From 2025, the real estate tax will increase, both for individuals and for companies. This is in the Approval Act OG16/2022. When forming legislation, notarial grids, which have high values, will be taken into account, which will lead to an increase in the amount of payments.

Why are taxes increasing?

The answer is given Alin Marius Andris, State Secretary of the Ministry of Finance: “Currently, the level of local tax revenues is relatively low, which implies a balanced transfer from the state budget to the budgets of UAZ in order to cover operational costs.”

What is the Ministry of Finance working with the World Bank on to increase taxes on real estate

“At the Ministry of Finance, we have a task included in the PNRR: to create, from a technical point of view, a method of applying legislation. We have a project with the World Bank to create the infrastructure so that we can apply the new local tax to the market value,” Andris said at a conference organized by News.ro.

According to him, the reason is related to the fact that in order to apply the market value tax, it is necessary to be able to determine the market value.

“Here we work with other partners on data collection, including notaries. It is about determining the market value taking into account local specifics or types of housing or real estate,” he explained.

Our goal, says Andris, is that during this year “we will create the infrastructure to be able to support local public authorities to determine the value and further application of this tax.”

“Whether it applies from 2025 or not, the only thing that is certain at the moment is that we have a law that will come into force in 2025. Whether it will be extended or not, I cannot tell you. This is a matter for the parliament,” he explained.

We will all have to pay more

Alex Miltsev, partner, head of tax and legal assistance at EY Romania and Moldova reminds that now local taxes are applied in a range: there is a minimum and a maximum percentage. There are also for residential, non-residential.

“From 2025, the idea of ​​a maximum ceiling is abandoned. A minimum limit remains and commissions are applied as follows. Plants, factories, lands, wind parks of companies will be affected. Owners of cars, land, etc. also suffer. Everyone will have to pay more in the future. How many? This is a question mark,” he explains.

According to Miltsev, these taxes are imposed on the value, which is as close as possible to the market value.

“The National Union of Notaries will be involved, which should issue the grids. This is an open element, and it is premature to draw any conclusions here. The simple fact that the local tax cap has been abolished should make people think twice. The idea is to increase the income of local taxes to local budgets,” the representative of EY Romania also noted.

In his opinion, the authorities in areas re-subscribed by investors can significantly increase local taxes.

“This is an important element for Romanian and foreign companies that have to draw up their budgets for the next 2-3 years. How to make them? This is a big question mark,” he says.

Gabriel Birish: Decree 16 was created by some economic assassins

Lawyer Gabriel Birish, former State Secretary of the Ministry of Finance states that today we have a gap between minimum and maximum rates: for private, non-residential, natural persons, and legal entities.

“In the new law, we have a minimum. For non-residential, commercial buildings, we have a minimum of 0.5%. 0.5% or 1%, as it is now, of the market value means about 20% of what this building produces. In general, these costs are included in the fee for the services of tenants. “Most companies work in rented premises,” he says.

He also stated that it is no longer possible to draw up any multi-year business plan.

“This is an important element of costs. This year it could be 1% and next year the local council could decide on 10%. At 10%, it becomes a problem for companies in Cluj, Bucharest, Timisoara. 10% doubles or triples your rent. Ordinance 16 was created by some economic killers,” Birish said.

He says that we need to see what the notarial grid is called: the estimated market value grid.

“I mean grades. You cannot set tax on estimated value. Something certain must be given. Establish in the law what is the basis. The notary grid also has an element of subjectivity: the notary fee is calculated based on minimum values. They are interested in being as big as possible. Here we have a conflict of interests,” says the lawyer.

Local authorities seek to charge companies as much as possible

“We have two areas: residential and non-residential, physical and legal entities. In Bucharest, we have resident individuals – 0.1%, non-resident individuals – 0.2%, resident legal entities – 0.2%, non-resident legal entities – 1.5%. We clearly see the temptation of local authorities to go as high as possible (we see this example everywhere in the country, if we talk about who votes and who does not),” he said. Dan Manolescu, President of the Chamber of Fiscal Consultants.

If we look at the calendar, he says, we will see that nothing can change.

“We are talking about this Government, which seems to be working until the November-December parliamentary election cycle. We will have a new government in December. The extension (for 2025 – no) was accepted at the insistence of local authorities. The only option I see is to extend this tax for 1 year, so that the new mechanism is implemented and local authorities can adjust their software,” said Manolescu.

About how much property taxes will increase: several examples

When Decree 16/2022 came out, HotNews.ro spoke with Adrian Vascu, Veridio Senior Partner and former ANEVAR President, who provided us with a simulation. We resume from an article published in the summer of 2022.

Example 1: Apartment located in Bucharest, zone A, floor 3, year of construction 1950, area 99.71 square meters.

If it had been applied in 2023, as desired, the tax would have risen to 429 lei.

Example 2: A house located in Cluj-Napoca, with a built-up area of ​​295 sq.m and a plot of land of 800 sq.m, zone C, taxable value as of 12/31/2021 of 479,000 lei and an annual tax of 958 lei.

The tax would increase to 3325 lei.

Example 3: Commercial premises located on the first floor of an apartment building in Bucharest, owned by an individual, area 86.4 square meters.

The tax would increase to 2127 lei.

Note that these calculations were made in 2022. There will be cases when taxes will increase by 2-3 times from 2025. It remains to be seen whether the authorities will decide to change the law.