Local taxes

08.02.2013 ZF English

Real estate taxes

Tax on buildings for individuals: 0.1% of the taxable value of the building (increased by 5% for each 50 sqm for any surface area in excess of 150 sqm). Those who own more than one residential property pay additional building tax as follows: 65% for a second home, 150% for a third and 300% for any more above this.

Tax on buildings for legal entities: 0.25% - 1.5% of the gross book value of the building. Local authorities may grant exemptions to companies under state aid schemes for regional development.

Special tax on buildings which have not been re-valued in the preceding 3 years: 10%-20% of gross book value and for buildings which have not been re-valued in the preceding 5 years: 30%-40% of gross book value, until next valuation.

Tax on land is calculated per sqm and varies according to the location of the land and its use.

Tax on vehicles: Vehicles are taxed on a rising scale for every 200cc, with varying rates depending on the type of vehicle.

Tax on land, buildings and vehicles is payable twice a year, by 31 March and 30 September.

Other local taxes include:

• Tax on other types of means of transportation which varies depending on the type and weight of the vehicle;
• Advertising tax:

• for advertising services: between 1% and 3% of the value of the services provided;
• for displaying advertising signs: up to RON 20 or RON 28 (if the sign is displayed at the location where the activity is carried out) multiplied by the number of square meters of the sign.

• Tax on shows: organizers of artistic events, sports competitions, and entertainment activities, such as discotheques and videotheques, must pay a tax on shows, determined as a percentage of the revenues from sale of tickets or subscriptions, or as a fixed amount per square meter.

• Hotel tax: local councils may apply a tax of 1% of the rates charged to clients of hotels and similar accommodation.

The level of certain local taxes may be increased annually by up to 20% by local councils.

Investment incentives

A private investor in Romania may benefit from business aid from both national and EU sources, within the limits allowed by the State aid regulations. The aid may be obtained for activities including, but not limited to, the following: employment and training, investment in processing activities, R&D, energy, tourism and agriculture.

In July 2008, a Government Emergency Ordinance was introduced to regulate investment incentives, after a period of legislative vacuum, following the expiry of the former Investment Law on 31 December 2006.

The main points of the Ordinance are:

A Romanian Investment Agency (RIA) has been set up to operate as a one stop shop for both Romanian and foreign investors. As part of the process of making an investment, a Protocol can be concluded upon the request of an investor between the investor and the RIA, whereby the potentially available state aid is specified and further guidance is given on the process of setting up an investment as well as on applying for business aid. Individual business aid may be granted for projects which are not eligible under the existing state aid schemes.

Local incentives (i.e. exemption from the local tax on buildings – which can be between 0.25% and 1.5% of the book value, but which in most cases is 1.5%, and from the local tax on land – depending on the location of the plot of land) may be granted by local authorities, provided that the local authority issues a specific regional state aid scheme in this respect. Moreover, investments located in industrial parks may be granted exemption from taxes for the conversion of agricultural land into land belonging to the industrial park, exemption from building and land tax, etc. 

Romania is eligible for substantial amounts of EU post-accession funding, which is intended to bring the quality of infrastructure and standard of living closer to the EU average. Much of this is available to business. Although the process of applying for and administering EU funds can be quite complex, requiring close cooperation with the Romanian state authorities, this additional source of financing provides a significant incentive for companies to invest in Romania.  

Various employment subsidies and significant national state aid schemes for regional investment for large investments of over EUR 30 million may be available for a private investor.

Source: KPMG - Investment in Romania report (May 2013)