Investors may basically acquire property in Romania both directly by means of an asset deal or indirectly through a company by means of a share deal. Direct land acquisition by means of an asset deal by foreign entities is subject to some restrictions. Companies which have their registered headquarters in Romania are treated as Romanian companies irrespective of the citizenship of their shareholders and therefore they are not subject to these restrictions.
Last modified 13 Mar 2025
Romania does not levy any stamp or transfer tax on the transfer of real estate by companies. Nonetheless, the purchase of real estate in Romania involves several costs such as notary's fees and land book registration fees.
When real estate is purchased from individuals income tax is due for such acquisition. This is similar in nature to a transfer tax. The tax is payable by the individual transferring the ownership or other dismemberments of the real property right and is calculated by applying a rate of (i) 3% on the taxable income for constructions of any kind and land related thereto, as well as on land of any kind without construction, held for a period of up to 3 years inclusive (ii) 1% for the assets described above held for a period of more than 3 years.
The value on which the tax is levied is the transaction value set forth by the parties through the transfer documents. If such value is under the minimum value set out in the valuation records kept by the notaries public, the notary public shall notify the tax authorities with regard to the transaction.
This income tax is payable by the seller and must be paid to the notary public before the transfer agreement is authenticated. The tax is not due upon acquisitions made from legal entities or
self-employed persons which are registered with the tax authorities and pay general income tax.
Non-resident entities are generally subject to a 16% withholding tax (if there is no overriding legislation and there are no overriding provisions in applicable double-tax treaties) on certain types of income derived from Romania, such as: capital gains, interest and royalties, commissions, income from management and consultancy services (irrespective of where the services are performed) or from other services provided in Romania and income derived by non-residents from the liquidation of a Romanian legal entity. The withholding tax applicable for income derived from dividends is 10%.
Non-resident individuals are generally subject to 10% withholding tax for most types of income obtained from Romania.
The withholding tax is usually reduced or eliminated by double-tax treaties (at present, Romania is a party to more than 85 double-tax treaties which usually follow the OECD model), where a valid fiscal residence certificate is made available by the non-resident beneficiary of the income at the moment when the payment is made. Also, for certain types of revenue (i.e. dividends, interest, royalties), the withholding tax rates can be reduced to nil if the relevant legal conditions are met. In addition, in case the national legislation, the EU legislation or double-tax treaties provide different rates of withholding tax for the same income, the applicable withholding tax will be the one which is favourable for the payer (if the payer proves that it has the residence in a state which signed with Romania a treaty for reduction of double taxation and, when the case, proved that the requirements of the EU legislation are met).
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VAT applies to the supply of
'New buildings' include existing buildings which have been refurbished where the cost of refurbishment, exclusive of VAT, represents at least 50 percent of the market value of the building after the relevant works were completed, as established through an expert’s report, excluding the value of the site. Supplies of new buildings are taxable if the supply is made before 31 December of the year following the one in which the building was occupied or first utilized (including the first utilization or occupation after a refurbishment).
Other supplies of real estate are, in principle, VAT exempt without any right of deduction. This means that any input VAT incurred cannot be deducted.
The supplies of real estate, if subject to VAT, falls under the reverse-charge mechanism, provided that both the supplier and the beneficiary are registered for VAT purposes in accordance with the legal provisions.
Supply of real estate properties (eg apartments or houses) is subject to a reduced VAT rate provided that certain conditions are met (mainly related to the value of the property and the usable space).
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All agreements for the transfer of ownership or other real rights over real estate must be notarized in order to be valid, and the notary's fees can be quite significant. For example, for transactions larger than RON 600,001 (approx. EUR 120,500), a notarial fee of 6,405 RON (approx. EUR 1,300) and 0.6% of the transaction value exceeding RON 600,001 is due.
The notary's fee is paid by the purchaser unless otherwise agreed between the parties.
Real estate related rights need to be registered for enforceability purposes. The Land Registry will charge a fee for any type of registration, depending on the particular characteristics of the transaction (i.e. sale and purchase, lease, right of use, etc). In the case of sale and purchase agreements, the registration of the transfer is subject to a fee of 0.5% for registration of the right in favour of a legal entity or 0.15% for registration of the right in favour of a natural person applied to the value of the immovable property which was transferred as indicated in the sale agreement, but not less than RON 60 (approx. EUR 12) per immovable asset.
The registration fee is paid by the purchaser unless otherwise agreed between the parties.
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For corporate entities the annual rate of building tax is set by the local council and should in principle be between 0.08 percent and 0.2 percent for residential buildings and between 0.2 percent and 1.3 percent for non-residential ones. These rates can be amended each year by the local councils.
In the case of buildings which have not been re-valued in the five years prior to the relevant fiscal year, the building tax is 5%.
The value on which the tax is levied is the acquisition value, the final value of construction works or the value established through a valuation report prepared by an authorised expert, as the case may be.
There are relatively few exemptions from building tax. Local authorities are allowed to grant tax exemptions to companies based on certain conditions set forth by each local authority.
Starting from 1 January 2025, the so called "tax per pole" was reintroduced in Romania. This is calculated by applying a 1% tax rate to the value of the buildings existing in the owner's patrimony on 31 December the previous year and the value of the buildings where building tax is owed is subtracted. These provisions also apply to the value of buildings industrial, scientific and technology parks.
