Doing Business 2020 Romania Economy Profile Romania Page 1 Doing Business 2020 Romania Economy Profile of Romania Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Romania About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Romania Ease of Doing Business in DB RANK DB SCORE Region Europe & Central Asia Romania Income Category Upper middle income 55 Population 19,473,936 73.3 City Covered Bucharest Rankings on Doing Business topics - Romania 1 19 25 32 46 56 61 91 147 157 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 87.7 58.4 53.7 75.0 80.0 62.0 85.2 100.0 72.2 59.1 Starting a Business (rank) 91 Getting Credit (rank) 25 Trading across Borders (rank) 1 Score of starting a business (0-100) 87.7 Score of getting credit (0-100) 80.0 Score of trading across borders (0-100) 100 Procedures (number) 6 Strength of legal rights index (0-12) 9 Time to export Time (days) 20 Depth of credit information index (0-8) 7 Documentary compliance (hours) 1 Cost (number) 0.3 Credit registry coverage (% of adults) 19.4 Border compliance (hours) 0 Paid-in min. capital (% of income per capita) 0.4 Credit bureau coverage (% of adults) 54.5 Cost to export Documentary compliance (USD) 0 Dealing with Construction Permits (rank) 147 Protecting Minority Investors (rank) 61 Border compliance (USD) 0 Score of dealing with construction permits (0-100) 58.4 Score of protecting minority investors (0-100) 62.0 Time to export Procedures (number) 24 Extent of disclosure index (0-10) 9.0 Documentary compliance (hours) 1 Time (days) 260 Extent of director liability index (0-10) 4.0 Border compliance (hours) 0 Cost (% of warehouse value) 2.0 Ease of shareholder suits index (0-10) 5.0 Cost to export Building quality control index (0-15) 13.0 Extent of shareholder rights index (0-6) 5.0 Documentary compliance (USD) 0 Extent of ownership and control index (0-7) 3.0 Border compliance (USD) 0 Getting Electricity (rank) 157 Extent of corporate transparency index (0-7) 5.0 Score of getting electricity (0-100) 53.7 Enforcing Contracts (rank) 19 Procedures (number) 9 Paying Taxes (rank) 32 Score of enforcing contracts (0-100) 72.2 Time (days) 174 Score of paying taxes (0-100) 85.2 Time (days) 512 Cost (% of income per capita) 405.8 Payments (number per year) 14 Cost (% of claim value) 25.8 Reliability of supply and transparency of tariff index (0-8) 7 Time (hours per year) 163 Quality of judicial processes index (0-18) 14.0 Total tax and contribution rate (% of profit) 20.0 Registering Property (rank) 46 Postfiling index (0-100) 76.8 Resolving Insolvency (rank) 56 Score of registering property (0-100) 75.0 Score of resolving insolvency (0-100) 59.1 Procedures (number) 6 Recovery rate (cents on the dollar) 34.4 Time (days) 14.5 Time (years) 3.3 Cost (% of property value) 1.3 Cost (% of estate) 10.5 Quality of the land administration index (0-30) 17.0 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 13.0 Page 4 Doing Business 2020 Romania Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them received domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Romania Starting a Business - Romania Standardized Company Legal form Societate cu răspundere limitată – Limited Liability Company Paid-in minimum capital requirement RON 200 City Covered Bucharest Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Procedure – Men (number) 6 5.2 4.9 1 (2 Economies) Time – Men (days) 20 11.9 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 0.3 4.0 3.0 0.0 (2 Economies) Procedure – Women (number) 6 5.2 4.9 1 (2 Economies) Time – Women (days) 20 11.9 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 0.3 4.0 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.4 0.7 7.6 0.0 (120 Economies) Figure – Starting a Business in Romania – Score 70.6 80.4 99.8 99.9 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Romania and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 95.7: Moldova (Rank: 13) 90.5: Regional Average (Europe & Central Asia) 88.2: Hungary (Rank: 87) 87.7: Romania (Rank: 91) 85.4: Bulgaria (Rank: 113) 82.1: Czech Republic (Rank: 134) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Romania Figure – Starting a Business in Romania – Procedure, Time and Cost Time (days) Cost (% of income per capita) 20 0.3 Cost (% of income per capita) 0.25 15 0.2 Time (days) 10 0.15 0.1 5 0.05 0 0 1 2 3 4 *5 *6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Romania Details – Starting a Business in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Evidence of verification of company name availability and reservation thereof 1 day no charge Agency : Commercial Registry of the Trade Register Office According to the Methodological Norms on keeping the trade register, making reservations and release of information: - The reservation of a company name is requested at the trade register office by application and is checked and made at national level so that company names are protected at national level as well. - A company name shall not include words like: ”științific”, ”academie”, ”academic”, ”universitate”, ”universitar”, ”școală”, ”școlar” or their derivatives. - A company name including words like ”național”, ”român”, ”institut” or their derivatives or words or phrases characteristic of the central or local public institutions or authorities may be used only with the approval of the General Secretariat of the Government or the Prefect. Such certificate is valid for a period of 3 months. Foreign translation of the words listed above (e.g. "National", "Institute", "National") can be used without approval; however, the General Secretariat of the Government needs to be notified and will issue a confirmation that approval is not necessary in 7 to 10 days. While the application can be done online at https://portal.onrc.ro , the approval documents must be obtained in a physical form from the Trade Registry, or sent by post directly to the applicant. Name reservation can also be obtained via e-mail and an electronically signed version may be used within the file to be submitted online for the incorporation of the relevant company. Nevertheless, the clerk designated to handle the incorporation might request that the document in physical form be first picked up from/delivered by the Trade Registry. 2 Deposit funds in a bank and obtain a document confirming bank deposit of sufficient funds 1 day no charge Agency : Bank The company's administrator or an authorized person must deliver certified copies of: (i) the name availability certificate, (ii) Articles of Incorporation, (iii) proof of the registered offices and (iv) the statement of the legal representative(s) and founder(s), and (v) the power of attorney (if applicable). Some banks, depending on their policy, may request originals of the documents mentioned above. Additionally, according to the specific internal rules of each bank, the bank may request a corporate excerpt evidencing the shareholder, headquarters and director(s) of the new company's shareholder, as well as other documents attesting the beneficiary. After the documents are being reviewed by a bank's representative, the deposit is granted and the administrator/authorized person will receive a document confirming the deposit of sufficient funds. The bank may charge the solicitant a commission, which may range from zero to 0.5% of the capital, in accordance to the internal regulations of each bank. The share capital payments will be made within a share capital account. No payments can be made from the share capital account, thus, upon completion of the incorporation formalities, an operational account will need to be opened; alternatively, the share capital account can be converted into an operational bank account. 3 Company registration at the Commercial Registry 3 days RON 122 Agency : Commercial Registry of the Trade Register Office In order to register at the Commercial Registry, the founders of the company shall have to prepare the articles of incorporation. Within 15 days from the establishment of the articles of incorporation, the founders or their mandates shall be under the obligation to register the company at the trade register in the area of the company's registered office. The articles of incorporation shall include, inter alia, the amount of the capital, which shall be fully subscribed by the founders. The trade register office also obtains electronically the fiscal record certificates. Registration at the trade register office is finalized by issuance of the certificate of incorporation ensures the following: - company incorporation - fiscal registration (for profit, wages, health, pensions, unemployment taxes) by obtaining the unique registration code from the Ministry of Public Finance - authorization, based on statements of own responsibility, in the field of food safety and sanitary- veterinary protection, environment protection and labor protection - publication in the Official Gazette of Romania as legal publicity (publication fee in amount of RON122 per page applies). Registration for VAT purposes is made at the Fiscal Administration Authority directly. Based on Government Emergency Ordinance no. 116/2009 instituting certain measures regarding the activity of registration in the trade register, in order to simplify the registration procedures, the final approval for incorporation is no longer given by a delegated judge, but by the director or the appointed person of the territorial trade register office in the county where the company is incorporated, Bucharest in our case study. Page 8 Doing Business 2020 Romania 4 Register for VAT 15 days no charge Agency : National Agency of Tax Administration If a company's turnover exceeds the threshold of RON 300,000 it is mandatory to request the VAT registration. In this respect, the company must submit Form 010 along with a copy of the trial