Romanian SRL vs Indian Private Limited Company

By Anuj Singh | Updated March 2026

Romania has become Eastern Europe's fastest-growing tech outsourcing hub, and Indian IT companies are increasingly establishing Romanian subsidiaries for EU market access. In the reverse direction, Romanian companies — particularly in IT services, automotive components, and manufacturing — are exploring India's massive domestic market. Both routes require understanding how the Romanian SRL (Societate cu Raspundere Limitata) compares with the Indian Private Limited Company.

The headline difference is taxation: Romania's micro-company regime taxes revenue at just 1% for companies under EUR 100,000 turnover, making it one of the cheapest corporate structures in the EU. India's standard effective corporate tax rate is 25.17%. But the comparison is not just about tax rates — Romania's 2026 capital reforms, India's compliance burden, and the India-Romania DTAA's uniform 10% withholding rates all shape the decision.

This guide covers formation, taxation, the India-Romania DTAA, compliance obligations, and how to structure operations between Bucharest and Bangalore.

Quick Comparison Table

Romania's Micro-Company Regime — The 1% Advantage

Romania's most distinctive feature is its micro-company tax regime, which taxes companies on revenue rather than profit at a flat 1% rate. From 1 January 2026, the eligibility requirements are:

• Annual turnover must not exceed the RON equivalent of EUR 100,000 (reduced from EUR 250,000 in 2025)
• Company must have at least 1 employee on payroll
• Share capital must be owned by Romanian-registered entities or individuals
• Annual financial statements must be filed on time

For an IT services company with EUR 80,000 in revenue, the micro-company tax is just EUR 800 — compared to approximately EUR 4,000-5,000 in standard 16% corporate tax on typical margins, or EUR 18,000-20,000 for an equivalent Indian company taxed at 25.17% on similar profit levels.

When Does the Micro Regime Break?

The micro-company regime becomes less attractive at higher revenue levels because it taxes revenue, not profit. A company with EUR 90,000 revenue but only EUR 10,000 profit pays EUR 900 in micro tax (9% effective on profit) versus EUR 1,600 under the standard 16% rate. For low-margin businesses, the standard rate may actually be lower. Companies exceeding EUR 100,000 automatically transition to the 16% standard corporate tax.

Formation — Both Are Fast, India Is More Complex

Romanian SRL

Romania's Trade Register (ONRC) processes SRL incorporations in 3-5 business days. The process:

1. Reserve company name with ONRC
2. Draft Articles of Incorporation (Act Constitutiv) — can be in standard form for single-shareholder SRLs
3. Obtain registered office proof (lease agreement or ownership deed)
4. Register with ONRC — includes automatic fiscal registration with ANAF (tax authority)
5. Open a Romanian bank account within 60 business days (mandatory under Law 239/2025)
6. Register for VAT if turnover will exceed RON 300,000 threshold

Deposit minimum share capital of RON 500 (approximately EUR 100). No notarization required for standard incorporations since 2020 reforms. Total cost: EUR 100-400 in registration fees plus EUR 500-1,500 in legal fees.

Indian Private Limited Company

The Indian process via SPICe+ is more documentation-intensive:

1. Obtain Digital Signature Certificates (DSC) for all directors
2. Apply for Director Identification Numbers (DIN)
3. Reserve name via RUN
4. File SPICe+ with MOA and AOA
5. Receive Certificate of Incorporation with integrated PAN, TAN, GST, EPFO, ESIC
6. File INC-20A (commencement of business) within 180 days

For Romanian directors: apostilled passport copies required. A resident director who has lived in India for 182+ days in the preceding year is mandatory. Government fees: INR 10,000-30,000. Professional fees: INR 15,000-50,000. Timeline: 7-15 working days.

