4335

Authorization procedure and Trade Register aspects for CAEN 4335

The establishment of a company that will carry out the activity of "Other finishing works" (CAEN code 4335) involves going through the standard registration procedure at the Trade Register (ONRC). For authorized natural persons (PFA), individual enterprises (II) or legal entities (SRL), the founding act must explicitly mention this CAEN code as the main or secondary object of activity. According to the Companies Law no. 31/1990 and Law no. 359/2004 on simplifying registration, no specific prior approvals from other institutions are required for authorizing the operation, except when the works involve interventions on the structural resistance or related building installations (e.g., electrical, sanitary, thermal installations – which fall under separate CAEN codes, usually 4321, 4322, 4329). Verification at the Trade Register is based on the administrator's/owner's own responsibility declaration, attesting to the fulfillment of legal operating conditions, without prior control of the registered office. For the registered office, the provisions regarding the use of a property intended for office, commercial space or, under certain conditions, the natural person's domicile, with the owner's consent and, if applicable, the approval of the homeowners' association, apply.

Regulatory framework, specific approvals and control institutions

Finishing activity (installing tiles, ceramic tiles, parquet, paints, decorative plasters, claddings, etc.) falls within the construction field, but for operations that do not affect the structural resistance, a building/demolition permit is not required. However, the legislation in force, especially Law no. 50/1991 on authorizing the execution of construction works, corroborated with the Methodological Norms, establishes that any work that modifies the exterior appearance of the building (e.g., exterior claddings, thermal insulation) may require a building permit. Verification is done by the local town hall of the building's domicile. For interior works, approvals are not necessary, except in cases where structural walls are intervened upon. The relevant control institutions are the State Inspectorate in Constructions (ISC) – for verifying the conformity of works with technical norms, and the Public Health Directorate – for works carried out in spaces with public destination (e.g., restaurants, medical offices) if materials with health risks are used. Also, workers handling hazardous materials (glues, paints with solvents) must comply with occupational safety and health norms, and internal theft prevention (labor protection measures) falls under the jurisdiction of the Territorial Labor Inspectorate (ITM).

Fiscal management, ANAF audit risk and specific accounting

From a fiscal point of view, finishing activity is considered a provision of services, and the income realized falls under the RO e-Factura system for B2B and B2G relationships, being mandatory to issue invoices through the national e-Factura system, starting July 1, 2022. For B2C, the deadline is postponed until January 1, 2025, but implementation from the beginning is recommended to avoid non-compliance risks. Regarding VAT, if the company provides finishing services to natural persons (non-VAT payers), the standard rate of 19% applies, or if the works are on old buildings (over 5 years from completion or reception), a 9% VAT rate may apply if the conditions of art. 291 para. (3) letter c) of the Fiscal Code are met (reduced rate for the delivery of housing as part of social policy). Important: the application of the reduced rate is conditioned by being within the value threshold of 600,000 lei, exclusive of VAT, and the status of authorized constructor. For taxable persons who do not meet these conditions, the standard rate applies. Accounting must reflect separately the costs of materials and labor, since in relationships with real estate developers, VAT reporting rules (reverse charge) may apply according to art. 331 of the Fiscal Code, if both the supplier and the beneficiary are registered for VAT purposes. Also, it is essential to correctly record advances and material stocks, given that works are usually executed based on firm estimated orders. The risk of ANAF audit is medium to high due to the specific nature of the works (income estimates, undeclared labor, purchases without invoices). ANAF generally checks payments to suppliers, the correlation between material stocks and invoiced works, as well as the correct use of the micro-enterprise income tax system (if applicable). The recommendation is to maintain off-balance sheet records of subcontracted labor and warranty certificates, otherwise risking recalculation of the tax base and sanctions for non-declaration. In relationships with natural persons, it is mandatory to issue the invoice and register it in the e-Factura system within 5 working days from the date of issue, under penalty of fines provided by Government Emergency Ordinance (OUG) 120/2021. To optimize cash flow, companies providing finishing services can use both advance payment and settlement upon completion, but with the note that revenues are recognized in accounting at the time of actual provision, and for long-term works, the percentage of completion method (IAS 11/IFRS 15) applies. Locally, it is recommended to consult a tax consultant specialized in construction for the correct determination of the applicable VAT rate and for managing risks related to subcontractors.