If you’re planning to buy property in Romania, you need to know what taxes and fees you’ll have to pay. In this article, we will discuss the tax rates and rules that apply in 2023-2024 for individuals buying residential or non-residential properties or land in Romania.
Property Tax
Property tax in Romania is paid annually by all owners of residential and non-residential properties. The tax rate depends on the type, price, and area of the property, as well as its location and year of construction. On average, property tax ranges from 0.1% to 2% of the cadastral value of the property. Property tax must be paid by March 31st each year.
Income Tax on Property Sales
If you sell property in Romania, you must pay an income tax on the sale. The tax rate depends on how long you have owned the property. If you sell the property within 3 years of purchase, you must pay 3% of the difference between the selling and purchase prices. If you sell the property between 3 and 5 years after purchase, you must pay 2% of the difference between the selling and purchase prices. If you sell the property more than 5 years after purchase, you are exempt from paying the income tax on property sales.
Foreigners selling Romanian property are subject to the same tax rules as Romanian citizens. To fulfill their tax obligations, foreigners must obtain a tax identification number (NIF) from ANAF.
Property Transfer Tax
When buying or selling property in Romania, you must pay a property transfer tax. This tax is paid when signing a preliminary sales contract or when registering the contract with the cadastral office. The tax rate is 0.5% of the transaction value for individuals and 16% for legal entities.
Value Added Tax (VAT)
In Romania, the standard VAT rate is 24%. However, a reduced VAT rate of 5% is applied when buying new or reconstructed properties with an area of less than 120 square meters and a cost of less than €45,000. VAT is not applicable when buying land plots.
In summary:
- When buying property in Romania, you’ll incur state fees and additional charges, including notary and registration fees. Associated expenses can range from 1.44% to 10.2% of the sales contract value.
- Payment for a notary’s services when buying property in Romania typically ranges from 3% to 7% of the total property cost.
- When selling property in Romania for €100,000 or more, the seller pays a property transfer tax equal to 3% of the transaction amount.
- Property owners in Romania pay an annual property tax ranging from 0.08% to 0.2% of the cadastral value of the property.
In the public domain, there have been “unofficial” reports about the implementation of a 1% tax for taxpayers who own multiple residential properties with a cumulative value exceeding €500,000. This means a tax of €5,000 per year. However, the draft ordinance states something slightly different. Firstly, it’s not a tax on buildings but rather a new tax that targets those who own multiple properties.
Individuals who pay the full tax on buildings and land by March 31 will receive a 10% discount.
Law shows that the tax is paid annually in two equal installments. The first term is until March 31, and the second is until September 31.