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LEGAL AND GENERAL
Residents permits for foreigners: are they necessary?

by Bianca Manea
October 2005

The other day I had to go to the passport office for a new passport. The passport office was surprisingly overcrowded with people who were trying to recover their passports or lift the restrictions imposed on them. We were trying to do the same, and hopefully as the day approaches for Romania to become an EU member, they will start to realise that they have obligations toward their citizens that go with the new EU freedom. As the Romanian state has started to comply with legislation imposed by EU standards, things are beginning to change around here.

On August 1, 2005 a new piece of legislation, Government Ordinance nr. 28, came into force. This did not amend dramatically the existing Government Ordinance no.65/1997, regarding passport laws in Romania, but merely highlighted the existing provisions in connection with freedom to travel. Thus, these provisions are not new but merely not applicable in practice, until now, by the Romanian authorities.

As a result of these laws, Romanian citizens are allowed to stay – not to work – without a visa for three consecutive months in the member states of the Schengen Convention. However, the custom officers, based on Government Ordinance no.28/2005, have proceeded to confiscate or impose restrictions on Romanian passports if a Romanian was:

- Found guilty of ‘begging’;

- Sent back to Romania for a reason as stated in bilateral agreements established between Romania and other states;

- Overstayed, without reason, the time limit imposed by the countries from which he was travelling.

In practice the above provisions were extended – in some cases – to include people who had multiple entries into the same country without a special reason (such as a work permit, study.)

According to the mirror principle, it is likely that Romanian authorities will question foreigners who overstay or have multiple entries to Romania without a proven reason (such as work or residential permit.)

Funnily enough, recently I have frequently been asked by foreigners about the necessity of obtaining a resident permit. After looking into the existing legislation and acknowledging the issues discussed above, my answer can only depend on the given case. Because it is difficult to cover all situations, let me discuss just the one category – the case of the foreigner who owns, directly or indirectly, a business in Romania – without being employed by a Romanian entity – and who needs to be in the country most of the year.
According to Government Ordinance no.194/2002, which covers foreigners rights in Romania, a foreigner who intends to spend more than three months at a time in the country needs to obtain a resident permit and/or a work permit.
Many expats who are connected to Romania or who have even lived here for years have managed to avoid obtaining a resident permit. Their refusal was motivated by the difficult process of obtaining the permit – too many formalities and queues – and also by the obligations that come with it. The most painful obligation is tax-related – and their main concern is not profit taxes, but the contributions to the Romanian health system, to social security and to pensions. These contributions are compulsory, even if the foreigner makes payments to a private health insurance plan, is covered by his own country’s social security system and/or makes his own payments to a private pension fund.

As human beings are very inventive, foreigners who fall into this category have found various ways to avoid obtaining a residence permit. The most common way was to leave the country briefly every three months and in so doing, remain inside the provisions of the Schengen Convention and/or the Romanian legislation in force. This solution may not be so safe forever, given the latest events (see restrictions imposed on the holders of Romanian passports) and the changing attitude of Romanian customs officers.

Coming back to our question, ‘Do I have to obtain a resident permit if I stay or intend to stay for a long period of time in Romania?’ The answer can only be ‘Yes’, especially if a foreigner is a business owner who has earned revenue in Romania for the past three years. Although these contributions are payable whether a Romanian citizen/Romanian resident obtains income of any kind, the amount to be paid is calculated, once you obtained income, according to its volume.

Is there any way around this? Should you wait for the legislation to change? Well, you can wait but it is not going to happen before the European legislation will change. To it sum up, the options are simple; stop spending so much time in Romania or comply with the legislation.

 

Bianca Manea is a lawyer with Rosca Law Office, a Bucharest-based law firm.