According to the Tax Code, as of 2016, with some exceptions, any person who owns a building located in Romania shall be required to pay an annual tax for that building. The approval of the New Tax Code will radically change the real estate property tax system, mostly affecting natural persons who own non-residential buildings used for business purposes, namely commercial premises or offices.
The purpose of a building - residential or non-residential - is the main criterion for establishing local taxes for next year. The current Tax Code does not make this distinction and the calculation formulas (tax rate, taxable amount) depend on the owner's standing: natural or legal person.
Therefore, starting with 2016, natural persons currently paying the same taxes, regardless of the purpose of the building, shall pay an increased tax. For commercial premises or offices, they shall pay the same amount as a legal person. The tax will be at least double and could even be 20 times higher.
The rate level is decided by the local councils, ranging from 0.2% to 1.3%.
The alignment of tax rates depending on the purpose of the building shall redefine the real estate market where, so far, natural persons benefited from lower taxes. Starting with 2016, natural persons, owners of non-residential buildings, shall be subject to the same tax treatment as companies. Until now, particularly in large cities, the tendency was for local administrations to select their maximum threshold of the tax rate, stipulated by the Tax Code. Consequently, we expect this increase to be significant for natural persons.
However, the new Tax Code eliminates increased taxes for owners of multiple real estate properties, as well as the taxes for real estate properties larger than 150 sqm.
Currently, natural persons who own two or several buildings pay an increased tax: 65% higher for the first building in addition to the main residence, 150% higher for the second building and 300% higher for the third and the following buildings. This provision is not included in the new Tax Code.
As of 2016, the tax shall be calculated by applying a rate which ranges between 0.08% and 0.2% from the taxable amount of the building.
The taxable amount of the building shall be determined by multiplying the gross built area, expressed in square meters, with the corresponding taxable amount, expressed in RON/sqm., from the table stipulated by the Tax Code. For instance, the taxable amount for a building with reinforced concrete frames or with exterior walls made of burnt brick or any other materials subject to thermal and/or chemical treatment, with water and sewerage system, electricity and heating shall be 1,000 RON/sqm. (for other types of buildings it decreases up to 75 RON/sqm.). Currently, the highest taxable amount is 935 RON/sqm., and the lowest 63 RON/sqm..
The taxable amount shall be adjusted depending on the rank of the city and the area where the building is located, multiplied with a correction coefficient. For instance, for a building located in a city with rank 0, in the A area, the coefficient shall be 2.6 (and it decreases, depending on the rank and area, up to 0.9).
The correction coefficient is reduced by 0.10 for apartments located in buildings with more than 3 floors and 8 apartments.
Moreover, the taxable amount of the building is reduced depending on the year of construction (by 50%, if the building is more than 100 years old, and it can decrease up to 10%, if the building is aged between 30 and 50 years, including.)
Starting with 2016, the tax shall be calculated by applying a rate ranging between 0.2% and 1.3%, including, on the resulting taxable amount:
Resulted from an assessment report prepared by an authorized assessor, within the last 5 years prior to the reference year
To construction works, in case of new buildings, built within the last 5 years prior to the reference year
In the event that the building amount cannot be calculated using one of the three above-stated values, the tax rate shall be 2%, applicable on the taxable amount calculated for non-residential buildings.
The tax shall be the sum between the tax calculated for the area used for residential purposes and the tax for the area used for non-residential purposes.
If the two types of surfaces cannot be distinctly separated, the tax shall be calculated for:
Residential buildings, in the event of a registered office, without any business activity carried out in the premises;
The taxable amount of buildings owned by legal entities shall be the amount applicable on December 31st of the prior year for which the tax is payable and it can be:
The last taxable amount registered by tax bodies;
The resulting amount of an assessment report prepared by an authorised assessor;
The final amount of construction works, in case of new buildings, built during the prior financial year;
The taxable amount shall be updated at least once each three years, based on an assessment report. Otherwise, the tax rate shall be 5%. At present, if the assessment has not been carried out for 3 years, the tax rate shall range between 10% and 20%, and for buildings which have not been assessed within the last 5 years, the rate shall range between 30% and 40%.
Currently, according to local council decisions, large cities apply a tax rate that is very close to the maximum threshold stipulated by the Tax Code for legal entities who reassessed their building within the last three years prior to the reference year. Pursuant to the Tax Code, the councils may decide on a rate ranging from 0.25% to 1.50%.
The rates proposed for Cluj Napoca under the Local Council Decision draft for 2016 are as follows:
Residential buildings - a rate of 0.1%/year from the taxable amount
Consequently, starting with 2016, the building tax for a natural person, owner of an apartment assessed at EUR 100,000 and rented to a company, with business activity carried out within said premises, shall amount to 1,000 EUR/year.
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