An Israeli Company Operating in Romania: Branch, Subsidiary or Representative Office, Permanent Establishment, VAT, Employees and Compliance Calendar

An Israeli company that starts selling, carrying out projects or employing people in Romania needs to decide under which legal framework to operate. The decision determines who is liable for debts, how much tax is paid and where, which returns are filed, and how easy it will be to open a bank account and sign local contracts. This guide sets out the options and the ongoing obligations, under the law in force in November 2026.

1In what ways can an Israeli company operate in Romania?

There are four main routes: direct activity from Israel, a branch, a representative office and a subsidiary. The choice depends on the scale of the activity, its duration and whether you want to separate the Romanian risk from the Israeli company.

2When can you operate directly from Israel without registering anything in Romania?

As long as the Israeli company has no permanent establishment in Romania. A company selling to Romanian customers from Israel, without an office, employees or a dependent agent in Romania, is usually not liable to corporate tax there, but VAT obligations and withholding tax on certain payments may still apply to it.

• A fixed place of business: an office, an active warehouse or a work site through which the activity is carried on creates a permanent establishment.
• A building or installation site: under the Romanian Fiscal Code, a permanent establishment arises if the project lasts more than six months, and related contracts are aggregated in the calculation.
• A dependent agent: a person in Romania authorised to sign contracts on behalf of the Israeli company creates a permanent establishment. An independent agent acting in the ordinary course of its business usually does not.
• Preparatory and auxiliary activity: storage, display, purchasing and collecting information do not in themselves create a permanent establishment.
• Withholding tax: under Romanian law, a payment to a non-resident for consulting and management services, and for services rendered in Romania, is subject to 16%; the treaty with Israel may reduce or eliminate this where there is no permanent establishment, on presentation of a certificate of residence.

3What is the difference between a branch and a subsidiary?

A branch is part of the Israeli company, and a subsidiary is a separate Romanian company. In both cases, according to PwC and as of November 2026, the profit from activity in Romania is taxed there at 16%, but the differences in liability, reporting and extracting money are significant.

• Liability: in a branch the Israeli company is directly liable for the debts. In a subsidiary liability is limited to the capital and investment in it, subject to exceptional cases.
• Extracting profits: a subsidiary distributes a dividend, with 16% withholding under Romanian law and up to 15% under the treaty. For a branch, PwC does not mention a tax on remitting profits to the parent company.
• Micro-enterprise regime: available only to a Romanian company, not to a branch.
• In Israel: branch profits are part of the Israeli company's income and are taxed there, with a credit for the Romanian tax. A subsidiary's profits are usually taxed in Israel only when distributed, subject to the controlled foreign company rules.
• Documents: registering a branch requires the Israeli company's incorporation documents, a board resolution and appointment of a manager for the branch, in certified translation and with an apostille as needed.

4When is a representative office enough?

A representative office suits the stage at which you are testing the market, marketing and maintaining contact with customers, without signing deals and without generating income in Romania. According to PwC, as of November 2026, it pays a fixed representative office tax of 18,000 lei a year, declared and paid by the last day of February, and in the year it was set up or closed the tax is calculated by the number of months. Once the representative office engages in actual commercial activity, it may be treated as a permanent establishment.

5Does a Romanian subsidiary need a local director?

No. Romanian company law does not require a Romanian or Romanian-resident director, and an Israeli director is permitted. However, there are three practical reasons to consider a local director or management actually carried out in Romania:

• The company's residence in Israel: a company whose control and management are exercised from Israel may be treated as resident in Israel for tax purposes.
• Banks: some banks ask for the director to be present when opening the account and for signatures.
• Micro-enterprise regime: a director paid under a management contract can satisfy the employee condition.

Details on incorporation, minimum capital under Law 239/2025 and restrictions on shareholder loans are in our guide to setting up an SRL in Romania, and on a structure with local partners in company structure for an Israeli developer in Romania.

6When does an Israeli company need to register for VAT in Romania?

When it makes taxable supplies in Romania where the liability does not shift to the buyer. When selling services to a Romanian business, VAT is usually paid under the reverse charge by the customer, and an Israeli company is not required to register for that reason alone. Selling goods located in Romania, selling to consumers or a project in Romania may require registration.