balance for the month in which the exemption threshold was exceeded. If a company requests the VAT registration at the moment of incorporation, then it submits Form 098 "Application for VAT registration purposes" Starting with February 1, 2019, the procedure for voluntary VAT registration has been amended. Starting with the day following the registration of a company, the VAT registration procedure can be initiated. The first step implies the company’s representative filling in an affidavit with the details ascertaining that the company meets the relevant criteria for VAT registration. The affidavit is filled in by using a software available on the National Agency for Tax Administration’s website, the same being generated in PDF format, which the representative must sign with a valid certified electronic signature. In the end, the electronically signed affidavit is sent to the National Agency for Tax Administration online, along with a separate hand signed version of the affidavit, which is scanned, archived in zip format and attached to the electronically signed version. After completing this procedure, the company’s representative or proxy must submit the 010 form, along with the proof of submitting the aforementioned affidavit, in person, before the competent Tax authority. The VAT certificate is then issued within 1 day of such submission. Following the issue of the VAT certificate, the Tax authority will then verify, within a 15 days timeframe, whether the company actually meets the relevant criteria for VAT registration, as declared under the affidavit. If concluded that such criteria is met, the issued VAT certificate remains valid. On the other hand, if concluded that the company does not actually meet the relevant criteria, the Antifraud directorate of the Tax authority will begin an inspection at the company’s headquarters in order to determine the relevant issues. If a company’s turnover exceeds the threshold of RON 300,000, it is mandatory to request the VAT registration, within 10 days from the end of the month during which the relevant threshold has been exceeded. Starting from October 1, 2017, taxable persons who request the registration for VAT are subject to a risk assessment procedure. The criteria for assessing the fiscal risk are set out in the Order of the Minister of Public Finance no.2856/2017. The new criteria are divided into 15 components, including: - the head office of the company; - information regarding associates and administrators, particularly with regards to their involvement in companies under insolvency or bankruptcy, tax inactivity, temporary inactivity at RECOM (Trade Register online service), or with cases of rejection or cancellation of VAT registration; - information regarding outstanding tax liabilities, contraventions, offenses, income, tax residence both for the company and its associates and administrators; - information regarding the bank account, business activity, accounting services and the number of employees at company level. Each set of criteria is assigned a corresponding negative score, and the summation of these scores is subtracted from initial 100 points that taxpayers is deemed to have. Companies with scores of less than 51 points are considered to have a high fiscal risk. The accelerated voluntary VAT registration procedure is available for already incorporated company that do not fall into the high-risk fiscal category. 5 Acquisition of the company's Unique Registry for Controls 1 day (simultaneous with RON 31 Agency : National Agency of Tax Administration (local office) previous procedure) According to the law, all legal entities registered in the Trade Registry have the obligation to purchase such a Registry for each of their seats (primary or secondary seats). The Registry must be purchased within 30 days after the company is registered at the Trade Registry. If not, the company may be subject to penalties. The registry can be purchased the same day with no previous application requested, from the local offices of the Tax Administration. The company tax registration certificate is needed for the acquisition of the Registry and a copy of the lease for the space in which it operates. In addition, in order to purchase such a Registry it is necessary to fill in an application in this respect and present a power of attorney for the person requesting the Registry accompanied by a copy of the identity card of the respective person. The Registry is used to record all inspections carried out by different control bodies: financial, consumer protection, urban planning, labor, fire protection etc. The Unique Registry for Controls is numbered, sealed and kept by the legal representative of the verified company or by its replacement. The Registry shall be kept at the registered office and at each secondary office for which there have been issued permits/licenses and/or operating agreements. 6 Register the employees contracts with the Territorial Labor Inspectorate (TLI) online 1 day (simultaneous with no charge Agency : Territorial labor inspectorate previous procedure) Each employer shall be under the obligation to settle an internal general register record of all of his employees, in electronic format, which shall be transmitted to the Territorial Labour Inspectorate in the jurisdiction the employer has its registered office or domicile. The registration of the employees' labor contract can be done online, after a representative of the employer obtains a password for operating the online registry from the Territorial Labour inspectorate. This is based on the Government Decision no. 905/14 December 2017 on the general register of employees record. The registration of the employees' labor contract can be done online, after a representative of the employer visits in person the Territorial Labour inspectorate to obtain a password for operating the online registry. This is based on the Government Decision no. 905/2017 on the general register of employees record, applicable starting with December 19, 2017. Page 9 Doing Business 2020 Romania Takes place simultaneously with previous procedure. Page 10 Doing Business 2020 Romania Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures The warehouse: that can be fully completed online are an exception to this rule - Will be used for general storage activities, such as storage of books or stationery. • Procedure is considered completed once final document is received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control after construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 11 Doing Business 2020 Romania Dealing with Construction Permits - Romania Standardized Warehouse Estimated value of warehouse RON 2,364,366.80 City Covered Bucharest Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 24 16.2 12.7 None in 2018/19 Time (days) 260 170.1 152.3 None in 2018/19 Cost (% of warehouse value) 2.0 4.0 1.5 None in 2018/19 Building quality control index (0-15) 13.0 12.1 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Romania – Score 24.0 32.6 90.2 86.7 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Romania and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 75.9: Bulgaria (Rank: 43) 69.0: Regional Average (Europe & Central Asia) 67.0: Hungary (Rank: 108) 58.4: Romania (Rank: 147) 56.2: Czech Republic (Rank: 157) 56.2: Moldova (Rank: 156) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 12 Doing Business 2020 Romania Figure – Dealing with Construction Permits in Romania – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 1.2 250 1 Cost (% of warehouse value) 200 0.8 Time (days) 150 0.6 100 0.4 50 0.2 0 0 1 2 3 4 *5 *6 *7 *8 *9 * 10 * 11 * 12 13 14 * 15 * 16 17 18 19 * 20 21 22 23 24 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 13 Doing Business 2020 Romania Figure – Dealing with Construction Permits in Romania and comparator economies – Measure of Quality 16 14.0 14 13.0 13.0 12.0 12.1 Index score 12 10 8.0 8 6 4 2 0 Romania Bulgaria Czech Hungary Moldova Europe Republic & Central Asia Details – Dealing with Construction Permits in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain topographical documentation 7 days RON 2,000 Agency : Private company To obtain the urban planning certificate, BuildCo must submit up-to-date topographical documentation. This will be drafted by an authorized engineer. 2 Obtain approval of topographical documentation and land registry excerpt from the Office 15 days RON 270 for Cadaster and Real Estate Registry (OCPI) Agency : Office for Cadaster and Real Estate Registry (OCPI) The information excerpt provides information regarding the legal status of the land. Topographical plans executed by authorized engineers must be approved by the Office for Cadaster and Real Estate Registry (OCPI). 3 Obtain urban planning certificate 30 days RON 14 Agency : Department of Urbanism of the local City Hall Pursuant to Order No. 839/2009 issued by the Ministry of Regional Development and Housing (“Order 839”), approving the Methodological Norms to the Construction Law, the following urban planning documents are required: • The general urban plan (PUG) and the related local regulation • The (zone) urban plan (PUZ) and the related local regulation • The detailed urban plan (PUD) The urban planning certificate provides information on the ownership, the public utility service availability, the location within (intravilan) and outside (extravilan) the city limits, the urban planning requirements, the land use at the time, the allowed uses, and so forth. From a technical point of view, the certificate shows the percentage of land occupation, the coefficient of land use, the minimum and maximum dimensions of the plots, the allowed built-up area, utilities, and access, necessary parking, alignment of the land and buildings with the adjacent streets, and the maximum and minimum construction height allowed. This certificate does not grant the right to build. Its validity period varies but cannot exceed 12 months. Construction must start during that 12-month period. The urban planning certificate enumerates all the necessary project clearances applicable to the warehouse case considered here. The municipality has the right to decide which project clearances are needed. 