Romanian SMEs Ministry Designs “Starter Firm” Law For Youths

Romanian youths aged up to 35, who have never owned a company, will be able to set up a firm with a share capital of 10 lei (EUR1=RON4.2293) and which will be exempt from profit and wage taxes in the first three years, according to an initiative of the Ministry for SMEs.

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These starter firms will receive priority in financial aid, will be exempt from paying certain customs taxes and will have access to loans with a grace period, according to the draft law stimulating the creation and development of micro-companies belonging to young entrepreneurs.

The draft document was presented Wednesday by SME minister Constantin Nita and was launched for public debate.

Young entrepreneurs, however, will also have several obligations, namely a choice between five areas of activity and the obligation to register a capital of at least EUR5,000, at the end of the three-year interval, through profit capitalization.

"If a young person manages in three years to collect EUR5,000 then that person really wanted a business. If this performance is not achieved, then the entrepreneur will have to reimburse the money received as fiscal incentives," Nita said.

He added that, for next year, the ministry estimates 500 firms will be created following this normative act, about 750 firms in 2011, 1,480 firms in 2012 and 3,000 in 2013.

Nita added he will also consider changing the taxes collected for the creation of this type of entity, and these taxes could be reduced by 50%.

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