Taxation — Side-by-Side Breakdown

DTAA Benefits: India-Romania Treaty

The India-Romania DTAA provides one of the simplest treaty structures — a uniform 10% rate across all categories:

• Dividends: 10% maximum withholding (compared to 20% domestic rate under Indian tax law)
• Interest: 10% maximum withholding
• Royalties: 10% maximum withholding
• Fees for Technical Services: 10% maximum withholding

This uniformity simplifies tax planning. A Romanian SRL receiving dividends, interest, and royalties from its Indian subsidiary faces the same 10% withholding across all income types — no need to restructure payments between categories for treaty optimization.

The IT Outsourcing Connection

Romania and India share a distinctive position in the global IT services market. Romania is the EU's leading nearshore IT outsourcing destination, with over 120,000 IT professionals. India, with 5.4 million IT workers, dominates global offshore delivery. The connection creates three common business patterns:

• Indian IT companies setting up Romanian subsidiaries: Companies like TCS, Infosys, and Wipro have Romanian offices to serve EU clients within the EU data residency framework. The Romanian SRL with micro-company treatment at 1% provides a cost-effective entity for EU-facing delivery.
• Romanian companies establishing Indian development centres: Romanian tech companies use Indian Private Limited subsidiaries to access India's deeper engineering talent pool at lower costs — a Bucharest senior developer costs EUR 3,000-4,500/month versus INR 1.5-2.5 lakh (EUR 1,650-2,750) in Bangalore or Pune.
• Joint ventures for EU market access: Indian companies partner with Romanian firms to leverage Romania's EU membership for passporting services across the single market, avoiding the complexity of direct Indian-to-EU service delivery.

Which Should You Choose?

Choose the Romanian SRL if:

• You need a low-cost EU entity — Romania's 1% micro-company tax and EUR 100 minimum capital make it the cheapest EU entry point
• Your company has under EUR 100,000 in EU-sourced revenue and qualifies for the micro-regime
• You need EU data residency for GDPR compliance when serving European clients from India
• You are a single founder — the SRL allows one shareholder with no residency requirement for the administrator
• You want to avoid mandatory audit — Romanian SRLs below the threshold have no audit obligation
• You need a holding company for an Indian subsidiary with the benefit of uniform 10% DTAA withholding rates

Choose the Indian Private Limited Company if:

• You need to operate in India — employ staff, sign Indian contracts, invoice Indian clients, or bid for government tenders
• Your manufacturing operation was already covered by the 15% concessional tax rate under Section 115BAB (effective 17.16%) — note this rate applied only to companies that began manufacturing by 31 March 2024; that window has closed and was not extended, so new manufacturers now pay 22% under Section 115BAA (effective 25.17%)
• You need to raise capital from Indian investors — the Pvt Ltd structure is the standard vehicle for VC/PE investment in India
• You plan to access India's PLI incentive schemes in sectors like electronics, pharma, or automotive — these require an Indian-registered entity
• You want direct access to India's INR 250+ lakh crore GDP market

Common Mistakes

• Assuming Romania's 1% rate applies to all revenue levels: Since 1 January 2026, the micro-company threshold dropped from EUR 250,000 to EUR 100,000. Companies that planned their structure around the old threshold now face the 16% standard rate on all income once they cross EUR 100,000 — a 16x increase in effective tax rate. Model your projections conservatively.
• Ignoring Romania's new capital requirements: From 2026, new SRLs require RON 500 minimum capital (previously RON 1 was sufficient). If your SRL's turnover exceeds RON 400,000 (approx. EUR 80,000), you must increase capital to RON 5,000 by year-end following the threshold breach. Failure risks judicial dissolution under the amended Law 31/1990.
• Forgetting the mandatory Romanian bank account rule: Under Law 239/2025, all Romanian legal entities must open a bank account within 60 business days of incorporation. Non-compliance triggers fines of RON 3,000-10,000 and can result in the company being declared fiscally inactive — which suspends your VAT code and expense deductibility.
• Not planning for India's resident director requirement: Romanian founders cannot manage an Indian subsidiary remotely — at least one director must have resided in India for 182+ days. This is not waivable. Consider a resident director service or hire a senior Indian employee as director.
• Double-paying social security contributions: India does not have a social security agreement with Romania. Romanian employees posted to India will pay into both systems — Romanian CAS (25% employee + 2.25% employer) and Indian EPF/ESI. Budget approximately EUR 5,000-8,000 per posted employee annually in duplicate contributions. Structure contracts to minimize this exposure.