4 Obtain project clearance from Bucharest Regional Environmental Protection Agency 21 days RON 500 Agency : Bucharest Regional Environmental Protection Agency According to the Order of the Ministry of the Environment and the Climacteric Changes no. 865 / 2014 regarding the amendment of certain regulations in the environment protection field, the cost in case the application requires no assessment (the project can be built without environmental permit) is of Ron 100. In this case, the application will be responded in 10 days; If a preliminary assessment of the project is found necessary by the Environmental Protection Agency (highly probable for our case study) the tax is of Ron 500 and the application will be responded in 21 days. 5 Obtain project clearance from water supply and sewerage authority (Apa Nova SA) 18 days RON 334 Agency : Apa Nova SA By law, the project clearance from the water supply and sewerage authority (Apa Nova S.A.) must be issued within 15 days, but, in practice, it can take up to 18 days. 6 Obtain project clearance from the electric power supply authority (Enel S.A.) 15 days RON 95 Agency : Enel S.A. According to Order No. 48/2008 on the Approval of the Methodology Regarding the Issuance of Clearance Permits by Network Operators, BuildCo must obtain a project clearance from Enel S.A. prior to beginning construction. The electric power authority will clear the electrical plans, by confirming that the plans are in compliance with regulations and standards. An approval from the electric power supply authorities is required for all construction projects implying the use of electricity. Page 14 Doing Business 2020 Romania 7 Obtain project clearance from General Inspectorate for Emergency Situations 15 days no charge Agency : General Inspectorate for Emergency Situations The relevant legal provisions in force are Methodological Norms for the Endorsement and Permitting regarding Fire Security and Civil Protection, approved by Order no. 3/2011 of the Ministry of Administration and Interior. According to the amendments to the Construction Law, if the 15-day term provided by the law for issuing the clearance is not observed by the General Inspectorate for Emergency Situations, the legal provisions referring to tacit approval shall be applied. 8 Obtain project clearance from Health Department 7 days RON 250 Agency : Bucharest Health Department The maximum term to respond to the application for project clearance from the Heath Department is 20 working days by the Order no. 251/2012 issued by the Ministry of Health, published in the Official Gazette Part I, no. 196/2012. In practice, the term to obtain the clearance is normally 15 days. However, there is a possibility to fast track this procedure, which allows BuildCo to complete it in 5 days for RON 250. To apply for approval at the Bucharest Health Department, several documents must be submitted: - urbanism certificate with annexed plans - technical memorandum drafted by the architect - ownership title - incorporation certificate 9 Obtain updated land registry excerpt from the Office for Cadaster and Real Estate Registry 2 days RON 20 (OCPI) Agency : Office for Cadaster and Real Estate Registry (OCPI) An updated land title excerpt is needed to attest that no legal changes have occurred. The land title excerpt obtained at the beginning is only valid for 30 days and so the initial one can't be used. OCPI issues the land title excerpt in 2 business days. Sign contract with the solid waste authority (REBU SA) 1 day RON 2,667 10 Agency : REBU SA Through the certificate of urbanization the municipality requests that a contract be signed with a waste disposal company to clear construction debris from the construction site. There are two companies that provide services in this area: ROSAL S.A. and REBU S.A. The latter is a larger player with a wider network. The fees are RON 93 (RON 75.00 + 24% VAT) per cubic meter of waste (although VAT is not taken into account in the Doing Business case study). Additionally, for the surface of the land in question, a tax of RON 42.00 would also be applicable. The minimum of 35 cubic meters must be contracted according to the requirements of company. 11 Notarize statement about nonexistence of land disputes 1 day RON 15 Agency : Notary BuildCo must obtain a notarized statement stating that there are no disputes related to the land. This procedure is not a standard requirement by law but is often requested in practice. Each notary charges a different fee, but the fee cannot exceed RON 30.00, the maximum notary fee established by the National Notaries Union. Register project with the Order of Architects and pay architecture stamp duty 1 day RON 1,232 12 Agency : Order of Architects Pursuant to Government Decision 932/2010 regarding the methodological norms for the application of Law 184/2001, the local branch of the Order of Architects (OAR) issues an attestation to their members confirming their right of signature on projects that are submitted for obtaining the building permit and other types of similar authorizations. The fee for this attestation cannot exceed RON 50 and constitutes revenue for the local OAR. Pursuant to Law 121/2002 regarding literary, cinematographic, theater, music and visual arts stamp duty and Order 2823/2003, architecture stamp duty is added to the value of the investment. The stamp duty represents 0.05% of the value of the investment and is applied to all plans designed by architects. It can be paid directly at the OAR or via bank transfer. The collected amount is transferred to the Order of Architects or the Architects Union based on the option of the architect in charge of the plans. Page 15 Doing Business 2020 Romania 13 Obtain building permit 30 days RON 23,644 Agency : City Hall BuildCo must apply for a building permit by submitting the following documents: • City-planning certificate • Property title on the land (there are no requirements as to how recent the title must be) • Technical documentation which replaced former plans for the authorization of construction • Necessary approvals, as required by the city-planning certificate • Environmental approval • Proof of payment of the legally required taxes (receipts from the tax authorities) • Legalized copy of the title to the real estate or the updated cadastral plan and land registry extract for informative purposes The building permit is issued by the City Hall. For Bucharest, the construction permit is issued by the General Mayor of Bucharest if the construction is outside the buildable area or if it exceeds a district area; or by the relevant district mayor if the construction is located in one of the six districts of Bucharest. The cost of the building permit is 1% of the value of the construction work. 14 Notify the City Hall of the start of construction works 1 day no charge Agency : City Hall According to Law 50/1991 on Approval of Construction works, the investor must notify the building permit issuing authority, the City Hall, of the date on which construction work will begin. Notify Bucharest Construction Inspectorate of commencement of construction and submit 1 day RON 11,822 15 the schedule of inspections Agency : Bucharest Construction Inspectorate According to Law 50/1991 on Approval of Construction works, the investor must notify the Bucharest Construction Inspectorate of the date on which construction work will begin. Notify the Bucharest Labor Inspectorate of the start of construction 1 day no charge 16 Agency : Bucharest Labor Inspectorate The investor or the project manager of the construction project must notify the local Labor Inspectorate if (i) the extent of the works is estimated to be over 30 days and there are at least 20 workers on the site simultaneously or (ii) the estimated workforce is greater than 500 workers/day. The notification must be submitted at least 30 days prior to the commencement of the construction works. Otherwise, the Labor Inspectorate will impose a fine. This is prescribed in Government Decision No. 300/2006 on minimum health and safety requirements for temporary construction sites. 17 Receive foundations work inspection 1 day no charge Agency : Bucharest Construction Inspectorate The schedule of inspections is described in the building permit. By law, BuildCo must pay 0.1% of the authorized value to the competent territorial inspectorate for construction. In addition, the investors or owners must pay the State Inspectorate for Construction a monthly payment equivalent to 0.70% of the value of the expenses incurred in that month for the execution of the construction work. 18 Receive frame inspection 1 day no charge Agency : Bucharest Construction Inspectorate 19 Notify City Hall of completion of construction and request final assessment 1 day no charge Agency : Department of Urbanism of the local City Hall BuildCo notifies the local public administration and other relevant authorities of the date of completion of construction so that the Acceptance Commission may be convened and a final assessment can be carried out. Notify Bucharest Construction Inspectorate of completion of construction and request final 1 day no charge 20 assessment Agency : Bucharest Construction Inspectorate At the end of construction works BuildCo must notify the State Construction Inspectorate and submit a request for the convening of the Acceptance Commission. Together with the notification, BuildCo must also submit proof of the actual value of construction works and a tax adjustment form. 21 Receive final inspection and obtain final assessment from the Acceptance Commission 15 days no charge Agency : Acceptance Commission The final acceptance commission will analyse: (i) the protocol(s) signed upon completion of the works, (ii) the manner the remaining works [mentioned by the initial protocol(s)] were performed and (iii) the report on the construction performance in time. Although prescribed by the law, in practice, the final inspection hardly ever takes place (especially in cases where the investor is also the construction company). Page 16 Doing Business 2020 Romania 22 Obtain water and sewage connection (Apa Nova SA) 75 days RON 2,300 Agency : Apa Nova SA According to the water and sewage authority (Apa Nova S.A.), this procedure takes approximately 2 -- 3 months due to a significant increase in demand and backlog. Inspections for utilities occur at the same time as the connection. 