Tax on property income in Romania
Taxation Researcher | January 17, 2023
Tax Rate on Rental Income
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Nonresidents are taxed on their income from Romanian-sources. Married couples are assessed and taxed separately; joint taxation is not permitted. No allowances are available for nonresident taxpayers.
Nonresidents are not allowed to directly own Romanian immovable properties.
Income from all sources are aggregated and taxed at a flat rate of 10%.
Rental income earned by nonresidents is taxed at a flat rate of 10%. A fixed deduction of 40% of the gross income is allowed to account for income-generating expenses. Taxpayers may also opt for itemized deductions of all expenses.
A landlord in Romania has the legal obligation to pay the taxes levied on income from property, except in the case of a foreign landlord, when the tax is withheld and paid to the state by the person paying the revenue, meaning the tenant.
No tax is levied on the capital gains realized by individuals from selling real property; however transfer tax is levied on the transfer of immovable property in Romania.
Property tax is levied on buildings and the applicable tax rate varies, depending on the building´s classification and property value. Property tax on residential buildings ranges from 0.1%-0.2%. Property tax on nonresidential buildings is 0.5%-1.3%.
A local tax is levied on land in located in urban areas in Romania, payable by the owner. The tax rate varies depending on the location of the property.
Nonresidents cannot directly own Romanian real property. Nonresidents can put up a local corporation in Romania in order to purchase real property.
Income and capital gains earned by corporations are taxed at a flat rate of 16%. Expenses incurred that are directly related to obtaining income can be deducted from the gross income.