Tax info for Romania investment
Income Tax 16% flat rate
Romania has a flat income tax rate of 16%. For rental income, the taxable amount is determined by deducting a 30% expense quota from the gross income. Tax on rental income is determined by levying 16% on the taxable amount. As part of our inclusive service for buying in Romania we can offer you discounted rates with a well-respected English speaking accountant who will be able to manage your tax returns on your behalf. Unless you have any other income streams in Romania this is simple and inexpensive.
Capital Gains Tax (CGT) 16%
The standard rate of capital gains tax in Romania is 16%. However, this can be reduced if the sale of buildings with land that have been held for more than three years. The final tax can be reduced as low as 2%!
As of January 1, 2007, this will change as follows:
The proceeds from the sale of buildings with land sold within 3 years will be subject to tax at the rate of 3% on the value of the sale up to 200,000 RON and at the rate of 2% on the value of the sale over 200,000 RON*.
The proceeds from the sale of buildings with land sold after 3 years will be subject to tax at the rate of 2% on the value of the sale up to 200,000 RON and at the rate of 1% on the value of the sale over 200,000 RON*.
*200,000 RON is roughly GBP 38,500
Building Tax 0.1%
Romania has a building tax ranging between 0.1% and 0.4% of the value of the building. As of January 1, 2007, building tax will be 0.1% of the value of the building regardless of its location. Owners of more than one building will pay an increase in tax for each building. The tax will be increased to 0.115% for the second building; 0.15% for the third building; and 0.175% for the fourth. For the fifth and subsequent buildings the tax will be increased to 0.2%.
Land owners are liable to pay a tax on land calculated upon the size of the plot and depending on the location of the land.
VAT - 19%
VAT is applied to all newly constructed properties in Romania at the standard rate of 19%. The VAT is always being advised in the prices advertised by Romanian Deals. In Romania, the prices advertised often exclude VAT.
Stamp duty and notary fees- 1-3%
The sale and purchase of real estate located in Romania is subject to stamp duty and a notary fee. The duty is charged as a percentage of the value of the transaction (the rate is approximately 0.5% to which the notary's fee is added). The notary fee usually equates to a similar figure as the duty.