On Wednesday, senators by 67 votes “for” and 37 “against” adopted amendments to Decree 16/2022, according to which the amount of taxation of residential buildings owned by individuals was increased to 50%. The vote in the Senate comes in the context of mayors expressing their opposition to the increase.

Senators with 67 votes “for”, 37 “against” and 1 abstention adopted the report of the budget and finance committee, which amended Decree 16/2022 on amendments to the Fiscal Code. UDR and AUR voted against raising fees and taxes.

According to the amendment introduced by PSD senator Radu Oprea and supported by members of the PSD-PNL-UDMR coalition, the tax net for residential buildings owned by public entities will be increased to 50%. It should be noted that the maximum limit for setting the local tax on land and real estate remained unchanged – 0.08 – 0.2%.

The leader of the PSD senators of the Oprya Council explained that whether the construction tax will increase or decrease depends on the decision of the local councils.

“According to the amendment voted on by the Budget Committee, the tax grid changes, but the maximum limit within which local taxes can be set on land and real estate remains unchanged: 0.08 – 0.2%. There is an increase of this grid by up to 50%, but based on the decisions of local councils, the situation in any settlement in Romania can range from a decrease to an increase in taxes and fees. It can also remain unchanged. If the city today had a coefficient of 0.12%, the local council voted and decided to choose 0.08% in this option, taxes would decrease,” Oprea explained.

How much will property taxes increase under the new proposal

According to an analysis conducted by Adrian Vascu, a senior partner at Veridio and former president of ANEVAR, if the level of tax rates is changed, that is, reduced, then the tax may not increase at the same rate as the taxable amount. It also states that the rateable value will apply to the building and associated land, rather than buildings and land separately, as has been done so far.

For example, for an apartment located in Bucharest, floor area A, floor 3, year of construction 1950, area 99.71 square meters. The new taxable value will result in approx. 307,317 lei, which, if the tax rate is maintained at 0.1%, will result in the amount of tax next year being 307 lei compared to 204 lei this year.

• How much will property taxes increase under the new proposal / Two examples: an apartment in Bucharest and a house in Cluj

For a house located in Cluj-Napoca with an area of ​​295 square meters. m and a land plot of 800 square meters. The new taxable value will result in approx. 718,500 lei, which, if the tax rate is maintained at 0.2%, will result in a tax amount of 1,437 lei next year compared to 958 lei this year.

Mayors disagree. The coalition is looking for a solution

The changes made by the PSD-PNL-UDMR are not well received by the mayors, who complain that the tax increase will create problems for those who must give them their votes in the upcoming elections.

Moreover, SDP mayors expressed their displeasure at a meeting with the party leadership. At the end of the meeting, PSD President Marcel Cholaku announced that a new formula for applying the property tax was being sought. Cholaku handed over the responsibility to the mayors, saying that they would come up with a proposal in the next period.

“Municipal mayors have a different formula and vision, and AMR will make a proposal. You know very well that this increase in property, which helps local budgets, was three months ago, an emergency order.(…) The mayors came and technically explained that this cannot be done. He came up with this amendment with a 50% increase, but the ratio remained the same, that is, there was decentralization and each mayor came and proposed whether to increase or not. With the notary grid, it was very clear, depending on where your property was. Now we are looking for another formula that will be applicable and correct,” said Marcel Čolaku after the PSD National Political Council meeting on Monday.

• – We will not make noise. What did Cholaku discuss with the PSD mayors regarding the increase in local taxes

It should be noted that European officials are asking Romania to update taxes to the market value of buildings. In addition, the change in the taxation method is an important milestone in the PNRR.

The draft approval of Ordinance 16/2022, as amended by the Senate, will be submitted to the Chamber of Deputies for discussion, which is also the decision-making forum in this case.