Tax on Rental Income in Romania for an Israeli Investor: Romania, the Tax Treaty and Reporting in Israel

1How much tax do you pay in Romania on renting out an apartment?

An individual who rents out a property in Romania pays, as of October 2026, income tax at a rate of 10% on net income, where net income is determined by a fixed deduction of 20% of gross rent. In practice this is about 8% of total rent. The rule applies to individuals regardless of their residence, and therefore also to an Israeli investor who holds an apartment in their own name.

The income is classified in the Romanian Tax Code as income from the “transfer of the use of assets” (cedarea folosinței bunurilor). The 20% deduction is fixed and does not depend on actual expenses - mortgage interest, repairs, management fees or building tax cannot be deducted. The option of calculating income according to actual expenses was abolished in recent years.

2Who withholds the tax and who reports?

Everything depends on the identity of the tenant. When the tenant is a company or another body that is required to keep books, it withholds the tax at source and transfers it to the tax authority (ANAF) by the 25th of the month following the withholding, and the withholding is final. When the tenant is an individual, the responsibility to report and pay lies with the landlord.

• Rental to an individual: the landlord files the annual single return (Declarația unică, Form 212) by 25 May of the year following the income year, and pays the tax on the same date. For 2025 income, for example, the deadline was 25 May 2026.
• Registering the contract: according to ANAF guidance, an individual landlord must register the lease agreement and its amendments with the tax authority by means of a dedicated application (Form C168). For a non-resident, it is recommended to carry out the registration through an attorney-in-fact.
• Remote filing: the return is filed through ANAF's virtual private space (SPV), on the e-guvernare.ro website with a qualified electronic signature, by mail or directly at the tax office.
• Rental to a company: there is usually no need for a further filing on the same income, but it is worth making sure that the tenant actually withholds and transfers the tax and obtaining a certificate from it - the certificate will also be used for reporting in Israel.

3Do health insurance contributions (CASS) apply to rental income?

Under the rules in Romania, as of 2026, a person whose net rental income (alone or together with other non-wage income) reaches at least 6 gross minimum wages - 24,300 lei - owes health insurance contributions (CASS) at a rate of 10%, on a base capped at 24 minimum wages (97,200 lei).

For a non-resident, whether CASS actually applies depends on their insurance status and on international arrangements, and is not automatic. This is a point to be checked in advance with a Romanian tax adviser, because with luxury apartments or several apartments the threshold may be crossed.

4What happens with short-term rental (Airbnb)?

Short-term tourist rental is subject to separate rules. According to ANAF guidance, the rental of rooms in privately owned apartments for tourism purposes, for periods of 24 hours to 30 days, is taxed, for a limited number of rooms, according to an annual income norm (normă de venit) set by the authority, and requires keeping a lodging capacity form. Beyond the number of rooms set by law, the income is taxed as self-employed activity based on actual income and expenses.

For an Israeli investor with several tourist units, the implication is that the activity may be considered a business - both in Romania and in Israel - with consequences for the tax rate, for National Insurance and for the registration obligation. In such cases it is worth considering holding through a company, and building the structure before operations begin.

5What does the tax treaty between Israel and Romania say?

A convention for the avoidance of double taxation was signed between Israel and Romania in Jerusalem on 15 June 1997, and was amended by a protocol that entered into force in October 2023 and applies from January 2024. As is customary in treaties of this type, income from real estate may be taxed first by the country in which the property is located - Romania - and the country of residence - Israel - may also tax it, while giving a credit for the tax paid in Romania.

The protocol updated, among other things, the list of taxes to which the convention applies (including the Israeli real estate betterment tax) and replaced the exchange-of-information article with a modern text. In practice, this means that the tax authorities of both countries can exchange information on income and assets, so there is no room to assume that income in Romania will not be known in Israel.

6How do you report rent from Romania in Israel: the 15% route or the regular route?

An Israeli resident is subject to tax in Israel on rental income from abroad, subject to the treaty, and can choose between two routes. According to the Israel Tax Authority's guide to the annual return, a reduced tax of 15% can be paid on condition that no expenses are deducted other than depreciation, and in this route there is no entitlement to a credit for tax paid abroad.

What does this mean in practice? In the 15% route the investor pays about 8% in Romania and another 15% in Israel on a similar base - about 23% in total, regardless of expenses. In the regular route the Israeli tax is determined by the marginal rate, but the Romanian tax is offset against it and the expenses are deducted. For an investor with a mortgage, high maintenance costs or relatively low income, the regular route may be cheaper; for an investor in a high marginal tax bracket and with no expenses, the 15% route may be simpler and more worthwhile. The calculation must be redone every year.

• Income in lei or in euros is converted into shekels according to the Tax Authority's rules - keep documentation of every receipt.
• Keep the Romanian return and the certificate of tax payment, or the certificate of withholding at source from the tenant, for the purpose of the credit in the regular route.
• Anyone who transferred a total of NIS 500,000 or more abroad within 12 months is required to file an annual return in Israel - a threshold that many investors cross already in the year of the purchase.
• The question of liability for National Insurance contributions on rental income from abroad has been discussed in case law and interpretation - check with your accountant.

7What changes when the apartment is held in a Romanian company?

When the property is held in a Romanian SRL, the rental income is the company's income. As of October 2026, a company that meets the conditions of the micro-enterprise regime (among other things, income of up to 100,000 euros in the previous year and at least one employee) pays 1% on income; otherwise corporate tax of 16% applies to profit. On a dividend distribution to an Israeli shareholder, Romania applies withholding tax - 16% under local law, and up to 15% under the treaty on presenting an Israeli tax residency certificate.

In Israel the dividend is taxed as dividend income from a foreign company, with a credit for the Romanian tax, and ownership of a foreign company requires reporting (Form 150). A comparison between personal holding and holding through a company must include all the layers: the tax in Romania, the dividend, the reporting in Israel and the management costs. See also our guide to setting up an SRL for holding real estate.

8A checklist for an Israeli landlord

1. Obtain a NIF before the rental begins.
2. Draft a bilingual lease agreement (Romanian and another language) and register it with ANAF.
3. Find out whether the tenant withholds tax at source, and obtain an annual certificate from it.
4. File Form 212 by 25 May, and check whether CASS applies.
5. In Israel - decide every year between the 15% route and the regular route, and keep all the documents for the credit.
6. Document the rent and the conversion rates throughout the year.

9What to do before signing and how we accompany you

Rental taxation should be planned before the purchase and not after the first return arrives: the choice between personal and company holding, the identity of the intended tenant and the type of rental affect the net yield no less than the price of the apartment. We accompany the purchase and the drafting of the lease agreement in Romania, take care of the registration and the NIF, and work in coordination with the client's accountant in Israel so that the reporting in both countries is consistent.

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The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.