The tax on buildings will increase from next year, both for individuals and for legal entities, and only in certain exceptional cases it will remain unchanged compared to 2022, according to an analysis carried out by Deloitte and published on Monday by Agerpres.
Starting from 2023, the taxation of real estate properties changes radically. The main changes consist in the increase of the tax rate, both for residential and non-residential buildings, and in the adjustment of the taxable value to which these tax rates are applied, according to the opinion material signed by Ana Petrescu-Mujdei, Senior Manager, Taxation Direct, Deloitte Romania.
Thus, the tax differentiation is eliminated depending on the type of owner – natural or legal person. Moreover, the revision of the taxation regime of buildings is one of the main objectives in the fiscal policy area assumed by Romania through the National Recovery and Resilience Plan (PNRR).
According to the PNRR, the tax reform in Romania must include measures regarding the alignment of the taxable value with the market value. In addition, through a report published in June of this year, the International Monetary Fund (IMF) sent the Romanian authorities a set of recommendations for improving property tax revenues. Among these are the application of the tax rate on the market value, both for residential and non-residential buildings, and the inclusion of the price of the land in the taxable value of the building – an otherwise logical measure, since the value of the construction is only artificially separated from the value of the land.
Starting from this objective and from the recommendations of the IMF report, the Government introduced in the Ordinance amending the Fiscal Code, adopted in the summer of this year, the new calculation methods for the tax on buildings, applicable from 2023.
“Although there are still unclear elements regarding the method of application, it seems to be a certainty that there will be an increase or, in the best case, in exceptional situations, the same tax will be applied as in 2022”, says the Deloitte analyst.
Currently, the tax rates have maximum values - 0.2% for residential buildings and 1.3% for non-residential buildings – local authorities having the possibility to apply higher tax rates, but which cannot exceed the maximum limit by more than 50 %.
Starting next year, the tax on buildings will be differentiated only according to the nature of the building, and the minimum rates will increase, without a maximum threshold. For residential buildings, the minimum rate will be 0.1%, and for non-residential buildings, 0.5%. Therefore, the value of the tax rates will be at the discretion of the local authorities, each local administration in the country being able to choose a tax rate according to its own needs.
Currently, the taxable value of a building is determined differently depending on the type of owner and the nature of the building. More precisely, in the case of a residential building owned by a natural person, this value is calculated depending on the area in which it is located, the type of construction and certain coefficients provided for in the legislation. For a legal person, regardless of the type of building, the value is determined according to the final estimate of the construction works, the purchase price or the value from the last evaluation report drawn up by an authorized appraiser.
Starting next year, regardless of the type of owner or the nature of the building, the taxable value of a building will be determined according to the data contained in the market studies administered by the National Union of Notaries Public in Romania, also known as “notary grids” . In addition, to the value of the building will be added the value of the land on which it is built, taken from the same studies.
As an exception, if the values from these studies are lower than the current ones, from the database of local authorities, respectively those determined according to the rules in force on December 31, 2022 for residential buildings, the tax for the year 2023 will be calculated taking into account the value bigger.
Thus, in principle, the tax on buildings will increase from next year, both for individuals and for legal entities, and, only in certain exceptional cases, it will remain unchanged compared to 2022.
For example, for a three-room residential apartment in Bucharest, built after 2011, in the Politehnica metro station area, if the same rate of 0.1%, valid this year, is applied, the tax will increase next year by the at least 50%, from 250 lei per year, to approximately 375 lei, using the value from the notary grids. But a correct estimate will be possible only after the applicable tax rate for 2023 is announced.
And for legal entities that own shopping centers or office buildings, there will be increases in the building tax, but, in the case of commercial buildings, as a rule, the tax is a cost transferred to the tenants.
In conclusion, the decision of each local authority regarding the tax rate and the reporting of real estate properties to the notary grids is awaited, in order to determine an estimated cost with the tax starting in 2023, states the cited source.