Trade between Türkiye and Romania has grown steadily over the years. According to data from TÜİK (Turkish Statistical Institute), the bilateral trade volume has surged from $6.8bn in 2019 to $10.3 billion in 2022, representing an impressive trend. This growing trade volume highlights the strength of Türkiye's export-oriented industries and Romania's increasing demand for Turkish goods, particularly in automotive spare parts, vehicles, iron and steel products, agricultural products, and machinery industry products, notes the Turkish Ministry of Foreign Affairs. On the other hand, Türkiye's main imports are iron and steel products, processed petroleum products, vehicles, telephone equipment, automotive spare parts, sunflower seeds, chemical fertilisers, and machinery industry products from Romania.

By the end of 2024, the trade volume is anticipated to grow to $13 billion

Türkiye is one of the leading investors in Romania. The Romanian Chamber of Commerce mentions that as of July 2023, 18,135 Turkish companies were operating in Romania, with a total subscribed capital value of over €717 million.

For 2024, Turkish companies are involved in numerous investments across various sectors, including trade in various goods, fruits, textiles, and the television industry[i]. Bucharest and Ilfov account for nearly 60% of all Turkish-owned businesses in the country, while Constanța ranks third, with over 200 companies operating there.

Recent bilateral meetings with Türkiye's VP which took place in May 2024 showed that Türkiye's direct investments in Romania have reached $7.5 billion. Furthermore, Romania is one of the top 10 European Union countries where Turkish companies invest the most, and it ranks as the leading destination in Europe for Turkish contracting firms. The VP mentioned that the data from the first three months of this year indicate a substantial increase in trade, with expectations to reach $13 billion by the end of the year. Last year, the total trade volume between Türkiye and Romania amounted to $10.6 billion, with a goal of achieving a much higher volume in the medium and long term.

Investments in Romania are increasing due to its strategic location

Turkish investments in Romania highlight a strategic effort to diversify economic engagements across various key sectors. Significant capital is channeled into manufacturing, encompassing both advanced production facilities and traditional industries, which benefit from Romania's skilled workforce and competitive costs. The construction sector also receives considerable Turkish investment, facilitating major infrastructure projects and real estate developments. Additionally, the textile industry, with its long-standing presence in Romania, has seen increased Turkish participation, leveraging the country's established production capabilities. The energy sector is another crucial area of focus, with Turkish investments aimed at enhancing Romania's energy infrastructure and exploring renewable energy prospects.

”Romania has emerged as a highly attractive destination for Turkish investors, thanks to its strategic location at the crossroads of Europe, its membership in the European Union, a skilled and competitive workforce, and favourable tax policies that create a welcoming business environment. These factors, combined with Romania's improving infrastructure and economic outlook, make it a prime location for Turkish investments,” mentioned Mert Kaftanoglu, Business Development Executive and Leader of the Turkish Desk, Forvis Mazars in Romania.

Complex bureaucracy, navigating legal frameworks, cultural differences, and strong market competition are some of the challenges faced by Turkish investors in Romania

Turkish investors in Romania face several challenges when entering and operating in the market. One of the main hurdles is navigating the complex Romanian bureaucracy, which can delay projects due to lengthy processes for permits, licenses, and approvals. Additionally, understanding Romania's legal frameworks is crucial, as the country has specific regulations, particularly regarding labour laws, taxes, and property rights. Although Romania adheres to EU standards, local nuances can create complications, making it essential for Turkish investors to seek local legal expertise.

Cultural differences also pose challenges, with Romanian business culture emphasising formalities, hierarchy, and trust-building. Furthermore, the Romanian market is competitive, with local and international companies vying for market share, requiring thorough research and strategic positioning to succeed.

The investors benefit from deferred VAT, VAT group systems, and reciprocal VAT refunds

”Companies importing goods into Romania from non-EU countries can benefit from deferred VAT payment based on a specific certificate, provided they have made imports totaling at least RON 50 million (€10.1 million) in the last six months. Another beneficial mechanism is the VAT group system, where only the cumulative VAT balance of all group members is declared. This allows members with VAT liabilities to offset them against the VAT refunds owed to other group members, eliminating the need to pay VAT to the state and accelerating the refund process within the group. Companies can also recover VAT on unpaid debts, provided certain conditions are met,” mentioned Edwin Warmerdam, Partner, Head of Tax, Forvis Mazars in Romania.

Additionally, there is a reciprocal VAT refund agreement between Romania and Türkiye. Turkish companies not established or VAT-registered in Romania are eligible to apply for VAT refunds from the Romanian tax authorities. The refund covers expenses related to participation in fairs, exhibitions, and transportation activities such as fuel, spare parts, and maintenance and repair costs.

In Romania, Forvis Mazars has established a new Turkish Desk - a dedicated team with cultural fluency and industry expertise. This team is designed to offer a comprehensive range of services and support to Romanian firms wishing to do business in Türkiye, Turkish companies setting up in Romania, and Turkish people who moved to Romania and need guidance in managing their assets.