• Rates: 21% standard, and 11% reduced for a closed list of goods and services, from 1 August 2025.
• Fiscal representative: a non-EU company without a permanent establishment in Romania is usually required to appoint a Romanian fiscal representative, by notarised power of attorney. The representative is jointly liable with it for VAT obligations.
• A subsidiary or branch: registers as an ordinary Romanian taxable person; registration is mandatory above turnover of 395,000 lei a year, and voluntary registration is possible below it.
• e-Factura: a registered taxable person uploads invoices to the government system within five working days.

7What are the employer's obligations when employing staff in Romania?

Employment in Romania is under an individual written employment contract, recorded in the electronic employee register (REGES-ONLINE, which replaced REVISAL) before work begins. The employer withholds income tax and the employee's contributions and pays them over, together with its own share.

• An Israeli employee relocating to Romania: a non-EU citizen usually needs a work permit and an appropriate visa. See residence permit in Romania.
• An employee posted from Israel for a period: the social security agreement between Israel and Romania determines to which country contributions are paid, and it should be checked in advance.
• The construction sector: a separate, higher sector minimum wage applies.

8In which language and under which law should local contracts be drafted?

In transactions between companies you can usually choose the law and the language. Documents filed with authorities, courts and registers are required in Romanian or in certified translation, so a bilingual contract with a provision on which version prevails saves problems. Employment contracts, office leases and contracts with authorities are in practice signed under Romanian law and in Romanian.

On jurisdiction, arbitration and enforcement clauses see the guide on commercial disputes in Romania; on contracts with contractors see contractor agreements in a project abroad.

9Does the activity require a licence?

Some activities do. Fields of activity are registered in the Trade Register by CAEN codes, and regulated activities, such as construction, financial services, insurance, food, health, gambling and transport, require a permit or additional licensing from the relevant authority. It is worth checking the licensing requirements of the specific sector before incorporation, because they affect the timeline.

10Which returns are filed every year?

From 2026, a company that has not filed financial statements within five months of the deadline may be declared inactive for tax purposes, with consequences such as denial of VAT deduction.

11How do you open a bank account for an Israeli-owned company?

Romanian banks carry out full know-your-customer checks: identification of the company, the ownership chain up to the individual at the top, the source of funds and the planned activity. When the shareholder is an Israeli company, its documents must be presented in translation and with an apostille as needed. Details in a bank account in Romania for a non-resident.

12What needs to be done in Israel?

• Branch: the branch's income is included in the Israeli company's return, with a credit for the Romanian tax under the treaty.
• Subsidiary: reporting of the holding in a foreign entity, and reporting of related-party transactions such as loans, services and management fees (Form 1385), at market prices.
• Controlled foreign company: for a subsidiary with passive income and low tax, section 75B of the Israeli Income Tax Ordinance should be checked.
• Coordination: details on reporting obligations in our Israel Tax Authority reporting hub and on tax treaties in Israel's tax treaties by country.

13How do you start operating in Romania, and in what order?

1. Define the activity: what you are selling, to whom, for how long, with or without employees, and whether there will be assets in Romania.
2. Check permanent establishment and VAT: whether the planned direct activity creates a permanent establishment or a VAT registration obligation.
3. Choose a framework: direct activity, a representative office, a branch or a subsidiary, according to the table.
4. Prepare documents from Israel: certificate of incorporation, company extract, board resolutions and power of attorney, in certified Romanian translation and with an apostille. See apostille and documents for Romania.
5. Register: in the Trade Register and for VAT, and file a beneficial owner declaration.
6. Open a bank account and appoint a Romanian accountant who will connect the company to e-Factura and to ANAF's reporting systems.
7. Coordinate with the tax adviser in Israel the financing structure, management fees and reporting.

This guide is general information as of November 2026 and is not legal or tax advice; registration and representation in Romania are carried out by a lawyer and an accountant licensed there, and every case is examined on its merits.

More on doing business in Romania: Setting up a company in Romania · Corporate tax and transferring profits to Israel from Romania · Commercial disputes and litigation in Romania · Comparison of 8 countries · All guides for companies and businesses

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