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Property ownership

The costs of owning a property in Romania differ depending on the type and size of the property, the location, and other individual circumstances. However, as a general guide, owners should bear in mind the following:

• Property tax – individual owners face an annual property tax which is calculated by multiplying the fixed tax rate by the taxable value of the building. The fixed rate is 0.2% for urban buildings, and 0.1% for rural buildings. The taxable value is calculated according to a number of different factors: the size of the property, the type, its location, and the year it was completed. Properties owned by companies are taxed at 0.5 – 1% of the value. Local taxes on buildings owned before 1998 are 5 – 10% of the value. The taxable base of fully depreciated properties is reduced by 15%.
• Land tax – calculated according to the plot size, the location and the zone in which the land is located.
• Income tax – a tax of 16% applies to rental income earned by non-residents. Approximately 25% of the total income from renting immovable property is deductible. A foreign landlord does not pay the tax directly, but instead the tenant holds it back and pays it on the owner’s behalf. If a company earns the rent, it is treated as normal income and is charged at the 16% rate of corporate income tax. In this case, expenses are deductible.
• VAT – there is no VAT payable on leasing, but a taxable individual can choose to add VAT at 19% onto the fees for the concession or rental of property. VAT is charged on the sale of property, but this does not apply to the transfer of real estate between individuals, or from a person to a legal entity.
• Capital gains tax – money earned by a company on the sale of immovable property is taxed along with their normal profits at the 16% flat rate. However, a lower rate of 10% applies if the property was bought before the end of 2003, has been held for over two years, and the purchaser and vendor are not related parties. There is no capital gains tax to pay on an individual’s earnings from the sale of property.

Related items

Documents and Reports

	Romania property investment report (368Kb)
Documents and Reports

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