are as follows: 1. marketing specialists – around 1,600 Euros; 2. legal specialists – 1,300 Euros; 3. Human Resources – 1,100 Euros (these are gross amounts).
Salaries have quickly risen because of the lack of specialists in some areas. Examples would be the banking sector, IT (Software), Legal sector, constructions. Because of the same reason an employer will also have a hard time keeping a trained employee and not losing him over to the competition (quite a common practice in Romania).
What are the same salaries in other similar countries?
If we were to trust the Internet and the rest of the press as a reliable source of information the differences between salaries in Eastern-European countries in the same stages of development are insignificant (Romania and Bulgaria for instance). Whatever relative difference between the two it can quickly decrease importance when compared to differences between other legislation and taxation issues.
How can I gather information before making a decision?
The best way to gather information would definitely be to interact with employers and employees in specific areas. The quickest way to do that is check out www.ejobs.ro and www.bestjobs.ro, the biggest online databases of employees in Romania. Here you can surf some of the offers (get some raw information on the quantum of salaries – if you are really patient as most of the offers do not contain a salary estimation) and even place your own offers. One very important thing to keep in mind (that is also perhaps very specific to the Romanian Human Resources market) is that most times less then 50% are truly interested in your job ad and show up at the actual interview.
Of course there is a number of Romanian specialists in certain areas, top-management etc. that will be very difficult to find on the Internet or at least on common job-search websites. The best way to go about solving this problem would be to either contact a Recruiting company (some are specialized in certain areas) or place an ad in Romanian business newspapers or magazines (like Capital www.capital.ro).
Do I have the big picture?
Romanian salaries are substantially lower than those in Western Europe. This is a fact however the big picture must not be overlooked. What is the big picture? It is a conclusion after analyzing the taxes, the laws, the infrastructure, the level of employee training. Some good advice would be to contact a local law firm to give you an idea on the legislation and taxes, contact a recruiting company, an accountant then make a pertinent decision.
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