Practical Example

CarpathianTech SRL, a Bucharest-based software company with EUR 800,000 annual revenue and 30 employees, wants to establish an Indian development centre in Pune with 40 engineers.

Step 1 — Indian Subsidiary Formation: CarpathianTech incorporates an Indian Pvt Ltd subsidiary with Beacon Filing's assistance. Cost: INR 25,000 government fees + INR 45,000 professional fees (total approx. EUR 780). Timeline: 10 working days. One Romanian director and one Indian resident director appointed.

Step 2 — Capital Injection: CarpathianTech invests EUR 300,000 (approx. INR 2.73 Cr) via automatic route FDI. FC-GPR filed within 30 days. Valuation report obtained per FEMA pricing guidelines.

Step 3 — Year 1 Operations:

• Indian subsidiary payroll for 40 engineers at average INR 12 lakh CTC: INR 4.8 Cr annually
• Indian subsidiary revenue (inter-company services to Romanian parent): INR 7.2 Cr
• Indian corporate tax on INR 2 Cr profit: INR 50.34 lakh (25.17% effective under 115BAA)
• Dividend repatriation of INR 1.2 Cr to CarpathianTech SRL: 10% DTAA withholding = INR 12 lakh
• Transfer pricing documentation required — inter-company transactions must be at arm's length under Section 92 of the Income-tax Act, 1961

Step 4 — Romanian Side: CarpathianTech SRL, now with EUR 800,000+ revenue, is on the standard 16% corporate tax rate (above the EUR 100,000 micro threshold). The Indian dividend income of approximately EUR 12,000 (after WHT) is taxed in Romania with credit for Indian tax paid.

Annual cost comparison: 40 engineers in Pune cost approximately EUR 530,000 all-in (salaries + compliance + office). The equivalent team in Bucharest would cost EUR 1.8-2.2 million. Net annual saving: approximately EUR 1.2-1.6 million.

Key Takeaways

• Romania's SRL offers the EU's lowest entry cost: RON 500 (EUR 100) minimum capital from 2026, with a 1% micro-company tax for companies under EUR 100,000 turnover — India has no equivalent low-rate regime.
• India's standard effective corporate tax rate (25.17%) is higher than Romania's 16%. The 17.16% concessional rate for new manufacturing (Section 115BAB) undercut both Romania and most EU rates, but applied only to companies that started manufacturing by 31 March 2024 — that window has closed and was not extended, so new manufacturers now default to 22% under Section 115BAA.
• The India-Romania DTAA provides uniform 10% withholding across dividends, interest, royalties, and fees for technical services — one of the simplest treaty structures India offers.
• India does not have a social security agreement with Romania, meaning posted employees face dual contributions — unlike Portugal, the UK, or Germany which have bilateral SSAs with India.
• Romanian SRLs face new 2026 compliance requirements: RON 500 minimum capital, mandatory bank account within 60 days, and capital increase to RON 5,000 if turnover exceeds RON 400,000.
• For IT outsourcing between Romania and India, the combination of a Romanian SRL (for EU client-facing delivery) and an Indian Pvt Ltd (for development capacity) is the standard dual-entity structure used by companies from TCS to mid-size Romanian tech firms.

Setting up your India-Romania cross-border structure? Beacon Filing handles Indian subsidiary incorporation, DTAA-optimized tax structuring, and ongoing compliance outsourcing for foreign-owned subsidiaries.