Why do you need a PFA (authorized natural persons) in Romania? Commercial contracts templates
The Emergency Ordinance no. 44 of 16 April 2008 (OUG 44/2008) provides the legal framework in which authorized natural persons (PFA), individual enterprises (ÎI), and family enterprises (ÎF) can carry out economic activities in Romania under various commercial contract templates. This ordinance is essential for anyone who wants to start or manage a small or medium-sized business in Romania, providing the necessary legal framework for carrying out economic activities in an organized manner and in compliance with the legislation in force.
Before establishing a PFA, individual enterprise, or family enterprise, get informed through this legal article about access to economic activities in the national economy as provided in the CAEN Code and the registration procedure in the trade register, authorization of operation, and the legal regime of authorized natural persons (PFA) to carry out economic activities, as well as individual and family enterprises.
General information on setting up a PFA. Contract lawyer.
How does OUG 44/2008 help you establish a PFA? Ask a lawyer online.
OUG 44/2008 establishes the rules for conducting economic activities by authorized natural persons (PFA), individual enterprises (ÎI), and family enterprises (ÎF). It regulates the establishment, operation, and cessation of these types of entities, as well as their fiscal and legal obligations.
Are there PFA, individual enterprise, or family enterprise that are not subject to OUG 44/2008? Contract lawyer.
When you have a liberal profession, it is possible to have a special regime for setting up a PFA through which you carry out your economic activity. OUG 44/2008 does not apply to liberal professions or those economic activities whose conduct is organized and regulated by special laws.
Also, the general regime for setting up PFA, individual enterprises or family enterprises provided by OUG 44/2008 does not apply to those economic activities for which certain restrictions on performance or other prohibitions are established and those activities expressly prohibited by law for free initiative.
Examples of liberal professions for which the establishment of a PFA is done according to special regulations are:
Tax consultant - this type of activity is regulated by Law no. 162/2017 on the statutory audit of annual financial statements and consolidated annual financial statements, as well as for amending other normative acts.
Family doctor - regulated by Law no. 95/2006 regarding health reform.
Lawyer - regulated by Law no. 51/1995 on the organization and exercise of the lawyer profession.
Certified accountant - regulated by Ordinance no. 65/1994 on the organization of accounting expertise and authorized accountants.
Architect - regulated by Law no. 184/2001 on the organization and exercise of the architect profession.
Examples of activities for which the establishment of individual enterprise and family enterprise are subject to special conditions:
Agricultural producer - establishing an individual enterprise for cereal cultivation, regulated by Law no. 17/2014 on certain measures for regulating the sale-purchase of agricultural land located outside urban areas and amending Law no. 268/2001.
Small entrepreneur in the commerce sector - retailing of non-food products, regulated by OUG no. 99/2000 regarding the marketing of products and services of the market.
Auto mechanic - establishing a family enterprise for auto repairs, regulated by Law no. 230/2007 regarding mandatory civil liability insurance for damages caused to third parties by motor vehicle accidents. Read about
Traditional craftsman - individual enterprise in the field of wood processing, regulated by Law no. 26/1996 - Forestry Code.
When is it necessary to set up a PFA? Contract lawyer.
When wondering whether or not you need to establish a PFA, you are probably already carrying out an income-generating activity based on contracts with other economic operators – for example, a collaboration contract model, a consultancy contract model, or a service provision contract model.
OUG 44/2008 comprehensively defines economic activity as any profit-making activity, consisting of producing, managing, or transferring goods or providing services. Any natural person who carries out an economic activity with a permanent, occasional, or temporary character in Romania must be registered and authorized accordingly.
When carrying out activities based on commercial contracts with commercial partners and receiving a payment, you are most likely conducting such an economic activity from the category of economic activities that according to the law entails the obligation to establish a PFA or another form of exercising individual enterprise (ÎI) or family enterprise (ÎF).
Read about contracts commonly used by PFAs, such as what you need to know about collaboration contracts, provisions to include in individual employment contract, or the execution of a service provision contract.
Who can set up a PFA, individual enterprise, or family enterprise? Contract lawyer.
Natural persons who have full legal capacity and meet the legal requirements can set up a PFA, individual enterprise (ÎI), or family enterprise (ÎF). To set up a PFA, it is necessary for the interested person to have a specific professional qualification in the field in which they wish to carry out the economic activity, or to be able to prove experience in that field.
If the profession you exercise requires a special qualification, in addition to setting up a PFA, you must obtain the authorizations, approvals, licenses, and other such documents provided in special laws, for carrying out the respective economic activity.
What types of activities can PFAs, individual enterprise, or family enterprise carry out? Commercial contracts templates.
Natural persons authorized through a PFA or who have set up an individual enterprise or family enterprise can carry out a wide range of economic activities, from services, production, and commerce to liberal activities. The CAEN codes specified in the registration certificate determine the activities permitted for each entity.
What are the advantages of the economic organization forms PFA, individual enterprise, or family enterprise? Commercial contract models.
Compared to commercial companies (SRL-type companies), the forms of exercising economic activities provided by OUG 44/2008 have the following advantages:
Simplified procedures for establishment and administration.
Reduced operating costs compared to other legal forms, such as commercial companies.
