ROMANIA Law and Practice Contributed by: Monia Dobrescu and Mădălina Trifan, Mușat & Asociații
8.4 Income Tax Withholding for Foreign Investors Rental income or revenue from the sale of real estate paid to non-residents represents Roma - nian-source income and is subject to Romanian taxation, based on the same rules as apply for the following: • Romanian companies – 16% profit tax applied to the difference between the rental income and the expenses incurred for realis - ing this income, or 16% applied to the sale price minus (i) the expenses for acquiring, constructing or refurbishment, out of which the depreciation value is excluded, and (ii) the commissions, taxes and other amounts paid with respect to the sale; and/or • individuals – 3% of the transaction value for buildings of any kind and land relating thereto, as well as on land of any kind with- out buildings, held for a period of up to and including three years, and 1% of the transac - tion value for such properties that are held for more than three years. These rates are subject to the provisions of any applicable tax treaty. There is no withholding tax for the buyer. 8.5 Tax Benefits As a general rule, if the owner of the property is a company subject to Romanian corporate income tax, depreciation is allowed (on a straight-line basis) on the acquisition value of the buildings. Plots of land are not eligible for tax depreciation.
does not exceed RON600,000, exclusive of VAT. This reduced rate applies only to homes that, at the time of delivery, can be lived in as such (the definition of “housing that can be lived in as such at the time of delivery” has been also modified). 8.2 Mitigation of Tax Liability As a general rule, the mitigation of real estate property transfer tax occurs if a sale, merger or demerger of shares of an entity owning real estate is implemented, rather than a simple sale of real estate. In cross-border share transac - tions, the provisions of the double tax treaties concluded by Romania with other countries should be observed, since in certain cases the sale of shares of companies whose assets con - sist mainly of real estate located in Romania may shift the taxation of the sale of shares to Romania. 8.3 Municipal Taxes No municipal tax is paid on the occupation of business premises. However, subject to limited exceptions, real estate used for paid tourist accommodation attracts a special tax for tour - ism established by each city council, which is collected from the tourist. Municipal taxes (property taxes – building tax or land tax) also apply to the ownership of real estate and certain other limited real rights (ie, lease, concession, administration or use of public or private property of the state or of the administrative-territorial units). There are cer - tain exemptions from property tax, but they are generally limited to non-profit, religious organi - sations, educational institutions, hospitals, gov - ernmental institutions, persons with disabilities, etc.
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