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Romania: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples can file tax returns jointly or separately.

INCOME TAX

Income is aggregated and taxed at a standard flat rate of 16%.This tax is levied on income from the following sources: independent activities, salaries, investments, leasing of real estate properties, pensions, agricultural activities, gambling and prizes, transferring immovable property from personal patrimony, and other sources.

Residents may deduct personal allowances, and the actual amount is regularly adjusted. The current personal allowance is RON250 (€71) but individuals earning more than RON3,000 (€855) are not entitled to the personal allowance. An additional allowance can be claimed for the taxpayer’s dependants (spouse and children) at RON125 (€36) for each dependant. The total amount of the personal and additional allowances may not exceed RON650 (€185).

RENTAL INCOME
Rental income earned by residents is taxed at a flat rate of 16%. A fixed deduction of 25% of the gross income is allowed to account for income-generating expenses. Taxpayers may also opt for itemized deductions of all expenses.

As of 01 January 2008, taxpayers who earn rental income from more than five simultaneous rental contracts can only be taxed under the direct method (gross income less itemized deductible expenses).

CAPITAL GAINS
No tax is levied on the capital gains realized by individuals from selling real property.

Transfer Tax

Individuals who sell Romanian property are liable to pay transfer tax, levied on the sales proceeds. The applicable tax rate depends on how long the property was held by the owner and how much the actual sales proceeds are.

Value Added Tax (VAT)

VAT is levied on sale of real property. However, this ruling is not applicable to transfers of real estate from a natural person to a legal entity, or for transfers between individuals.

PROPERTY TAX

Property Tax

A local tax is levied on buildings, payable by the owner. The applicable tax rate varies between 0.25% and 1%, depending on the building’s location and property value. If the building has not been revalued during the last three years, the applicable tax rate varies from 5% to 10%.

Land Tax

A local tax is levied on land in Romania, payable by the owner. The tax rate for urban land ranges from RON0.001 and RON0.59 per square metre for land in urban areas. Land outside urban areas is taxed at a fixed rate of RON1 (€3.51) per hectare.

Romania - more data and information

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