23 Obtain certificate attesting the existence of the construction from the City Hall 30 days no charge Agency : Department of Urbanism of the local City Hall According to Order 700/2014 of the National Agency for Cadaster and Real Estate Registry the City Hall will issue a certificate attesting the existence of the construction, which, together with the final assessment, is necessary for registering the building with OCPI. 24 Register the building with the Real Estate Registry 30 days RON 1,242 Agency : Real Estate Registry Before obtaining the certificate attesting the existence of construction and registering the building with the Office for Cadaster and Real Estate Registry, BuildCo needs to hire a cadastre/topographical engineer to update the cadastre plans with the construction. The building can be registered once it has been completed and approved. Pursuant to Order No. 700/2014 for the approval of the regulation regarding the endorsement, the reception and the registration with the Real Estate Registry, the standard registration time is 15 business days but if the applicant pays an additional fee, the registration time will be reduced to 5 business days. According to Order No. 39/2009 on the approval of fees for performing services by the National Agency for Cadastre and Land Registration ("Order 39"), the standard fee for registering the building upon reception is RON 60 plus 0.05% of the value of construction. For the fast-track process, the fee is the standard fee plus 4 times the standard fee. The fees can be found at the following link: http://www.OCPI.ro/images/documente/prima_inregistrare_imobil.pdf. Takes place simultaneously with previous procedure. Page 17 Doing Business 2020 Romania Details – Dealing with Construction Permits in Romania – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect. 1.0 building regulations? (0-1) Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Passing a certification exam. What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Passing a certification exam. Page 18 Doing Business 2020 Romania Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). • Does not include time spent gathering information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. - Tariffs effective in January of the current year are used for calculation of the price of electricity for • Regulatory monitoring of utilities’ performance (0–1) the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 19 Doing Business 2020 Romania Getting Electricity - Romania Standardized Connection Name of utility e-distribuție Muntenia Price of electricity (US cents per kWh) 9.2 City Covered Bucharest Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 9 5.1 4.4 3 (28 Economies) Time (days) 174 99.6 74.8 18 (3 Economies) Cost (% of income per capita) 405.8 271.9 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 7 6.2 7.4 8 (26 Economies) Figure – Getting Electricity in Romania – Score 0.0 32.2 95.0 87.5 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Romania and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 95.6: Czech Republic (Rank: 11) 75.6: Regional Average (Europe & Central Asia) 75.3: Moldova (Rank: 84) 63.3: Hungary (Rank: 125) 55.1: Bulgaria (Rank: 151) 53.7: Romania (Rank: 157) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Romania – Procedure, Time and Cost Time (days) Cost (% of income per capita) 450 160 400 Cost (% of income per capita) 140 350 120 300 Time (days) 100 250 80 200 60 150 40 100 20 50 0 0 1 2 3 4 5 6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 20 Doing Business 2020 Romania reflected here, see the summary below. Figure – Getting Electricity in Romania and comparator economies – Measure of Quality 9 8 8 7 7 7 7 6.2 Index score 6 6 5 4 3 2 1 0 Romania Bulgaria Czech Hungary Moldova Europe Republic & Central Asia Page 21 Doing Business 2020 Romania Details – Getting Electricity in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to the utility and await site inspection 5 calendar days RON 215 Agency : E-distribuție Muntenia The client submits the request for the technical connection approval (TCA). E-distribuție Muntenia analyses the submitted documents (town planning certificate, placement permit, construction permit etc.) and makes a site inspection, and if the connection solution is unique („obvious”) it issues a Solution Sheet and then the TCA. If there are several connection solutions, the customer must contract e-distribuție Muntenia to make the solution study. After e-distribuție Muntenia finishes the solution study, it submits it to the beneficiary and the beneficiary chooses the solution. Afterwards, e-distribuție Muntenia issues the TCA based on the solution chosen by the beneficiary. The TCA comprises all cost estimates for the connection works. 2 Receive site inspection and await a proposal study, a study solution and technical 25 calendar days RON 0 connection approval Agency : E-distribuție Muntenia The utility visits the site to visualize possible solutions for connection and also confirms the technical information provided by customers at the time of application. 3 Sign a declaration of easement in front of a notary 1 calendar day RON 80 Agency : Notary Because the transformer is located on the customer's private land, the customer must sign a declaration of easement in front of a notary, through which he conveys easement to e-distribuție Muntenia. This declaration is part of the file that has to be submitted to the utility to receive the connection contract, and it is also needed before external connection works can start. 4 Submit documents for connection contract and receive contract 10 calendar days RON 189,438 Agency : E-distribuție Muntenia The customer can request the connection contract at most within 12 months from the date of issue of the connection approval. The client submits the documents for the conclusion of the connection contract, chose the project designer, chose the electrical contractor (certified by ANRE) and commits to obtaining for E-Distributie right for "use of land" for the private properties. An assignment agreement ("convenție de atribuire") must be signed with the contractor. Within ten days, E-Distributie prepares the connection contract. After signing the contract, the client receives the invoice for the connection works. 5 Sign an easement contract in front of a notary and notify the property easement to the 1 calendar day RON 2,140 Cadastre and Land Registration office Agency : Notary/Cadastre and Land Registration office (OCPI) The customer must sign an easement contract in front of a notary, through which s/he conveys easement to the utility. The notary notifies the Cadastre and Land Registration office (OCPI) about the change in the propriety rights on the plot of land. The OCPI updates the land registry. Costs for a contract for “use of land” vary significantly depending on the surface land affected by capacity, circulation value of land depending on the area where it is located, public notary fees. 6 Obtain construction permit for connection works 30 calendar days RON 0 Agency : Municipality The electrical contractor prepares the design of the connection works. At the same time, the contractor applies to the municipality for a Town Planning Certificate for the connection works. The application must include topographical and cadastral plans issued by the Cadastre and Land Registration office. The Town Planning Certificate indicates all the approvals that the contractor must obtain for the new connection (environment approval, fire safety, approvals from other utilities). The contractor obtains such approvals and applies to the municipality for a construction permit. In order to obtain the construction permit, a fee equal to 1% of the construction works value has to be paid. 7 Conclude execution contract between e-distribuție Muntenia and the electrical contractor, 90 calendar days USD 0 await connection works, and submit internal wiring file Agency : Electrical contractor After the construction permit is issued, e-distribuție Muntenia concludes the execution contract with the contractor chosen by the consumer by direct entrusting. Through the contractor, the utility obtains an excavation permit from the municipality. After the excavation permit is issued, the works can begin. The customer can send in the internal wiring file. 8 Receive final inspection by utility, submit internal wiring file and receive connection 10 calendar days RON 0 certificate Agency : E-distribuție Muntenia At the end of the works carried out according to the execution contract, the electrical contractor notifies E-Distributie and requests the inspection and reception of the installation. After accepting the works, e-distribuție Muntenia issues the connection certificate. At this time it is mandatory that the internal wiring file is sent to e-distribuție Muntenia. Page 22 Doing Business 2020 Romania 9 Sign supply contract and receive meter installation 2 calendar days RON 0 Agency : E-distribuție Muntenia The consumer signs a supply contract with any supplier that operates in Bucarest. 