Land tax is calculated in accordance with a formula that takes into account the number of square metres, the ranking of the town/village where the land is situated, the area within the locality and the purpose for which the land is used. Instead of a percentage tax rate, the Romanian Fiscal Code uses a fixed 'basis amount' of tax per hectare, which is updated annually. The land within a city is divided into four areas (A-D) depending on their location. For example, the tax per hectare for building land type A – the central areas of Bucharest, is between RON 8,282 (approx. EUR 1,700) and RON 20,706 (approx. EUR 4,200).
As with building tax, local authorities are allowed to grant tax exemptions for companies based on certain conditions set forth by each local authority.
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The owner will incur maintenance costs in relation to the property (the owner is obliged to keep the building in such a condition as will not harm neighbours or passers-by) and utility company fees and garbage management fees which are paid to the municipality.
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The income to be expected from ownership will consist of either rent (under a lease, usufruct, superficies rights) or profit generated from sale of the property.
Last modified 13 Mar 2025
As a general rule, the taxable income of a company is subject to the standard tax on profits at a rate of 16%. The taxable profit is the difference between income from any source and expenses incurred for the purpose of obtaining income, from which non-taxable income is deducted and to which non-deductible expenses are added.
The Romanian legislation also contains provisions covering a tax system for micro-companies which are taxed on their income derived from any source (to which certain adjustments are made). This tax system is optional as of 1 January 2023 and the possibility to opt for it is conditioned upon fulfilment of several conditions. Under this regime, companies pay a tax of (i) 1% of their income if the level of the total income (with certain adjustments) is below or equal to EUR 60,000 and the company does not perform certain activities listed by the Romanian Fiscal Code or (ii) 3% of their income if the level of the total income (with certain adjustments) exceeds EUR 60,000 or if it performs certain activities listed by the Romanian Fiscal Code.
If, due to changes occurring during the tax year, the micro-company changes the tax rate it falls under, the appropriate tax rate is applicable from the quarter in which such situation occurs. Additionally, if micro-companies that carry out certain activities referred to above also obtain income from other activities, the 3% tax rate shall also apply to income from these other activities.
Also, Romanian tax legislation specifically mentions that all revenues derived by non-residents from real estate located in Romania (including from the sale of real estate or from the right to use such properties) are subject to tax in Romania at the general rate of 16% for corporate entities and 10% for natural persons. This includes the sale of shares held in local entities whose assets mainly consist of real estate.
The Romanian tax legislation provides a tax exemption for capital gains derived from the sale of shares held in a Romanian legal entity by a Romanian corporate entity or a non-resident corporate entity which is resident in a double-tax treaty jurisdiction, provided a minimum holding criteria is met (ie 10% for at least one year at transaction date), the right to tax such transaction is not allocated to Romania and supporting documentation is available at local level to sustain the fiscal residence of the alienator.
Provided that the conditions mentioned by the Romanian legislation are not met (i.e. the minimum holding criteria), the taxation of capital gains derived by non-residents can also be reduced in accordance with the provisions of the relevant double-tax treaty between Romania and the country of residence of the beneficiary of the income, provided that a valid fiscal residence certificate is made available and the relevant treaty does not allocate the right to tax the transaction to Romania.
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The method by which income is transferred to a foreign investor depends on the structure of the investment, for example if:
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The costs include professional advisors' fees (ie the fees of accountants, etc) and bank fees and are negotiated for each particular case.
Last modified 13 Mar 2025
The costs include professional advisors' fees (ie the fees of accountants, etc) and bank fees (ie exchange costs, money transfer fees, etc) and are negotiated for each particular case.
Last modified 13 Mar 2025
The general rule under Romanian legislation is that gains derived by non-residents from sale of real estate located in Romania are subject to 16% tax in Romania for corporate entities or 10% for natural persons. This includes gains from disposals of shares held in local entities that own real estate. Alternatively, income from real estate properties that are sold by micro-companies is subject to the rate of (i) 1% applicable to the entire amount, if lower or equal to EUR 60,000 and the micro-company does not perform certain activities listed by the Romanian Fiscal Code or (ii) 3%, if higher than EUR 60,000 or the micro-company performs certain activities listed by the Romanian Fiscal Code.
The Romanian tax legislation provides a tax exemption for capital gains derived from the sale of shares held in a Romanian legal entity by the foreign investor if the latter is a corporate entity which is resident in a double-tax treaty jurisdiction, provided a minimum holding criteria is met (ie 10% for at least one year of holding), the right to tax such transaction is not allocated to Romania and the seller makes available a valid tax residence certificate at the transaction date.
The tax can be also reduced under the provisions of a double-tax treaty, if a valid fiscal residence certificate is made available by the beneficiary of income at the moment when the payment is made (at present, Romania is a party to more than 85 double-tax treaties which usually follow the OECD model).
Last modified 13 Mar 2025
The costs include professional advisors' fees (ie the fees payable to accountants, lawyers, etc). Standard Romanian market practice is for notary and registration fees to be paid by the purchaser unless otherwise agreed.
Last modified 13 Mar 2025
How can investment in real estate by an individual/organization/company be set up?
Investors may basically acquire property in Romania both directly by means of an asset deal or indirectly through a company by means of a share deal. Direct land acquisition by means of an asset deal by foreign entities is subject to some restrictions. Companies which have their registered headquarters in Romania are treated as Romanian companies irrespective of the citizenship of their shareholders and therefore they are not subject to these restrictions.
Last modified 13 Mar 2025