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.
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. VAT:
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.
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.