48 hours after the signing of the contract, e-distribuție Muntenia comes to the warehouse to install the meter and electricity starts flowing. In some situations, it can be necessary to interrupt the overall grid of the neighborhood. Takes place simultaneously with previous procedure. Page 23 Doing Business 2020 Romania Details – Getting Electricity in Romania – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 7 Total duration and frequency of outages per customer a year (0-3) 2 System average interruption duration index (SAIDI) 3.1 System average interruption frequency index (SAIFI) 3.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.anre.ro/ro/info -consumatori/comparator- de-tarife Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 24 Doing Business 2020 Romania Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its • No prior contact with officials official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. - Has no occupants, and no other party holds a legal interest in it. • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 25 Doing Business 2020 Romania Registering Property - Romania Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 6 5.5 4.7 1 (5 Economies) Time (days) 14.5 20.8 23.6 1 (2 Economies) Cost (% of property value) 1.3 2.7 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 17.0 20.4 23.2 None in 2018/19 Figure – Registering Property in Romania – Score 58.3 93.5 91.6 56.7 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Romania and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 82.8: Moldova (Rank: 22) 80.1: Hungary (Rank: 29) 79.7: Czech Republic (Rank: 32) 75.8: Regional Average (Europe & Central Asia) 75.0: Romania (Rank: 46) 69.8: Bulgaria (Rank: 66) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 26 Doing Business 2020 Romania Figure – Registering Property in Romania – Procedure, Time and Cost Time (days) Cost (% of property value) 0.8 14 0.7 12 Cost (% of property value) 0.6 10 Time (days) 0.5 8 0.4 6 0.3 4 0.2 2 0.1 0 0 1 *2 3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 27 Doing Business 2020 Romania Figure – Registering Property in Romania and comparator economies – Measure of Quality 30 25.0 26.0 25 22.0 20.4 Index score 19.5 20 17.0 15 10 5 0 Romania Bulgaria Czech Hungary Moldova Europe Republic & Central Asia Details – Registering Property in Romania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain information from the Cadastre 8 days RON 80; (1. Consultation Agency : Cadastre and Real Estate Publicity Office of archives on the spot - The seller obtains information drafted by an authorized expert from the Cadastre and Real Estate cost 10 RON for 15 Publicity Office. This information includes: technical memorials, coordination inventory, analytical minutes (order 16/2019, calculation of the land, topographical description, area plan on a scale of 1:500; and on the scale annex 1, point 2.7.1) of 1:2000, description of property, the plan of the real estate, and a property statement regarding the identification of the limits of the measured real estate. 2. Land Book information excerpt - cost : 20 RON for The documentation shall include: online requests; 25 RON • Application form for requests registered by • A copy of the identification documents of the owner registry office. (order Order no. 700/2014 was repelled and replaced first by Order no. 16/2019 for the approval of the 16/2019, annex 1, point tariffs for the services provided by the Real Estate Office published in the Official Gazette on 2.7.2.) January 10, 2019. Order 16 has been subsequently amended on February 28, 2019 by Order no. 3. Certified copies of 796/2019 which has been published in the Official Gazette 174 on March 5, 2019 and entered into documents from the force on March 11, 2019. documents files and land Any document having a public character (e.g., location layouts, cadastral data) can be obtained by books - costs: 25 RON per any person and not only by the owner of the property. file (order 16/2019, annex, point 2.7.5. ) Time: 4. Certificate for the 1. Consultation of archives: 1 day (order 117/2016 point 2.7.1) identification of the 2. Obtaining a Land Book information excerpt (order 117/2016, annex 1, point 2.7.2.): topographic/cadastre 2 business days (regular procedure) and 1 business day (expedited procedure ) number and land book 3. Obtaining certified copies of documents from the files and land books (order 117/2016, annex 1, number according to the point 2.7.5.): 2 business days (regular procedure); 1 business day (expedited procedure) name of the owner - cost: 4. Obtaining the certificate for the identification of the topographic/cadastral number and land book 10 RON per owner/land number according to the name of the owner (order 117/2016, annex 1, point 2.7.6.): 10 business book office (order 16/2019, days (regular procedure ) and 3 business days (expedited procedure ) point 2.7.6) 5. Obtaining cadastral plan excerpts (order 117/2016, annex 1, point 2.7.7.): 3 business days 5. Cadastre plan excerpts : (regular procedure ) and 1 business day (expedited procedure ) cost - 15 RON per property (order 16/2019, annex, point 2.7.7)) 2 Obtain the fiscal certificate from the direction for public taxes of the Municipality 4 days no charge Agency : Municipality The Seller obtains a clearance certificate from the direction for public taxes of the Municipality from the district were the real estate is located attesting that the property is not owned by someone else and that there are no unpaid taxes. This fiscal certificate is required for completion of a transfer of ownership. The fiscal certificate is valid for up to 30 days for legal entities (90 days for individuals). The documentation shall include: • An application from the owner • A copy of the identification documents of the owner • The last accounting records of the company • The power of attorney for the company's representative Page 28 Doing Business 2020 Romania 3 Obtain the Land Registry extract (non-encumbrance certificate) from the Land Registry Less than one day, RON 40; (Authentication office online excerpt - 40 RON in Agency : Cadastre and Real Estate Publicity Office regular Procedure (2 For the notarization of the transfer deed of an immovable, the notary public requests an business days), authentication excerpt from the Land Registry online. The authentication excerpt may only be 200 RON in expedited obtained by a notary public. Procedure (1 day);) The validity of the authentication excerpt is of 10 business days, starting with the day when the request application form was requested. During the 10-business days validity period, the Land Registry office clerk is not entitled to register any other operation in the relevant Land Registry, save for the one for which the excerpt was required; the Land Registry is blocked during the aforementioned period, in order to ensure the security of the real estate transactions. However, if during the validity term, the notarial deed for which the excerpt was requested is submitted to the Cadastre and Real Estate Publicity Office for registration or if the notary public made an express request in this sense, the validity of the excerpt expires. 4 The notary authenticates the transfer deed 2 days RON 12,843.21; (RON Agency : Notary Public 5,080 + 0,44%, of the The notary public verifies the fiscal certificate and the Land Registry excerpt and notarizes the transaction value sale purchase agreement. Without these documents, the notary public may not notarize the exceeding RON 600,001 agreement. According to the actual legal provision, the sale purchase agreement shall be drafted (notary fees) only by the notary public.The costs related to the procedure could be paid either directly to the notary public, or via bank transfer. Though it is not mandatory, a lawyer may conduct a due For transactions with the diligence before this procedure, by perusing the previous successive transfers and owners of the value of the transaction (in property. The notary public is obliged to verify all encumbrances and relief measures instituted RON): over the immovable to be sold in the public records and it is liable for the failure to specify in the • Below RON 15,000 - the notarial deed the encumbrances and the relief measures over the immovable - see also 2.1.3., fee is 2,2% but no less above. The documentation for the notarization of the transfer deed includes, among others, the than RON 150 following: • From RON 15,001 to (i) the property title in original, RON 30,000 - the fee is (ii) the cadastral documents of the property (obtained in Procedure 1), RON 330 + 1,6% for the (iii) the Fiscal certificate from the local taxes office (obtained in Procedure 3), (iv) identification certificates/documents for the signatory parties (identity cards, passports, amount exceeding RON registration certificates, etc), 15,001 (v) documents attesting the capacity of the signatories to sign the sale purchase agreement • From RON 30,001 to (power of attorney, shareholders' decision, articles of incorporation, etc.). RON 60,000 - the fee is The Seller - legal entity has to pay an income tax of 16% applied on the profit resulted in the RON 580 + 1,3% for the company's balance sheet, including this transaction. amount exceeding RON 30,001 • From RON 60,001 to RON 300,000 - the fee is RON 970 + 0,9% for the amount exceeding RON 60,001 • From RON 300,001 to RON 600,000 - the fee is RON 3,130 + 0,65% for the amount exceeding RON 300,001 • Over RON 600,001 - the fee is RON 5,080 + 0,44% for the amount exceeding RON 600,001) 5 Register the title with the Land Registry Office 3 days RON 16,821.83; (0.5% of Agency : Land Registry office the property value without The same public notary applies for registration of the property title at the Land Book Office, by VAT (regular Procedure); sending the application and the original notary deed, directly or by fax, to the district Land Book 2% of the property value Office where the real estate is placed. Therefore, the registration is performed ex officio by the without VAT (expedited notary, based on the authenticated sale purchase act. An expedited option is available given that an extra fee of 4 times the normal fee will be added. The extra fee cannot be more than RON Procedure). 