In brief
The total cost of buying a property in Romania is higher than the price of the property, because notary fees and registration fees are added to it, VAT on new properties, and, on the seller's side, also capital gains tax. Proper budgeting in advance, and tax planning before choosing the structure of the deal, prevent surprises at closing.
Key takeaways
- 1The gap between the property price and the cost of the deal stems from several tax components and mandatory costs, and can reach tens of percent of what was planned.
- 2The notary's fee is calculated according to an official price list or the actual purchase price, whichever is higher, and is usually borne by the buyer.
- 3A new property purchased from a developer or a contractor is subject to VAT at 21%.
- 4The bank will not release the loan funds before the buyer is registered as the owner in the land registry.
- 5A common mistake is to budget only the notary's fee and to ignore VAT, future capital gains tax and ancillary costs.
What does the cost of buying a property in Romania include beyond the property price?
Beyond the property price, the cost mainly includes notary fees and registration fees, VAT when buying a new property, and, on the seller's side, taxes on the gain from the sale. An investor who comes to Romania with a property price in mind and leaves with a cost tens of percent higher than planned - this is not a rare phenomenon. The gap stems from several tax components and mandatory costs that it is important to budget in advance.
| Component | What applies | Note |
|---|---|---|
| Notary fees and registration fees | According to the official price list of the notaries' chamber or the actual purchase price, whichever is higher | Usually on the buyer, unless otherwise agreed |
| VAT on a new property | 21% when the property is purchased from a developer or a contractor | In addition to the notary costs |
| Corporate tax on capital gain (a seller that is a company) | 16% on the gain from the sale of the property | From 2024, whether a minimum turnover tax applies should be examined separately |
| Tax on the sale of agricultural land outside the city | 80% on the gain, if the sale is before the end of eight years | Calculated and collected by the notary before the transaction is authenticated |
| Recurring property tax (arnona) | The 30% discount on properties aged 50 years and over is expected to be abolished | A new, more moderate adjustment system is expected |
The notary's fee is calculated according to an official price list or the actual purchase price, whichever is higher, and is usually borne by the buyer.
How much do the notary's fee and the registration fees cost?
The notary's fee is set according to an official price list of the notaries' chamber (which is updated from time to time) or the actual purchase price, whichever is higher. In transactions of up to 20,000 RON the rate is 2.2% of the transaction value.
In higher-value transactions the fee is calculated as a fixed amount plus a percentage of the balance. For example, in a transaction above 600,001 RON the fee is 6,405 RON plus 0.60% of the excess portion. The buyer usually bears the notary costs and the registration fees, unless otherwise agreed.
Is there VAT on the purchase of a new property in Romania?
Yes. New properties purchased from a developer or a contractor are subject to VAT at 21%, and it is added to the notary and registration costs.
What capital gains tax does a seller that is a company pay?
A company that sells a property and is subject to corporate tax will be charged 16% on the gain from the sale, that is, the difference between the sale price and the fiscal value of the property (the acquisition cost and the historical construction cost). From 2024, whether the seller is subject to a minimum turnover tax should be examined separately, because this affects the calculation of the liability.
What is the tax on the sale of agricultural land in Romania?
A tax of 80% applies to the gain from the sale of agricultural land outside the city limits before the end of eight years. The tax is calculated and collected by the notary before the transaction is authenticated.
Is a change expected in the recurring property tax?
Yes, and this is a regulatory change worth taking into account. The 30% discount on the value of properties aged 50 years and over is expected to be abolished, and a new, more moderate adjustment system is expected to take its place. This will affect yield calculations, particularly for older properties.
What other costs are worth budgeting for?
- Equity for the deposit
- Lawyer's fees
- Notarial translations
- Brokerage commissions
- A cash reserve for unforeseen situations
How do banks in Romania work when the purchase is financed?
When the purchase is financed by a bank, it is customary for the bank to require a first mortgage on the property purchased. The bank will not release the loan funds until the buyer is registered as the owner in the land registry, and sometimes also after the bank's mortgage has been registered on the property.
Banks usually carry out their own independent due diligence on the property, and require that the property be free of any prior security interest. Mortgages are registered on the land and buildings purchased, or on land and buildings that are to be built on it.
What is worth doing before signing?
The costs of buying in Romania are not particularly high compared with other countries in Europe, but they are complex and spread among different parties. Correct tax planning, carried out before choosing the structure of the deal and not after it, is the difference between a deal that works numerically and one that surprises unpleasantly at closing. It is therefore worth building a full budget in advance, including VAT, future capital gains tax and ancillary costs, and not only the notary's fee.
The content of this article is general information only and does not constitute legal advice, tax advice or an investment recommendation. Laws, regulations and tax rates may change, and specific circumstances may affect their application to a given case. Before any investment decision, it is advisable to seek individual advice.
Frequently asked questions
How much does a notary's fee cost in Romania?
The fee is set according to an official price list or the actual purchase price, whichever is higher. In transactions of up to 20,000 RON the rate is 2.2%, and in a transaction above 600,001 RON it is 6,405 RON plus 0.60% of the excess portion. The buyer usually pays it.
Is there VAT on buying a new apartment in Romania?
Yes. A new property purchased from a developer or a contractor is subject to VAT at 21%, in addition to the notary and registration costs.
How much capital gains tax does a company that sells a property in Romania pay?
A company subject to corporate tax pays 16% on the gain from the sale of the property. From 2024, whether the seller is subject to a minimum turnover tax, which affects the calculation of the liability, should be examined separately.
When does the Romanian bank release the loan funds?
The bank will not release the loan funds until the buyer is registered as the owner in the land registry, and sometimes also after the bank's mortgage has been registered on the property.
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