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.
Capital gains
For both resident and non-resident companies, capital gains realised on the disposal of Romanian property are generally subject to CIT at the standard rate. However, double tax treaties will be observed.
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 (the rate is applied on the difference between the selling price and 105% of the acquisition value.
The purchase of Romanian real estate is subject to Stamp Duty between 0.5% and 3% depending of the real estate value.
In addition to stamp duties (which are revenues of the local administrative authorities), public notaries fees are also applicable. In practice, the notary fees represent 0.5% of the transaction price.
Please note that land cannot be acquired by non resident individuals or companies. This restriction does not apply to buildings.
VAT
VAT registration is compulsory for Romanian companies with annual turnover exceeding RON 200,000 (approx. EURO 57,000). 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.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.