5,000. Registration fees are 0.5% of property value with a minimum of RON 60 according to Order no 39/06.04.2009, for a Procedure that takes 9 days. An expedited Procedure is available (3 days) The extra fee paid for the for an additional fee of 2% of property value. According to the article 1 paragraph 6 of Order no expedited Procedure 39/2009, this additional fee cannot exceed RON 5000. Only when the real estate is registered in cannot exceed RON the Land Book for the first time a tax of RON 120 should be paid for this registration. In case the 5,000.) owner registers his/her property for the first time (i.e. following the reconstitution of the ownership for which the cadastre is made for the first time) the terms for registration are 21 days (regular Procedure) or 7 days (expedited Procedure). The documentation shall include: • Sale-purchase contract (notarized in Procedure 4) • Fiscal certificate (obtained in Procedure 2) • Cadastre certificate (obtained in Procedure 1) • ID of the buyer • A registration application • The property title, all the originals, plus a legalized copy from a public notary • Proof of total payment Page 29 Doing Business 2020 Romania 6 File the fiscal declaration confirming the acquisiton of the property 1 day RON 10 Agency : Local Tax Department The fiscal declaration concerning the immovable acquisition should be filled in by the purchaser at the Local Tax Department within a 30-day term since the notarization of the transfer deed. The documentation shall include: tax statement for the immovable, the property title, in original and a copy, accounting documents (invoice, analytical balance, balance sheet, etc.), cadastral documents, copy of the registration certificate of the company. Takes place simultaneously with previous procedure. Page 30 Doing Business 2020 Romania Details – Registering Property in Romania – Measure of Quality Answer Score Quality of the land administration index (0-30) 17.0 Reliability of infrastructure index (0-8) 5.0 Type of land registration system in the economy: Deed Registration System What is the institution in charge of immovable property registration? Bucharest Cadastre and Land Registration Office ("Oficiul de Cadastru si Publicitate Imobiliara Bucuresti") In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Bucharest Cadastre and Land Registration Office ("Oficiul de Cadastru si Publicitate Imobiliaria Bucuresti") In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Single database 1.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 6.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.ocpimm.ro /ocpi_web/formular/A CTE.pdf Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.ocpib.ro/fis iere/tarife_Mof_253_o 39.pdf Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://www.ocpib.ro/fis iere/termene.xls. Also available at the local district Cadaster and Land Registration Offices. Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency Yes 1.0 in charge of immovable property registration? Contact information: http://ancpi.ro/pages/l egea544.php? lang=ro Page 31 Doing Business 2020 Romania Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Number of property transfers in the largest business city in 2018: 48208.0 Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Link for online access: http://www.ocpib.ro/fis iere/ODG_16_07012 019.pdf Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, online 0.5 if so, how does it communicate the service standard? Link for online access: http://www.ocpib.ro/fis iere/termene.xls Is there a specific and independent mechanism for filing complaints about a problem that occurred at the Yes 0.5 cadastral or mapping agency? Contact information: http://www.ancpi.ro/in dex.php/informatii- publice-3/interes- public/solicitari- conform-legii-544- 2001 Geographic coverage index (0–8) 0.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 6.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Article 56 of Law no. 71/2011 in conjunction with Articles 885-886, 1675 of the New Romanian Civil Code Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: Article 44 of the Romanian Constitution; Articles 901, 909, 931 of the Romanian Civil Code. Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 Page 32 Doing Business 2020 Romania What is the Court of first instance in charge of a case involving a standard land dispute between two local The Bucharest businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Tribunal in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 1 and 2 2.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 33 Doing Business 2020 Romania Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 34 Doing Business 2020 Romania Getting Credit - Romania Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Strength of legal rights index (0-12) 9 7.8 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.7 6.8 8 (53 Economies) Credit registry coverage (% of adults) 19.4 24.0 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 54.5 41.7 66.7 100.0 (14 Economies) Figure – Getting Credit in Romania – Score 80.0 Score - Getting Credit Figure – Getting Credit in Romania and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 80.0: Romania (Rank: 25) 75.0: Hungary (Rank: 37) 72.2: Regional Average (Europe & Central Asia) 70.0: Czech Republic (Rank: 48) 70.0: Moldova (Rank: 48) 65.0: Bulgaria (Rank: 67) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 35 Doing Business 2020 Romania Figure – Legal Rights in Romania and comparator economies 10 9 9 9 8 8 7.8 8 7 Index Score 7 6 5 4 3 2 1 0 Romania Bulgaria Czech Hungary Moldova Europe Republic & Central Asia Page 36 Doing Business 2020 Romania Details – Legal Rights in Romania Strength of legal rights index (0-12) 9 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Romania and comparator economies 8 7 7 6.7 7 6 6 Index Score 6 5 5 4 3 2 1 0 Romania Bulgaria Czech Hungary Moldova Europe Republic & Central Asia Page 37 Doing Business 2020 Romania Details – Credit Information in Romania Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? Yes Yes 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 7,057,000 2,200,496 Number of firms 0 316,269 Total 7,057,000 2,516,765 Percentage of adult population 54.5 19.4 Page 38 Doing Business 2020 Romania Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members. • Ease of shareholder suits index (0–10): Access to internal - Has not adopted bylaws or articles of association that go beyond the minimum requirements. corporate documents; Evidence obtainable during trial and allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and extent of shareholders rights, extent of ownership and control directors that approved the transaction. and extent of corporate transparency indices • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 39 Doing Business 2020 Romania Protecting Minority Investors - Romania Stock exchange information Stock exchange Bucharest Stock Exchange Stock exchange URL http://www.bvb.ro Listed firms with equity securities 83 City Covered Bucharest Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Extent of disclosure index (0-10) 9.0 7.5 6.5 10 (13 Economies) Extent of director liability index (0-10) 4.0 5.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 5.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 5.0 3.4 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 3.0 3.7 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 5.0 4.1 5.7 7 (13 Economies) Figure – Protecting Minority in Romania – Score 62.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Romania and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 74.0: Bulgaria (Rank: 25) 68.0: Moldova (Rank: 45) 62.0: Czech Republic (Rank: 61) 62.0: Romania (Rank: 61) 61.0: Regional Average (Europe & Central Asia) 54.0: Hungary (Rank: 97) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 40 Doing Business 2020 Romania Figure – Protecting Minority Investors in Romania and comparator economies – Measure of Quality Romania 5 4 9 3 5 5 Bulgaria 7 2 10 4 6 8 Czech Republic 4 6 2 5 5 9 Hungary 5 4 2 5 4 7 Moldova 6 4 7 4 5 8 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Europe & Central Asia 4.1 4.8 7.2 3.6 3.4 6.8 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 41 Doing Business 2020 Romania Details – Protecting Minority Investors in Romania – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 4.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 5.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 3.