Buyers Guide Romania
  • How to acquire property in Romania
  • Security of Title deeds
  • Romania - real estate tax guide
  • Other Fees


    How to acquire property in Romania

    A non Romanian citizen may not purchase land in Romania under current laws but a Romanian company can.

    As there are no restrictions on the ownership of a Romanian company by non-Romanian citizens land can be acquired through this means and we at Yiannakas Real Estate can assist its clients with setting up of companies in Romania to acquire land.

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    Security of Title deeds

    There is a central land registry in Romania similar to that in other western European countries. 

    No sale will be entered into without a notarized certificate from the land registry showing proper title to the property. 

    No official notary in Romania will provide incorrect information in respect of the title of the property.

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    Romania - real estate tax guide

    OBTAINING FINANCE:
    Since April 2006 foreign investors have been able to obtain finance in Romania.

    While terms were initially unattractive, the market has developed well and quickly. 85% Loan to Value is now available to foreigners and the number of providers continues to grow. Repayment of mortgages is subject to fixed or variable rates of interest and may be deductible for tax purposes.

    Corporation tax:
    Corporate income tax (CIT) is charged at the standard rate of 16%.  This will apply to income derived by Romanian entities as well as by non-resident entities operating in Romania through a permanent establishment.  The tax is reportable to the tax authorities on an accounting year basis, with quarterly payments to be made in advance.

    Property transfer taxes:
    Natural persons deriving income from the sale of real estate will be chargeable to income tax at the rate of 16% for the transfer of a building which has been owned for less than 3 years and for all transfers of land alone.

    Land Tax is established as a fixed amount per square meter, depending on the location. A fixed rate applies to land outside urban areas. The purchase of Romanian real estate is subject to Stamp Duty between  0.5% and 3% depending of the real estate value. Notary fees of up to 2.5% are usually added.

    Please note that land cannot be acquired by non resident individuals only through formation of a Romanian company. This restriction does not apply to buildings.

    VAT:
    Standard rated supplies are subject to VAT at 19%.

    Real estate transfers are also subject to VAT.  However, if both the vendor and purchaser are VAT payers then VAT on such a transfer will be ‘reverse chargeable’ for both vendor and purchaser, i.e. the net VAT cost for both parties is nil and no payment of VAT needs to be made.

    Rental payments are generally VAT exempt, however it may be possible to ‘opt to tax’ in certain circumstances.

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    Other Fees

    • Real Estate Agency fees are 3% to both buyer and seller.

    OTHER TAXES

    A building tax is payable to the local authorities. This amounts to between 0.25–1.5% of the value of the transaction.

    Tax on Rental Income: The taxable amount is determined by deducing a 25% expense quota from the gross income. Tax on rental income is determined by levying 16% on the taxable amount and  it is also subject to double taxation agreements.

    Capital gains

    For both resident and non-resident companies, capital gains realized on the disposal of Romanian property are generally subject to CIT at the standard rate. However, double tax treaties will be observed.

    There are two different tax regimes for Individuals and legal entities:

    a. Individual Sellers. As of January 1 2007 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 (approximately €57,000) and at the rate of 2% on the value of the sale over 200 000 RON  (€57,000) 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 (€57,000) and at the rate of 1% on the value of sales over 200,000 RON (€57,000).
         
    b. Legal Entities. In this case Capital gains tax become profits and is subject of 16% corporate tax. Non-resident legal entities are taxable in Romania at the standard profits tax rate of 16% for the capital gains realized from selling ownership right over a local company. Profits derived from the direct sale of real estate in Romania are also subject to the standard 16% tax.

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