The world continues to globalize and a growing number of entrepreneurs choose to open companies in foreign countries. There is an underappreciated country in Europe that seldom attracts international business people’s attention while it is certainly worth considering. The name of the country is Moldova.
The Republic of Moldova offers a great number of advantages to foreign entrepreneurs wishing to set up companies there. The taxes are low in Moldova in comparison to other European states, the administrative bodies are highly flexible, the use of electronic signatures is allowed, all the reports can be filed in the electronic form, the bank system is well-developed in the country, and the overall business climate is superb.
Main advantages of Moldova for entrepreneurs in brief
If you establish a company in Moldova, you will be able to build a strong foundation for your international business activities. The jurisdictions offers the following main advantages to locally registered companies that are conduct their business operations in other countries:
- Moldova is a European country and you can make use of the prestige that the continent enjoys. A company can be registered in Moldova very fast. If you choose to buy a shelf company in the country, it can be done within hours. The opportunity to set up an international company in Europe in an instant is not to be missed.
- Companies in Moldova have to keep the accounting records but there are no audit requirements. Some types of companies do not even have to submit financial reports.
- The tax system is highly beneficial in Moldova. Your Moldavian company can be paying nothing in taxes at all. The condition that you would have to meet to achieve the goal is as follows: do business abroad. If your Moldavian-based company derives profits from other countries, the profits are not taxed in Moldova.
- The banking system is advanced in the country. You can register a company with a bank account in Moldova and go into business straight away. The country boasts the following important advantage, among others: setting up a corporate bank account in Moldova is a simpler task than setting up bank accounts in many other European countries.
- Your company assets will be perfectly safe in Moldova: the state administration guarantees their security. As far as your personal assets are concerned, registering an LLC in Moldova will leave them intact.
- The investment environment is extremely favorable in Moldova. If you decide to do business in the country, you are going to be taxed but the tax rates are not too high in Moldova. At the same time, you can find plenty of business opportunities there.
A few details about the taxation system in Moldova
Moldovian-based companies can choose one of the following two taxation regimes:
Taxation regime №1: The company is not registered as a VAT payer and it pays a tax at the rate of 4% of its annual turnover. This tax regime is applicable if the company’s turnover does not exceed 60,000 euros per month. If it does, tax regime №2 is applied automatically.
Taxation regime № 2: The company is registered as a VAT payer and it pays a tax at the rate of 12% of its registered gross profit.
The profit tax is payable before March 25 of the following year. When the profit is calculated, the company’s operational costs are deducted from its gross income.
Taxation regime №1 suits small- and medium-sized companies with low operational costs.
Taxation regime №2 has to be applied by companies with large annual turnovers.
A non-resident of Moldova who registers a company in the country and pays him/ herself dividends has to pay a 6% dividend tax.
Therefore, if you register a foreign company in Moldova and you have to use tax regime №2, you will have to pay only 18% in taxes in total (12% company tax plus 6% personal tax).
Moldavian company registration
The process of registering a company in Moldova is simple. Most foreigners establishing companies in the country register LLCs or corporations. There is a minimum charter capital requirement and it is 5 to7 euro cents. This is approximately the price of one Moldavian leu, the local currency.
A company can be registered in Moldova within a few days or even hours. The minimum number of people that can found a company in the country is 1 and the maximum number is not set. The company founder can act as a company administrator but he or she cannot be employed by the company.
If you care for your personal information confidentiality, you can set up a corporation in Moldova (often referred to as a ‘joint stock company’ in the country). The company has to compile a register of shareholders and submit it to the Registrar but it is going to be a private Registrar, not a public one. The register of company shareholders is not going to be published anywhere.
Companies registered in Moldova have to keep the books and most of them have to file annual accounting reports and balance sheets. Hiring an accounting firm in Moldova is going to cost you very little. The overall company maintenance costs are rather low in the country.
Banking system in Moldova
The banking system in the Republic of Moldova is made up of 11 commercial banks. Some of them are local banks while others are divisions of foreign banks. You can open a bank account in the local currency or in foreign currencies.
All banks in Moldova offer online banking services that are easy to use. MASTERCARD or VISA bankcards can be issued to both individual and corporate clients. Non-residents are welcome to set up bank accounts in Moldova.
Besides, there are no restrictions as to the bank account balance or cash withdrawal. The account holders’ information is strictly confidential.
Advantageous geographical position of Moldova
The Republic of Moldova is a rather small country with a population of 3 million people. It is located in Eastern Europe between Romania and Ukraine.
Moldova is not an EU member state and this status is highly advantageous, as a matter of fact. Neither the Government of the country nor the banks have to play by the European rules and report the information about the local entrepreneurs to the EU administration. This means that all the activities undertaken by a foreign business person in Moldova remain confidential.
Chișinău, the capital of Moldova, has direct flights to and from a number of European cities. The airfare is about 100 euros and you can get to almost any place in Europe within 2 to 3 hours.
Citizens of the European Union can stay in Moldova for 90 days without visas. The public transport is cheap (a taxi ride can cost you a couple of euros only). The average price of a hotel room in the capital city is about 50 euros per night. Many people are multilingual and you will certainly find somebody who speaks English, Italian, Russian, or Romanian in the country. Welcome to Moldova!
