1422

Authorisation procedure and Trade Register aspects for CAEN 1422

Setting up a commercial company having as its main activity the CAEN 1422 code – 'Manufacture of underwear' – requires going through the standard formalities at the Trade Register Office (ONRC) in accordance with Law 265/2022 on the trade register. For authorised natural persons (PFA) or individual enterprises (II), the simplified registration procedure applies, specifying that the manufacturing activity requires technical equipment and production spaces. When submitting the registration application, a sworn statement according to the model in Law 359/2004 is attached, certifying compliance with the legal conditions regarding the possession of spaces and equipment. For LLCs, the minimum share capital is 1 RON, but we recommend an adequate share capital for investment in machinery and raw materials. The constitutive acts must expressly mention the CAEN 1422 code as the main or secondary object. Also, at the ONRC, an operating permit issued by the mayor's office or the Public Health Directorate, as applicable, will be requested for production spaces. The processing time for the application is 1-3 working days, and after registration, the unique registration code is requested from the Tax Authority (ANAF) through declaration 010. Do not forget to activate the fiscal vector at the territorial tax body, indicating the activities carried out and the VAT regime.

Regulatory framework, specific permits and control institutions

CAEN 1422 falls into the category of manufacture of wearing apparel and is regulated by the provisions of the General Inspectorate for Emergency Situations (IGSU) regarding fire safety, indirectly through Law 307/2006. Specific to this class, the production process involves the use of sewing machines, cutting devices, possibly equipment with mechanical or electrical risk, which entails the obligation to comply with occupational safety and health standards (Law 319/2006). The Labour Inspectorate (ITM) periodically checks working conditions and equipment use. From a sanitary point of view, the Public Health Directorate (DSP) approves the production spaces based on hygiene standards. Note that manufacturing underwear involves direct contact with the skin, so the finished products must comply with EU standards on labelling and fibre composition (Regulation 1007/2011). Also, the local chamber of commerce may require product quality checks, and for exports, specific customs regulations apply. No environmental permits are issued for light textile manufacturing activities, but waste management (textile scraps) must be done in accordance with Government Emergency Ordinance 2/2021 on waste.

Fiscal management, risk of ANAF audit and specific accounting

For CAEN 1422, the standard tax regime involves VAT registration if turnover exceeds the threshold of 300,000 RON (exemption threshold increased to 395,000 RON as of 1 January 2025, according to recent amendments). The special VAT regime for cash receipts is recommended for small businesses, depending on cash flow. Corporate income tax is paid quarterly, and micro-enterprises can opt for income tax (1% or 3% of income, provided they do not carry out activities in the financial sector etc. – excluded for CAEN 1422, thus eligible). Accounting obligations are complex: valuation of raw material stocks (textiles, thread, accessories) and finished products; FIFO or weighted average cost methods apply. Employee salary costs are deductible, but attention to income tax and social contributions (CAS, CASS, CAM). ANAF may trigger a tax audit in case of discrepancies between stocks and sales, especially in the absence of a cash register (although the activity is mostly B2B, direct sales to individuals require the use of a cash register with electronic journal). Starting from 2024, invoicing to public authorities or legal entities is mandatory through the RO e-Factura system, and for intra-community supplies, specific procedures apply. We recommend keeping declarations 394 and 390, as well as reporting on SAF-T for large taxpayers. In the business plan, consider profit margins in the textile industry, profitability being influenced by labour costs (over 40-50% of costs) and seasonality. For tax optimisation, you may resort to the tax exemption for production employees under the Fiscal Code (art. 60 point 13, for seasonal sectors). Finally, the risk of taxation is medium, but rigorous accounting of stocks and cash transactions prevents potential penalties.