Companies with no employees operate in trade, consultancy, construction and transport industries and posted 16 billion lei (EUR3.7 billion) revenue in 2011, according to the quoted source. This is less than 1.5% of the total turnover of the companies in Romania, but these SMEs with zero employees are too many to ignore.
How can more than 200,000 businesses with no employees exist?
“It’s not normal to have this many companies with no employees. Still, the current economy is not favorable to SMEs and it is understandable that they should be put on stand-by while waiting for better days to come,” said Emilian Duca, a partner with Tax&Business Solutions. These companies do not pose a tax risk unless used for tax evasion, he added.
Almost 490,000 SMEs were active in Romania in 2011, 135,000 fewer than in 2008 and were employing about 2.5 million people. The Trade Registry data show the turnover of SMEs (which submitted their financial statements to the Finance Ministry) was RON425 billion in 2011.
The percentage of small businesses with no employees surged during the crisis; in 2008, such companies accounted for 32% of the total, while in 2011 the share was up to 44%.
“Most often it’s about businesses started by young entrepreneurs. These companies are inactive because the economy does not allow them to do the business they wanted. There are also companies created for a specific investment, which were left without anything to do by the real estate crisis. To a smaller extent, some were created for tax evasion (shell companies),” Duca says.
An attempt to limit the impact of the increase in the number of companies with zero employees is one of the programs designed by the Economy Ministry encouraging young people to start their business. The entrepreneurs get government funding (EUR10,000) to create their own business and are required to create at least two jobs. Since the program began in 2011, more than 7,800 companies have been established with over 10,000 jobs, according to the Labor Inspection Department data.
However, neither the Labor Ministry, the tax authorities nor the Economy Ministry answered ZF’s request for comment on the high number of zero employee companies.
“Some businesses do not necessarily require using employees to operate. Such examples are those companies providing marketing, advertising and certain types of advisory services,” says Bogdan Bibicu, partner with the Bucharest officer if law firm Kinstellar.
(English version by Loredana Fratila-Cristescu)