Flexibility in managing activities and revenues.
What are the disadvantages of the economic organization forms PFA, individual enterprise, or family enterprise? Commercial contracts templates.
If you have a PFA or an individual enterprise or a family enterprise, you should know that:
The legal liability of the holder for the obligations contracted through commercial contract models by the professional organization form is unlimited. In the case of SRL-type commercial companies, the company acts as a distinct entity from the shareholders and is liable on its behalf for the contracted obligations.
Limited possibilities for business expansion. The law imposes certain development restrictions, such as the fact that a PFA can have a maximum number of 3 employees with individual employment contracts (model) who can participate in the conduct of activities based on employer-employee relationships.
PFA holders or individual enterprises or family enterprises have specific fiscal obligations, such as registering with the tax authorities, paying taxes, paying pension and health contributions. While managing tax obligations for employees is easy, being largely the employer's responsibility, freelancers who carry out activities through a PFA can face excessive bureaucracy, unpredictable changes in tax regulations, and frequently non-functional ANAF systems.
What contract models do I need if I carry out activities as a PFA? Commercial contract models.
Authorized natural persons (PFA) in Romania often use the following types of contracts for carrying out economic activities:
This is one of the most frequently used contracts by PFAs. It is used for providing services to clients, such as consultancy, IT, accounting, marketing, medical services, etc. The contract stipulates the object of the services, execution deadlines, remuneration, and other specific conditions.
PFAs that need spaces for carrying out their activity (offices, workshops, stores) frequently use lease contracts. These regulate the rights and obligations of the parties regarding the use of a property for a determined period, in exchange for rent. The clauses of the lease contract can protect you against unforeseen situations, so it is recommended to use a professional model or order a personalized contract.
A collaboration contract model is often used between PFAs and other entities or individuals for jointly carrying out an activity or subcontracting certain services. This type of contract regulates the contribution of each party, the way of sharing results, and other specific conditions of the collaboration.
Although rarely used directly by PFAs to hire staff (because PFAs generally do not employ staff based on individual employment contracts), there are situations where a PFA uses an individual employment contract model (CIM) to hire people who will work directly within its activity, thus complying with labor legislation.
Copyright transfer contract template
This contract is frequently used by PFAs that operate in creative fields, such as writers, photographers, visual artists, graphic designers. A copyright transfer contract template regulates the way in which copyright is transferred from the author to the client, in exchange for remuneration.
Used mainly by PFAs that carry out trading activities. This contract regulates the sale of goods to clients, stipulating the price, delivery terms, payment conditions, and guarantees.
Check out other professional contract templates!
Frequently asked questions about PFAs. Commercial contract models for PFAs.
What are the steps for setting up a PFA, individual enterprise, or family enterprise?
The first step is to submit an application to the National Trade Register Office, accompanied by the necessary documents, such as proof of professional qualification, a copy of the ID card, and a document that certifies the right of use of the professional premises. After submitting the documentation, the Trade Register issues the registration certificate, which allows the conduct of economic activities.
The documentation can be submitted personally, through the ONRC portal, without the need for a lawyer, as in the case of setting up an SRL-type company.
Attention: only diplomas/documents in Romanian are accepted for setting up a PFA/individual enterprise (ÎI)/family enterprise (ÎF).
Do I need professional premises to set up a PFA, A, individual enterprise, or family enterprise? Contract templates.
Yes, to set up a PFA, individual enterprise or family enterprise, it is necessary to have professional premises. The professional premises are the address where the economic activity is carried out and where accounting documents and other necessary activity documents are kept. The address of the professional premises must be mentioned in the registration application at the Trade Register, and for this, you must present a document that certifies the right of use of the property (lease contracts regime, property titles in Romania, etc.).
What taxes and duties do I have to pay as a PFA, A, individual enterprise, or family enterprise? Ask a lawyer.
PFA, individual enterprise, or family enterprise are required to pay income tax, social security contributions (CAS), and health insurance contributions (CASS). Additionally, if the revenues exceed the VAT exemption threshold, the entity must register as a VAT payer and submit the corresponding tax returns.
How can I cease the activity of a PFA, individual enterprise, or family enterprise? Ask a lawyer for free.
The cessation of the activity can be done by deregistering the entity from the Trade Register. This involves submitting a deregistration application, accompanied by the original registration certificate and other relevant documents. After approval, the entity is no longer allowed to carry out economic activities.
Deregistering a PFA can be done online through the ONRC portal, without the need for specialist assistance. The procedure is simple and straightforward.
Can I transform a PFA into an individual enterprise, or family enterprise, or vice versa? Commercial contracts templates.
Yes, it is possible to convert between these forms of organization, provided that the legal procedures are followed, and the necessary documentation is submitted to the Trade Register. The conversion may also involve modifying the CAEN codes and the object of activity if necessary.
What happens if I do not comply with the legal obligations as a PFA, individual enterprise, or family enterprise? Contract lawyer.
Failure to comply with legal obligations may result in contraventional sanctions, including fines, and in extreme cases, the suspension or termination of the activity. It is essential to stay informed about all fiscal, accounting, and reporting obligations to avoid such situations.
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