Closing a Business in Romania doesn’t need to be a hassle. On the contrary, it can be a very good occasion for a fresh start. As long as it’s properly prepared. Let’s see how it’s done.
The steps I need to take before closing my Business in Romania relate to closing the business relationships I had when the company was up and running: talking to the employees about the situation and finding solutions for each of them, ending rent&utilities contracts, scrapping or selling assets, managing the company archive. The deadline for maintaining payroll documentation is 50 years, and the deadline for maintaining accounting records and other financial documents is 10 years, starting from the end of the financial year during which they were drafted. I can keep the company archive in my location or make use of the services of specialised archival firms. In case I have associates, the Companies Law sets up the legal framework for the archival of company documents: "After the approval of the accounts and the end of the distribution, the registers and the documents of the company [...] which will not be needed by any of the associates, will be filed to the associate designated by the majority."
Closing the business all starts with me appointing a lawyer and an accounting firm for the specific purpose of closing my company. Ideally, they know each other and have experience in working together, to facilitate communication throughout the process. For the accounting firm I will need a notarised power of attorney if I have never worked with them before. Both the lawyer and the accounting firm will analyse the company status, each from their specific point of view: the lawyer from the legal point of view and the accounting firm from the tax point of view. Afterwards, their paths will go in parallel but they need to maintain a close synchronisation, just in case something needs to be adjusted along the way.
The legal closure is handled in two stages: dissolution and deregistration. First, the lawyer drafts the shareholder decision - or shareholders, if I have associates in the company. If I don’t speak Romanian I need to ask the lawyer to prepare the document for me also in a language I understand. This will be important, to avoid future problems. The lawyer submits it to the Trade Registry and keeps an eye on the status, just in case a third party would appeal the Trade Registry dissolution decision.
In parallel, on the accounting side, things move fast:
the accounting firm asks for a Tax Certificate from the Tax Agency and starts drafting a balance sheet at the beginning of the liquidation. In coordination with me, the accounting firm drafts an inventory and ensures that all accounting balances remain on 0: this is an important accounting rule, that all of the accounts need to remain on 0 before the actual start of the liquidation process. If I still have receivables I need to speak to my clients and recover the money, if I still have payables I need to pay my suppliers.
The next in line are taxes: regarding taxes due I need to pay all taxes before closing the firm.
Important aspects which may show up during the liquidation process can be treated mainly as exceptions, but it’s good to know them:
if I have filed a recent VAT refund request has been filed, the process needs to be cancelled and reorganised. The accounting firm will detect this situation before starting the liquidation procedure, via a routine VAT status check.
if I have an outstanding shareholder loan, I can use that for tax optimisation.
if my firm has amounts to recover from the medical leaves and I am not certain of getting that back until the liquidation date, that receivable can be treated like an asset and sold to a specialised third-party.
An interesting case is the one where I have recently changed my tax year but I still want to close the company: if I’ve changed it to anything else than the traditional January to December tax year, then I need to keep the company active until a full new year has passed.
Finally, the accounting firm drafts the balance sheet at the end of the liquidation and contacts the Tax Agency to ensure database update.
The Tax Agency issues the ending Tax Certificate which the accounting firm receives and forwards over to me.
In the meantime, the lawyer has waited for 30 days from the publication of the shareholders’ decision in the Romanian Official Gazette, if no opposition against the dissolution has been filed, and has initiated the second legal stage, the deregistration. She has prepared and submitted the deregistration statements to the Trade Registry and, once receiving the Deregistration Decision from the Trade Registry, forwards that to me.
Once I have on my desk both the ending Tax Certificate from the accounting firm and the Deregistration Decision from the Trade Registry, I am now in front of the proof that my Business in Romania is now closed - and I am ready for new beginnings.