VAT on properties has been reduced to 5%

Hi all,

this is good news for everyone. VAT has been reduced to 5% on properties purchases. I am still waiting for my lawyer's confirmation that this is affecting also to foreigner investors but reading the article I would expect this law affects to our adquisitions. One question I have is if we can claim the 19% VAT we have paid in our deposit. This will be my next question to my lawyer after they have confirm that we can pay the 5% VAT on our property.

Jose,


Post from PropertySecrets
Posted by Easy Credit.
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Dear all,

Through Goverment Emergency Ordinance (OUG) 200/2008, the Romanian goverment has decided to modify some provisions in the Romanian fiscal legislation ("Codul Fiscal")

A goverment emergency ordinance acts as a temporary law.


According to the new (updated) provisions of the Romanian fiscal code throug Goverment Emergency Ordinance 200/2009, the VAT charged on property purchases including land, has been reduced to 5%

The new provisions come in force from the 15th of December 2008 and apply only to:

1 delivery/purchase of elderly homes
2 delivery/purchase of property/buildings for child care centers
3 delivery/purchase of property owned by a city council which is rented out to individuals
4 delivery/pruchase of a home/appartment by an individual/individuals which does not exceed a purchase price of 380.000 RON (+/- 100.000 EURO) excluding VAT

A dwelling (as mentioned under (4) ) can be subject to the 5% VAT provision according to the following conditions:

a) a maximum living surface of 120 m2, bought by any individual or family
b) finished properties (new dwellings still to be built are charged 19% VAT in the pre-contract stage, but 5% upon delivery)
(the goverment defines a finished property as one that you can move in right away)
c) the quota of land not surpassing 250 m2 (including any percentage of communal land held by the buyer)
d) an individual buyer who wants to benefit from the 5% VAT can only apply this ones on one property
e) a family (husband/wife) can only apply the 5% VAT ones (as a couple) on one property

This is a temporary law, which will be kept in force (as far as I can see) until the goverment decides to withdraw this ordinance.


Stefan

PS1 In case property is bought throug a Romanian company (SRL) the 19% VAT is still in force.

PS2 I am not a lawyer (al though very much interested in Romanian legislation) and I translated the contents of this ordinance myself. In case of 100% certainty about the legality of the provisions, please contact your designated lawyer.

Dear George,

Goverment Emergency Ordinance 200/2008 (in Romanian) can be found at:

http: / /www .dreptonline .ro /legislatie /oug _modificare _lege _codul _fiscal _200 _2008 .php

article 7

7. La articolul 140, dupa alineatul (2) se introduce un nou alineat, alineatul (21) cu urmatorul cuprins:
"(21) Cota redusa de 5% se aplica asupra bazei de impozitare pentru livrarea locuintelor ca parte a politicii sociale, inclusiv a terenului pe care sunt construite. Terenul pe care este construita locuinta include si amprenta la sol a locuintei. In sensul prezentului titlu, prin locuinta livrata ca parte a politicii sociale se intelege:

a) livrarea de cladiri, inclusiv a terenului pe care sunt construite, destinate a fi utilizate drept camine de batrani si de pensionari;
b) livrarea de cladiri, inclusiv a terenului pe care sunt construite, destinate a fi utilizate drept case de copii si centre de recuperare si reabilitare pentru minori cu handicap;
c) livrarea de locuinte care au o suprafata utila de maximum 120 m2, exclusiv anexele gospodaresti, a caror valoare, inclusiv a terenului pe care sunt construite, nu depaseste suma de 380.000 lei, exclusiv taxa pe valoarea adaugata, achizitionate de orice persoana necasatorita sau familie. Suprafata utila a locuintei este cea definita prin Legea locuintei nr. 114/1996, republicata, cu modificarile si completarile ulterioare. Anexele gospodaresti sunt cele definite prin Legea nr. 50/1991 privind autorizarea executarii lucrarilor de constructii, republicata, cu modificarile si completarile ulterioare. Cota redusa se aplica numai in cazul locuintelor care in momentul vanzarii pot fi locuite ca atare si daca terenul pe care este construita locuinta nu depaseste suprafata de 250 m2, inclusiv amprenta la sol a locuintei, in cazul caselor de locuit individuale. In cazul imobilelor care au mai mult de doua locuinte, cota indiviza a terenului aferent fiecarei locuinte nu poate depasi suprafata de 250 m2, inclusiv amprenta la sol aferenta fiecarei locuinte. Orice persoana necasatorita sau familie poate achizitiona o singura locuinta cu cota redusa de 5%, respectiv:

1. in cazul persoanelor necasatorite, sa nu fi detinut si sa nu detina nicio locuinta in proprietate pe care au achizitionat-o cu cota de 5%;
2. in cazul familiilor, sotul sau sotia sa nu fi detinut si sa nu detina, fiecare sau impreuna, nicio locuinta in proprietate pe care a/au achizitionat-o cu cota de 5%;
d) livrarea de cladiri, inclusiv a terenului pe care sunt construite, catre primarii in vederea atribuirii de catre acestea cu chirie subventionata unor persoane sau familii a caror situatie economica nu le permite
accesul la o locuinta in proprietate sau inchirierea unei locuinte in conditiile pietei."



Romanian Fiscal Code regarding equal treatment of Romanians & non-residents

http: / /www .contabilul .ro /a /2388 /Codul -fiscal - -Titlurile -I -II .html (article 3)

ART. 3

Impozitele si taxele reglementate de prezentul cod se bazeaza pe urmatoarele principii:

a) neutralitatea masurilor fiscale in raport cu diferitele categorii de investitori si capitaluri, cu forma de proprietate, asigurand conditii egale investitorilor, capitalului roman si strain;


In my personal opinion whenever a property is bought through a pre-sales or final sales agreement prior to this Goverment Emergency Ordinance, any invoice issued for the remaining balanced by a developer after the 15th of December 2008 should be according to the provisions of OUG 200/2008, whereas the balance of the sales agreement has a VAT percentage of 5% (the property purchase price excluding VAT and maximum surface area and land surface area , to be in accordance withe the Goverment Emergency Ordinance provisions!)

I do advice you to also contact your local representative to find out if the VAT percentage of 5% on the balance does really apply in this case when buying a property off-plan but still owing a balance towards the developer (as the the Government Ordinance is not completely clear on this)