The implications of value-added tax (VAT) on the sale of buildings and land in Romania depend on certain conditions, according to the information provided. Let’s break down the VAT implications based on the type of property.
New Housing Units:
When it comes to the sale of new residential properties to individuals, VAT is applicable at a reduced rate of 5% if the property is under 120 square meters and has a value under EUR 100,000. However, if the property exceeds these thresholds, the standard VAT rate of 19% applies.
New Commercial Properties:
Sales of new commercial constructions are generally subject to VAT at the standard rate of 19%. However, if both the seller and the buyer are VAT registered, the reverse charge mechanism may apply.
Old Housing Units:
The sale of older residential properties is exempt from VAT, but the seller has the option to apply VAT if desired. If VAT is applied, the same VAT rates and scenarios as for new constructions can be followed.
Old Commercial Properties:
The sale of older commercial properties is generally exempt from VAT. However, if both the seller and the buyer are VAT registered, the reverse charge mechanism may apply. There is also an option for the seller to apply VAT in certain cases, particularly if both the seller and buyer are VAT registered.
Agricultural Land:
The sale of agricultural land is exempt from VAT. However, the seller has the option to apply VAT at the standard rate of 19% if desired. The reverse charge mechanism may apply if both the seller and the buyer are VAT registered.
Land for Constructions:
The sale of land for construction follows the VAT regime of the construction itself if both are registered with the same number in the land book and the construction is more valuable than the land. Otherwise, the sale of land for construction is taxable at the standard VAT rate of 19%. The reverse charge mechanism may apply if both the seller and the buyer are VAT registered.
It is important to note that specific conditions, thresholds, and exemptions may apply in each case. Therefore, it is advisable to consult with a tax professional or legal expert to ensure compliance with the applicable VAT regulations.
In conclusion, the sale of buildings and land in Romania can be subject to VAT depending on the type of property and specific circumstances. The VAT rates and exemptions vary for new and old residential and commercial properties, agricultural land, and land for construction. Understanding the VAT implications is crucial for both buyers and sellers to ensure compliance with the tax regulations. Seeking professional advice is recommended to navigate through the complexities of VAT in the Romanian real estate market.
Source
