Romanian Property Tax

It is important to consult an expert tax advisor when considering purchasing property in Romania. Below is a brief guideline to tax payments for your Romanian property.


VAT

19% VAT is applied to the full price of the property and is charged if the seller is VAT registered (i.e. a company). However, with transfers from one VAT payer to another, or the transfer of a business by way of a share sale, VAT is not charged.

Individual Income Tax and Corporate Tax

Rates for both taxes in 2008 are flat at 16%.

Capital Gains Tax

For companies and individuals is charged at 16%. For individuals, the tax rate for gains from the sale of real estate is 2% - 3%.

Inheritance Tax

If the inheritance procedure is finalised within two years from the death, no tax is due. If this is not the case, a 1% is payable on the total value of the inheritance. No tax exists on gifts or wealth.

Property Tax

Is set at 0.5% to 1% of the property value. In case of a building owned before 1 January 1998 and not revalued after this date, local taxes range from between 5% and 10% of the recorded cost of the building.

Rental Income

Is subject to a 16% flat tax rate; however, a 25% notional deduction is also available.

Double Taxation

Romania is signed up to a Treaty for the Prevention of Double Taxation with many countries all over the world. A Double Taxation Prevention Treaty, in principle, enables you to offset tax paid in one of two countries against the tax payable in the other, thus preventing double taxation.

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When considering a buying property in Romania, you are well advised to get expert mortgage advice from a mortgage broker.

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