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 42 Doing Business 2020 Romania Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Extent of corporate transparency index (0-7) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 43 Doing Business 2020 Romania Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured • Collecting information, computing tax payable at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 44 Doing Business 2020 Romania Paying Taxes - Romania Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Payments (number per year) 14 14.4 10.3 3 (2 Economies) Time (hours per year) 163 213.1 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 20.0 31.7 39.9 26.1 (33 Economies) Postfiling index (0-100) 76.8 68.2 86.7 None in 2018/19 Figure – Paying Taxes in Romania – Score 81.7 82.4 100.0 76.8 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Romania and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 85.2: Moldova (Rank: 33) 85.2: Romania (Rank: 32) 81.4: Czech Republic (Rank: 53) 80.6: Hungary (Rank: 56) 77.9: Regional Average (Europe & Central Asia) 72.3: Bulgaria (Rank: 97) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 45 Doing Business 2020 Romania Figure – Paying Taxes in Romania and comparator economies – Measure of Quality 100 90.5 90.8 87.5 90 80 76.8 71.2 68.2 Index score 70 60 50 40 30 20 10 0 Romania Bulgaria Czech Hungary Moldova Europe Republic & Central Asia Page 46 Doing Business 2020 Romania Details – Paying Taxes in Romania Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Employee paid - 0.0 online and jointly 35.0% (10% as gross salaries 39.48 withheld Social security health fund contributions contributions and 25% as pension contributions) Corporate 1.0 online 25.0 16% taxable profit 15.58 income tax Work insurance 1.0 online 82.0 2.25% gross salaries 2.54 contribution Building tax 2.0 1% building value 0.98 Environmental 1.0 RON 2 per kilo of weight of 0.89 taxes packaging packaging Vehicle tax 2.0 varies fixed fee 0.03 depending on type of vehicle Land tax 2.0 various rates land area 0.02 Stamp duty on 0.0 various rates type of contract 0.00 small amount contracts Firm tax 2.0 A fixed amount The surface of 0.00 per square meter the lighting panel of lighting panel Fuel tax 1.0 included in fuel 0.00 small amount price Urbanism tax 1.0 surface 0.00 Value added tax 1.0 online 56.0 19% value added 0.00 not included (VAT) Totals 14 163 20.0 Page 47 Doing Business 2020 Romania Details – Paying Taxes in Romania – Tax by Type Taxes by type Answer Profit tax (% of profit) 15.6 Labor tax and contributions (% of profit) 3.4 Other taxes (% of profit) 1.0 Page 48 Doing Business 2020 Romania Details – Paying Taxes in Romania – Measure of Quality Answer Score Postfiling index (0-100) 76.8 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 75% - 100% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 23.0 55.0 Time to obtain VAT refund (weeks) 27.0 53.2 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 2.0 99.1 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 49 Doing Business 2020 Romania Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 50 Doing Business 2020 Romania Trading across Borders - Romania Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Time to export: Border compliance (hours) 0 16.1 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 0 150.0 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 1 25.1 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 0 87.6 33.4 0 (20 Economies) Time to import: Border compliance (hours) 0 20.4 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 0 158.8 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 1 23.4 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 0 85.9 23.5 0 (30 Economies) Figure – Trading across Borders in Romania – Score 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Romania and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 97.4: Bulgaria (Rank: 21) 92.3: Moldova (Rank: 38) 87.3: Regional Average (Europe & Central Asia) 100: Czech Republic (Rank: 1) 100: Hungary (Rank: 1) 100: Romania (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 51 Doing Business 2020 Romania Figure – Trading across Borders in Romania – Time and Cost Time (hours) Cost (USD) 1.2 1.2 1 1 1 1 Time (hours) Cost (USD) 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 0 0 0 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 52 Doing Business 2020 Romania Details – Trading across Borders in Romania Characteristics Export Import Product HS 85 : Electrical machinery and equipment and HS 8708: Parts and accessories of motor vehicles parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner Germany Germany Border Romania-Hungary border crossing Romania-Hungary border crossing Distance (km) 610 610 Domestic transport time (hours) 9 9 Domestic transport cost (USD) 650 650 Details – Trading across Borders in Romania – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 0.0 0.0 customs authorities Export: Clearance and inspections required by 0.4 0.0 agencies other than customs Export: Port or border handling 0.4 0.0 Import: Clearance and inspections required by 0.0 0.0 customs authorities Import: Clearance and inspections required by 0.4 0.0 agencies other than customs Import: Port or border handling 0.4 0.0 Page 53 Doing Business 2020 Romania Details – Trading across Borders in Romania – Trade Documents Export Import CMR waybill CMR waybill Commercial invoice Commercial invoice Packing list Packing list Intrastat Intrastat Page 54 Doing Business 2020 Romania Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. • Alternative dispute resolution (0-3) Page 55 Doing Business 2020 Romania Enforcing Contracts - Romania Standardized Case Claim value RON 85,339 Court name Bucharest Court of First Instance City Covered Bucharest Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Time (days) 512 496.4 589.6 120 (Singapore) Cost (% of claim value) 25.8 26.6 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 14.0 10.3 11.7 None in 2018/19 Figure – Enforcing Contracts in Romania – Score 67.9 71.1 77.8 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Romania and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 72.2: Romania (Rank: 19) 71.0: Hungary (Rank: 25) 67.0: Bulgaria (Rank: 42) 65.5: Regional Average (Europe & Central Asia) 63.6: Moldova (Rank: 62) 56.4: Czech Republic (Rank: 103) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 56 Doing Business 2020 Romania Figure – Enforcing Contracts in Romania – Time and Cost Time (days) Cost (% of claim value) 800 40 Cost (% of claim value) 700 678 33.8 35 605 585 589.6 600 564 28.6 30 26.6 Time (days) 496.4 512 25.8 500 21.5 25 400 18.6 20 15.0 300 15 200 10 100 5 0 0 Bulgaria Czech Europe Hungary Moldova OECD Romania Republic & high Central income Asia Page 57 Doing Business 2020 Romania Figure – Enforcing Contracts in Romania and comparator economies – Measure of Quality Romania 3 4 2 5 Bulgaria 2.5 2.5 2 3.5 Czech Republic 2 3 3 1.5 Hungary 3 4 2.5 3 Moldova 2.5 3 2 3.5 OECD high income 2.5 3.2 2.4 3.6 Europe & Central Asia 2.3 2.8 1.3 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Romania Indicator Time (days) 512 Filing and service 52 Trial and judgment 365 Enforcement of judgment 95 Cost (% of claim value) 25.8 Attorney fees 7.7 Court fees 8.1 Enforcement fees 10 Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 5.0 Case management (0-6) 4.0 Court automation (0-4) 2.0 Alternative dispute resolution (0-3) 3.0 Page 58 Doing Business 2020 Romania Details – Enforcing Contracts in Romania – Measure of Quality Answer Score Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 5.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? Yes 1.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? Yes 1.0 Court automation (0-4) 2.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? Yes 1.0 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 59 Doing Business 2020 Romania 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or Yes conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 60 Doing Business 2020 Romania Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 61 Doing Business 2020 Romania Resolving Insolvency - Romania Indicator Romania Europe & Central OECD high Best Regulatory Asia income Performance Recovery rate (cents on the dollar) 34.4 38.5 70.2 92.9 (Norway) Time (years) 3.3 2.3 1.7 0.4 (Ireland) Cost (% of estate) 10.5 13.3 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 13.0 11.2 11.9 None in 2018/19 Figure – Resolving Insolvency in Romania – Score 37.0 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Romania and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 80.1: Czech Republic (Rank: 16) 59.1: Romania (Rank: 56) 57.8: Bulgaria (Rank: 61) 55.7: Regional Average (Europe & Central Asia) 55.0: Hungary (Rank: 66) 54.8: Moldova (Rank: 67) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 62 Doing Business 2020 Romania Figure – Resolving Insolvency in Romania – Time and Cost Time (years) Cost (% of estate) 3.5 3.3 17.0 3.3 18 14.5 2.8 15.0 16 Cost (% of estate) 3 13.3 14 Time (years) 2.5 2.3 2.1 2.0 10.5 12 2 9.0 1.7 9.3 10 1.5 8 6 1 4 0.5 2 0 0 Bulgaria Czech Europe Hungary Moldova OECD Romania Republic & high Central income Asia Page 63 Doing Business 2020 Romania Figure – Resolving Insolvency in Romania and comparator economies – Measure of Quality Romania 6 2.5 2 2.5 Bulgaria 3 2.5 4 2.5 Czech Republic 5.5 2.5 3 3 Hungary 5 2.5 2 0.5 Moldova 4 2.5 3 2.5 OECD high income 5.3 2.8 2.1 1.9 Europe & Central Asia 4.5 2.5 2.3 1.7 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Romania and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 80 70 67.5 60 50 44.2 37.7 38.5 40 34.4 32.1 30 20 10 0 Romania Bulgaria Czech Republic Hungary Moldova Europe & Central Asia Page 64 Doing Business 2020 Romania Details – Resolving Insolvency in Romania Indicator Answer Score Proceeding liquidation (after an According to the Romanian Insolvency Code (Law no. 85/2014), the procedure will start with an observation period, attempt at followed by reorganization and, if the reorganization fails, it will be followed by liquidation. Article 66 para (1) of the reorganization) Insolvency Code establishes the obligation for Mirage management to file for insolvency within 30 