3600

Authorization procedure and Trade Register aspects for CAEN 3600

When registering with the Trade Register (ONRC) of an LLC or sole proprietorship with the main activity code CAEN 3600 (Water collection, treatment and distribution), a sworn declaration according to Law 359/2004 must be submitted, by which the administrator confirms compliance with the legal operating conditions. The articles of association must clearly mention the activity of water collection, treatment and distribution, with specifications regarding the water sources (groundwater/surface water) and the capacity of the installations. No prior operating authorization is required, but within 30 days of registration, the company must request from the Tax Authority (ANAF) the fiscal registration and obtain the fiscal vector. For sole proprietorships, the fiscal registration certificate is submitted. Obligations include declaring the registered office, shareholders and minimum share capital. At the ONRC, the fee is approximately 200-300 RON for legal entities, and the processing time is 1-3 business days.

Regulatory framework, specific permits and control institutions

The activity of water collection, treatment and distribution is strictly subject to the Water Law no. 107/1996, Law no. 241/2006 on the water supply and sanitation service, and Order 621/2014 of the Ministry of Environment. It is mandatory to obtain the water management permit issued by the National Administration Romanian Waters (ANAR) – within 60 days of registration. Without this permit, operation is illegal and is punishable by a fine of 5,000 to 50,000 RON and suspension of activity.

Also, for water collection from boreholes, a drilling and exploitation authorization issued by ANAR is required, valid for 10 years. For water treatment for drinking purposes, a sanitary permit from the County Public Health Directorate (DSP) is mandatory, according to Law 458/2002 on drinking water quality. Water quality control is periodically carried out by the DSP, and non-compliance with chemical parameter limits (nitrates, nitrites, arsenic, etc.) triggers fines from 10,000 to 100,000 RON. The main regulatory authority is the National Regulatory Authority for Community Public Utility Services (ANRSC), which issues an operating license for water distribution (if the activity is carried out as a public service). The license is renewed every 5 years and involves an annual fee of 0.5% of turnover.

For the construction of water networks, building permits issued by the municipality, a permit from the Traffic Police for road occupation, and a permit from the electricity operator for connection are required. Fines for the lack of these permits can reach 30,000 RON, according to Law 50/1991.

Tax management, ANAF audit risk and specific accounting

From a fiscal point of view, CAEN 3600 falls under CAEN code 3600, and the standard VAT rate is 19% (except for certain situations of reduced VAT for drinking water, of 9%, according to art. 291 para. 2 letter j of the Fiscal Code, but only for distribution to the population). The VAT rate must be applied correctly, otherwise there is a risk of adjustment during an ANAF audit. Corporate income tax is calculated at 16% or micro-enterprise income tax (1% for revenues under EUR 500,000, if the thresholds of 3 employees and EUR 500,000 turnover are not exceeded).

Accounting must distinctly reflect the costs of collection (drilling, pumping), treatment (chemicals, filters), distribution (pipelines, connections) and depreciation of installations. It is mandatory to monitor stocks of treated water and record invoices issued to consumers, in compliance with the RO e-Factura system as of July 1, 2022. ANAF prioritizes checks for this CAEN class, as there is a risk of underreporting of extracted quantities and undeclared cash collections from the population.

If the company extracts water from a borehole without a permit, ANAF may estimate additional income based on the borehole capacity and apply tax with penalties of 0.02% per day. Also, for the distribution of water to the population, income tax (10%) and social contributions (CAS 25%, CASS 10%) are withheld at source if individuals are employed. We recommend monthly preparation of declaration D112 and correct submission of declarations 300 and 394. Any discrepancy between issued invoices and treated water stocks automatically triggers a tax inspection. Requests for VAT refund are made with supporting documents regarding investments in water networks (invoices, contracts, reception minutes).

In conclusion, for CAEN 3600, strict compliance with environmental permits and fiscal obligations is critical to avoid severe sanctions. We recommend consulting a specialized accountant and a lawyer specialized in water law for the correct implementation of procedures.