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Company Formation Moldova

Establish a Branch in Moldova

Updated on Thursday 01st August 2019

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Companies can establish a branch in Moldova as a manner of entering their market and expanding their business operations in the European region. The branch is a type of business establishment, not a business entity, that can be used to engage in the same business operations as the parent company abroad. The foreign company will need to present the formal decision of the founders attesting the fact that they are willing to open a company in Moldova under this particular business form.
 
The branch, compared to the subsidiary, is different in terms of the parent company’s level of liability and requires a slightly different incorporation process. However, the requirement to register the business with the local authorities remains.
 
Company formation in Moldova can be aided by our team of specialists. We provide complete services for the formation of branches as well as other business forms, as preferred by the founders. In this article, we describe the characteristics of the branch, however, investors can also find information about subsidiaries with the help of our agents.
 

What are the main characteristics of the branch?

 
Investors who are interested in company incorporation in Moldova are advised to fully understand the characteristics of the chosen business form before they start the formation and registration process. The branch is a business form that has a number of important traits, out of which the liability of the parent company is the first one that needs to be taken into consideration. Below, we present the main features of the branch:
 
  • - Separation: the branch is not a separate legal entity from the parent company, it is merely its extension in Moldova.
  • - Liability: the parent company abroad remains the one that is liable for the debts and obligations of its Moldavian branch.
  • - Business activities: the branch is limited to performing only the same business activities as the foreign company.
  • - Representative: when the branch is incorporated, a representative is appointed to oversee the local activities.
  • - Registration: although not a company with legal entity, the branch still needs to be registered with the State Register of Legal Entities.
  • - Reporting: the branch will need to keep its own accounting records for its activities in Moldova.
 
Companies that wish to set up a company in Moldova may find that, despite the liability, the branch is a suitable manner in which they operate their activities in this country.
 

What are the requirements for branch registration in Moldova?

 
The law which governs the registration of branches in Moldova is the Law no. 1265-XIV “on state registration of enterprises and organizations” adopted on the 5th of October, 2000.
The law specifies exactly the documents that must be registered. The registration must be performed at one of the territorial offices of the State Chamber of Registration (situated in Chisinau, Edinet, Hincesti, Cahul, Causeni, Orhei, Soroca and Ungheni, Balti, Comrat).
 
An entrepreneur must present a dossier containing the standard application, the certificate of registration and an extract from the register where the foreign company is registered, the memorandum of association, the articles of association or any other constitutive document, the minute of the meeting when the decision of opening a branch was taken, the passport copies of the representatives, the criminal record of the representative, proof of payment of the registration fee and the stamp duty.
 
The extract from the foreign register, the constitutive documents and the criminal record of the branch’s representative must be presented in original or in copies approved by notary and legalized at a consular office of the Republic of Moldova from the foreign country.
 
If the company’s representatives are represented by an attorney he must also present the power of attorney.
 
One of our agents who specialize in company formation in Moldova can assist foreign companies that are interested in opening a branch here. You can reach out to us for more details about the registration requirements, a list of documents required for registration (as needed by each company) as well as assistance for the actual registration process with the help of one of our agents.
 

When can the branch start its activities in Moldova?

 
As a result o fthe aforementioned actions, the State Registration Chamber will issue a registration number (IDNO number). Also the certificate of registration and the constitutive acts are released and the Ministry of Information, Technologies and Communication is releasing an official stamp. The statistical codes are also obtained from the State Registration Chamber.
 
The process of registration the branch at the State Chamber in Moldova doesn’t take longer than five working days after depositing all the relevant documents. The registration can also be performed in 24 hours or in 4 hours if there is a request for this and special fee is paid.
 
A bank account must be opened then, in order to perform any financial transactions.
 
The last actions that a Mondavian branch must take before starting business are registering at the Social Security Fund and the National Medical Insurance Company.
 
All the changes that interfere in the status of the branch or in the status of the foreign parent company must be reported immediately at the State Chamber of Commerce, if not, penalties may be applied.
 

Conditions for doing business in Moldova

 
A branch in Moldova is subject to the local taxation regime, as such: while a resident company is taxed on its worldwide income, the branch, as a non-resident, is taxed on its income derived from Moldavian sources. The corporate income tax in the country is 12%, however, certain companies may calculate their income tax differently. This only applies to those companies that are not registered VAT payers, however, this may not always be the case for branches and it does not apply in any case to businesses that offer services related to business management consulting as well as those in a few other selected fields. One of our agents who specialize in company formation in Moldova can provide investors with more details about corporate taxation and reporting. 
 
Foreign investments in Moldova are encouraged and the country offers favorable conditions for doing business. The following data issued by the National Bureau of Statistics highlights the situation for small and medium sized companies in 2018:
 
- last year, the number of small and medium-sized companies was 55.700;
- in 2018, out of the total number of small and medium companies, the majority were involved in trade.
- in 2017, the number of small and medium sized businesses was 53.600 thousand; 
 
The country’s competitive tax regime, the proximity to markets of interest as well as the low business and employment costs are important reasons why investors choose to invest in Moldova. Contact us for detailed information on how to open a company in Moldova, a branch or a subsidiary. 
 

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