days of the occurrence of insolvency. At first, Mirage might propose a reorganization plan in order to benefit from the moratorium of all ongoing judicial proceedings involving its creditors and to renegotiate payment with creditor. However, reorganizations in Romania are rare and banks prefer liquidation to return its money faster. Given this context, according to Article 143 para. (1) of the Insolvency Code, if the debtor fails to comply with the reorganization plan or its activity brings losses, the judicial receiver or any of the creditors may request the syndic judge to approve the commencement of liquidation procedure against the debtor. Outcome piecemeal sale The hotel will continue its current activity only during the observation period (art. 87 of Law 85/2014) and in the reorganization procedure according to the reorganization plan (art. 141(1) of Law 85/2014). If Mirage enters the liquidation procedure, then the hotel will stop operating, as it is unlikely that a buyer can be found willing to purchase the hotel as a going concern and continue operating it. Time (in years) 3.3 Insolvency proceedings last on average 3-5 years due to a large number of cases filed and delaying tactics used by the debtors to avoid liquidation of the company. Most statutory deadlines cannot be complied with in practice. The main procedural steps for the completion of the insolvency process for Mirage are: (i) the observation period (as of the opening of the insolvency proceedings and until the reorganization plan is approved or the liquidation proceedings are initiated) may take a maximum of 12 months (art. 112(3) of the Insolvency Code); (ii) reorganization may take 4 years after the confirmation of the plan, but this period may be extended (art. 139(5) of the Insolvency Code). After one year or one year and a half, the course of proceedings becomes apparent: either successful completion of reorganization (in very few cases), or the liquidation proceedings are initiated, (iii) liquidation may take from 9 months to 2.5 years, depending on the nature and quantity of the debtor’s assets to be capitalized on. Cost (% of estate) 10.5 The cost of the proceedings will amount to approximately 10.5% of the value of the debtor's estate. The major expenses will include fees of the insolvency representative (around 8%) and attorneys' fees (around 2%). Other expenses are minimal. Recovery rate 34.4 (cents on the dollar) Page 65 Doing Business 2020 Romania Details – Resolving Insolvency in Romania – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature Management of debtor's assets index (0-6) 6.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary 1.0 unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 2.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as Yes 1.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 2.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 66 Doing Business 2020 Romania Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 67 Doing Business 2020 Romania Employing Workers - Romania Details – Employing Workers in Romania Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 36.0 Maximum length of fixed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 496.6 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.0 Premium for night work (% of hourly pay) 25.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 75.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 20.0 Paid annual leave for a worker with 5 years of tenure (working days) 20.0 Paid annual leave for a worker with 10 years of tenure (working days) 20.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 20.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.0 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.0 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.0 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 0.0 Page 68 Doing Business 2020 Romania Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0 Unemployment protection after one year of employment? Yes Page 69 Doing Business 2020 Romania Business Reforms in Romania From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: Romania made starting a business easier by allowing voluntary value added tax registration, which is less time consuming than mandatory registration. Paying Taxes: Romania made paying taxes less costly by eliminating five employer-paid taxes and contributions. At the same time, Romania introduced a new work insurance contribution paid by the employer. DB2019 Starting a Business: Romania made starting a business more complicated by introducing fiscal risk assessment criteria for value added tax applications, thereby increasing the time required to register as a value added tax payer. DB2018 Registering Property: Romania improved the quality of land administration by digitizing ownership and land records. DB2017 Starting a Business: Romania made starting a business more difficult by increasing the time to register for Value Added Tax. DB2016 Paying Taxes: Romania made paying taxes less costly for companies by reducing the rate for social security contributions and the rate for accident risk fund contributions paid by employers. Enforcing Contracts: Romania made enforcing contracts easier by transferring some enforcement responsibilities from the court to the bailiff, by making it easier for the bailiff to obtain information from third parties and by making use of the electronic auction registry mandatory. Resolving Insolvency: Romania improved its insolvency system by introducing time limits for the observation period (during which a reorganization plan must be confirmed or a declaration of bankruptcy made) and for the implementation of the reorganization plan; by introducing additional minimum voting requirements for the approval of the reorganization plan; and by clarifying rules on voidable transactions and on payment priority for claims of post-commencement creditors. DB2015 Paying Taxes: Romania made paying taxes easier for companies, with the majority now using the electronic system for filing and paying taxes. DB2014 Starting a Business: Romania made starting a business easier by transferring responsibility for issuing the headquarters clearance certificate from the Fiscal Administration Office to the Trade Registry. Paying Taxes: Romania made paying taxes easier and less costly for companies by reducing the payment frequency for the firm tax from quarterly to twice a year and by reducing the vehicle tax rate. Enforcing Contracts: Romania made enforcing contracts easier by adopting a new civil procedure code that streamlines and speeds up all court proceedings. DB2013 Starting a Business: Romania made starting a business easier by reducing the time required to obtain a clearance certificate from the fiscal administration agency. Getting Credit: Romania strengthened its legal framework for secured transactions by allowing the automatic extension of security interests to the products, proceeds and replacement of collateral. DB2012 Starting a Business: Romania made starting a business more difficult by requiring a tax clearance certificate for a new company’s headquarters before company registration. Paying Taxes: Romania made paying taxes easier for companies by introducing an electronic payment system and a unified return for social security contributions. It also abolished the annual minimum tax. Resolving Insolvency: Romania amended its insolvency law to shorten the duration of insolvency proceedings. Employing Workers: Romania increased the maximum duration of fixed-term contracts and also decreased the severance pay applicable in case of redundancy dismissal of employees. Page 70 Doing Business 2020 Romania DB2011 Dealing with Construction Permits: Romania amended regulations related to construction permitting to reduce fees and expedite the process. Paying Taxes: Romania introduced tax changes, including a new minimum tax on profit, that made paying taxes more costly for companies. Resolving Insolvency: Substantial amendments to Romania’s bankruptcy laws—introducing, among other things, a procedure for out-of-court workouts—made dealing with insolvency easier. DB2010 Dealing with Construction Permits: Romania made dealing with construction permits more costly by introducing a new fee. Registering Property: Romania speeded up property registration by introducing expedited procedures at the land registry and the cadastre. Paying Taxes: Romania made paying taxes more costly for companies by increasing labor taxes. Resolving Insolvency: Romania made resolving insolvency more difficult by requiring that a percentage of recovered amounts be transferred to a fund for reimbursing the expenses of insolvency administrators in cases where the debtor has no assets. DB2009 Paying Taxes: Romania made tax compliance more time consuming for companies by introducing mandatory accounting books—though at the same time it made paying taxes less costly by reducing the corporate income tax rate. Enforcing Contracts: Romania made the enforcement of judgments simpler and faster by eliminating the need for an enforcement order and allowing the attachment of credit balances and accounts receivable. DB2008 Starting a Business: Romania made starting a business more difficult by implementing several laws that added to the procedures and time required. Getting Credit: Romania strengthened its secured transactions system by introducing provisions allowing parties to a security agreement to agree to out-of-court enforcement of the security right when signing the agreement. Paying Taxes: Romania made paying taxes less costly for companies by reducing employers’ social security contribution rate. Employing Workers: Romania increased the severance payments applicable in redundancy dismissals. Page 71 Doing Business 2020 Romania Page 72