Frequent legislative changes and fiscal complexity featured heavily on the Romanian business landscape in 2016, and this year the trend continues.
The most notable change in the fiscal environment in 2017 so far has been the VAT rate. It has decreased three times in the past 18 months, most recently in January when it reduced to 19%.
A corporate income tax exemption was introduced for R&D companies, and along with other provisions such as increasing the threshold for micro enterprises (from €100,000 to €500,000), it could make Romania a more attractive destination for foreign direct investors. At the same time it increases the need for local expertise to help navigate fiscal and legislative instability.
The benefit of local partners
It's common for both domestic and global companies in Romania seek out relevant experts, such as ourselves, for support. Our latest survey with Gfk found that 33% of Romania-based Chief Financial Officers face difficulties complying with group and local authority reporting standards. This is an increase from the 26% who indicated the same difficulties in 2015.
And over 80% of Chief Human Resources officers in the country struggle due to a talent shortage. Finding and hiring the right professionals, particularly in the industry, services and trade sectors is proving increasingly difficult. Consequently, this becomes a key trigger for companies to choose outsourcing.
Recently a multinational company came to us struggling to remain compliant with changing legislation after starting business operations in Romania, and having to register for VAT. My team were able to offer a tailored solution and assist the company with corporate secretarial, accounting and payroll services. We established documentation for the fiscal authorities so that the client could follow their business plan uninterrupted.
It's not a stretch to say that this company would not be experiencing the same compliance peace of mind and level of business success in the local market had they chosen to 'go it alone.'
Whatever you know it as, 'outsourcing', 'external services' or 'global business services' – it's far from a purely cost-cutting exercise (however of course, it can have that benefit too).
As our latest research found, and I'm sure many of our clients would agree, partnering with local experts for administrative support provides peace of mind. And it gives companies the increased bandwidth internally to be more competitive in the market.
Need more information? Download the briefing paper, Insight into Multi-Country Outsourced Services Trends: Romania.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.