Does the concept of a 'permanent establishment' apply when a foreign person invests in real estate and, if so, how much does it cost to set up such a permanent establishment, how long does it take and what corporate governance requirements apply?
A direct investment in a real estate asset can be held by a private person or a corporate vehicle. Non Romanian entities may set up a branch or 'permanent establishment' in Romania for this purpose.
Branches are entities without legal personality (they are merely geographic extensions of the entity to which they belong). Branches must be registered with the Commercial Registry in the county where they will carry on business. The registration with the Commercial Registry will trigger costs of approximately 800 RON. Additional costs are likely to be incurred in filing, drafting and translating the necessary documents.
In theory, the incorporation process can take as little as a week, although in practice, assembling all the necessary documents, translating them, obtaining notarized and apostilled copies etc, can take several weeks. The registration certificate attesting the registration of the branch with the Commercial Registry should be issued within three days from the filing of the registration application, subject to compliance with the required documentation.
All legal and commercial operations related to the Branch’s activity must be carried out by a representative designated by the parent company (typically the branch manager), a specimen of whose signature must be filed with the Commercial Registry. As the branch manager is entitled to represent the branch and the branch is an integral part of its parent company, the manager will in fact be able to bind the parent company.
