Can an EU registered company carry out drilling operations in Romania?
Yes, in principle a company registered in a country of European Union (EU) can carry out drilling operations in Romania directly, without having to register a subsidiary or branch in Romania, if such drilling activities are temporary, i.e. they are carried out for a limited period of time.
As a general rule, in Romania, petroleum operations may be carried only by companies attested by the National Agency for Mineral Resources (NAMR). However, a company registered in an EU member country may carry out petroleum operations in Romania if it has an operating license issued by the State agency of its country of residence, which is the equivalent of the (NAMR).
According to current NAMR practice, a company from an EU country which owns a valid operating license issued by the competent authority of its EU country of residence may carry out petroleum operations for a limited period of time. In principle such “limited period of time” is construed as 6 – 7 months.
Does the EU registered company have to employ a specialist certified by the National Agency for Mineral Resources for carrying out operations in Romania?
In case of temporary operations, there is no legal requirement re employment of a specialist in petroleum operations attested by the NAMR. However, it is recommended to have at the worksite an expat or local employee who could interface with the representative of the National Agency for Mineral Resources Territorial Inspectorate regarding the scope of the drilling contract, and the operations carried out by the company at the worksite, as the case may be.
Can an EU registered company operate in Romania with its own personnel?
The EU registered company can second its own personnel to Romania in order to carry out activities. The EU registered company must notify the relevant Territorial Labour Inspectorate in this respect.
The EU employees working at the worksite staying for more than 90 days must register with the competent Immigration Inspectorate from the county where the worksite is located.
Does the EU registered company need to carry out Safety Training according to the Romanian legislation while carrying out operations in Romania?
The approach of the Romanian Labour Authorities is that the provisions of the legislation regarding the health and safety of the local employees are also applicable to the seconded employees of a foreign employer, who are working in Romania.
Thus, an EU registered company carrying out drilling activities in Romania has the obligation to ensure the safety training of the seconded employees in accordance with the provisions of the Romanian legislation. Usually, the foreign companies conclude a services agreement with a specialized local health & safety company which will prepare all the documents and carry out the specific trainings.
Does the drilling equipment have to be authorized according to Romanian legislation?
The Romanian authorities recognize the CE certification of rigs and related equipment. However, although the rig may be CE certified and may have obtained the Certificate of Conformity (COC), depending on the technical specifications of the components, i.e. types of lifting equipment and recipients under pressure, the EU registered company may have to request the State Inspection for the Control of Boilers, Recipients under Pressure, and Lifting Equipment (ISCIR) and the National Company for the Control of Boilers, Lifting Equipment and Recipients under Pressure (CNCIR) to authorize certain components of the rig or, as the case may be, to register the list of equipment with the said authorities.
In this respect, the EU registered company must appoint a RSVTI engineer (the engineer who is responsible for the supervision and verification of the installation) or conclude a contract with a local firm which can provide such services.
Does the EU registered company need an environmental permit in relation to the noise and emission measurement of rig equipment?
The beneficiary of the drilling services, i.e. the concession owner, not the company carrying out the drilling services, has the obligation to obtain the environmental permit. Consequently, the beneficiary of the drilling services is responsible for obtaining any amendments to such environmental permit, including the amendment covering the noise and emission measurements of the rig equipment.
The EU registered company must handover the technical book of the rig mentioning the noise level of the rig the beneficiary in order to be filed with the relevant environmental agency. The environment agency may perform a noise level evaluation if the rig is placed in a sensitive inhabited area, and further issue an amended Environmental Permit.
For what period of time can an EU registered drilling services company work in Romania before having to register with the Romanian tax authorities?
According to the Romanian Fiscal Code, the activity carried out by a non-resident in Romania may be considered a permanent establishment of the foreign company in Romania. In such case, the EU registered company will have to pay profit tax in Romania.
A permanent establishment implies a place of business through which the company conducts some or all of its operations. If the company has a place of business that falls into certain categories specified by the Romanian Fiscal Code, then the EU registered company is treated as having a permanent establishment in Romania.
Under the Romanian Fiscal Code, drilling activities are likely to be considered as qualifying as “a worksite, a construction project, an assembly, or installation operations, or activities regarding the supervision of such, if such last longer than 6 months”. Thus, an EU registered company will have to register a permanent establishment in Romania only if the drilling works exceed 6 months.
However, the Treaty for the Avoidance of Double Taxation between Romania and the relevant EU member state where the company is registered, may include a different timeframe for determining whether such construction operations are treated as permanent establishment, for example such construction works must last longer than 9 months, instead of 6 months provided by the Romanian Fiscal Code.
This article provides general information and should not be considered as legal advice. For more information about the issues discussed above, you can contact us at firstname.lastname@example.org.