Living in Romania

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples are assessed and taxed separately; joint taxation is not permitted.

INCOME TAX

Income is classified into the following categories: (1) income from independent activities, including royalties, (2) salaries, (3) income from trading activities, (4) income from investments, (5) pensions, (6) agricultural activities, (7) income from gambling and prizes, and (8) capital gains.

Income is aggregated and taxed at a standard flat rate of 16%.

Residents may deduct personal allowances, and the actual amount is regularly adjusted. The current personal allowance is RON250 (€58) but individuals earning more than RON3,000 (€696) are not entitled to the personal allowance. An additional allowance can be claimed for the taxpayer’s dependants (spouse and children) at RON125 (€29) for each dependant. The total amount of the personal and additional allowances may not exceed RON650 (€151).

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; however transfer tax is levied on the transfer of immovable property in Romania.

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.

TRANSFER TAX FOR PROPERTY OWNED FOR LESS THAN 3 YEARS
SALES PROCEEDS, RON (€)	TAX RATE
Up to 200,000 (€46,387)	3%
Over 200,000 (€46,387)	2%

TRANSFER TAX FOR PROPERTY OWNED FOR AT LEAST 3 YEARS
SALES PROCEEDS, RON (€)	TAX RATE
Up to 200,000 (€46,387)	2%
Over 200,000 (€46,387)	1%

An exemption from paying the transfer tax on the transfer of Romanian immovable property is allowed under the following circumstances:

• The property transfer was made through the state restitution process
• The property transfer was by inheritance, only if the inheritance was processed within two years after the death of the benefactor. If the inheritance was processed over two years, a 1% inheritance tax is payable by the beneficiaries
• The property transfer was by gift from a spouse or a relative up to the third degree of kinship

PROPERTY TAX

Property Tax

A local tax is levied on buildings, payable by the owner. The tax is generally levied at 0.1%. The applicable tax rate varies between 0.25% and 1.50% for legal entities, depending on the building’s location and property value.

Land Tax

A local tax is levied on land in located in urban areas in Romania, payable by the owner. The tax rate for urban land ranges from RON0.052 (€0.012) and RON89.21 (€20.70) per square metre for land in urban areas. The tax rate for land outside urban areas ranges from RON0.01 (€0.002) and RON0.48 (€0.11) (globalpropertyguide)