The obligation of the individuals to pay a tax on buildings that is differentiated according to the designation of the building was introduced upon the entry into force of the Law no 227/2015 concerning the Fiscal Code, aimed to better enforce the European legislation concerning the reduction of the discrimination between the individuals and the companies, namely for the reinstatement of the equitableness between the two types of taxpayers.

The individuals can choose, by filling in the ITL 001 statement, to declare if they are owners of residential buildings, non-residential buildings, or mixed usage buildings.

A residential building is declared if no business activity and/or companies that hold a property right to that building deduct any utilities expenses.

The modality to calculate the tax on residential buildings is regulated in the Fiscal Code as follows:

“ART. 457

The calculation of the tax on residential buildings owned by individuals

(1) For the residential buildings and appurtenance buildings owned by individuals, the tax on buildings is computed by applying a quota ranging between 0.08% – 0.2%, on the taxable value of the building. The quota of the tax on buildings shall be established by a decision of the local council. For Bucharest municipality, this responsibility lies with the General Council of Bucharest Municipality.

(2) The taxable value of the building, expressed in RON, is determined by multiplying its developed built area, expressed in square meters, with the corresponding taxable value, expressed in RON/sqm ….”

A building is declared as non-residential if in that building business activities take place and/or the companies that have registered offices in the respective space (even if they do not perform a business activity) deduct the utilities expenses. The modality to calculate the tax has been established by the Fiscal Code as follows:

“The calculation of the tax on non-residential buildings owned by individuals

(1) For the non-residential buildings owned by individuals, the tax on buildings shall be calculated by applying a quota ranging between 0.2% – 1.3% on the value, that can be:

  1. a) the value resulted from a valuation report drawn up by an authorized valuator in the last 5 years before the reference year, submitted with the fiscal body before the first payment deadline for the reference year;
  2. b) the final value of the construction works, for the new buildings, built in the last 5 years before the reference year;
  3. c) the value of the buildings resulting from the document transferring the property right, for the buildings acquired in the last 5 years before the reference year.

(2) The quota of the tax on buildings shall be established by decision of the local council. In Bucharest Municipality, this responsibility lies with the General Council of Bucharest Municipality.

(3) For the non-residential buildings owned by individuals, used for agricultural activities, the tax on buildings shall be calculated by applying a 0.4% quota on the taxable value of the building.

(4) If the value of the building cannot be calculated according to the provisions in para. (1), the tax shall be calculated by applying the 2% quota on the taxable value calculated according to art. 457”.

The individual shall pay a quota ranging between 0.2% – 1.3% after submitting a valuation report with the Internal Revenue Service, as compared to 2% if the valuation report is not submitted.

The following are considered mixed usage buildings:

  • the areas are delimited in the cadastral documentation or are stipulated and delimited in a rental agreement or a bailment agreement with a company which performs business activities in the assigned space.
  • the areas are not delimited, but the utilities expenses are paid by a company.

The calculation of the tax for mixed usage buildings shall be made as follows: for the residential usage area, the tax shall be calculated using the specific method for this type of building, and for the non-residential usage area, an assessment report must be drawn up in order to establish the taxable value (by an ANEVAR – The National Association of Authorized Romanian Valuators – authorized valuator) and the tax percentage shall be applied to the valuation value. The two tax values obtained after the application of each quota, namely the quota corresponding to the area with residential usage, and the one corresponding to the non-residential usage, are summed up, and the total value represents the tax owed for the mixed usage building, as stipulated in the Fiscal Code in art. 459:

“ART. 459

Calculation of the tax on mixed usage buildings owned by individuals

(1) For the mixed usage buildings owned by individuals, the tax shall be calculated by summing the tax calculated for the area used for residential purposes according to art. 457, and the tax determined for the area used for non-residential purposes, according to art. 458.

(2) If, at the building address, a fiscal domicile is registered, and no business activity is performed therein, the tax shall be calculated according to art. 457.

(3) If the areas used with a residential purpose and the ones used for non-residential purpose cannot be distinctively emphasised, the following regulations shall apply:

  1. a) if, at the building address, a fiscal domicile is registered, and no business activity is performed therein, the tax shall be calculated according to art. 457;
  2. b) if, at the building address, a fiscal domicile is registered, and business activities are performed therein, and the utilities expenses are registered with the company performing the business activity, the tax on buildings shall be calculated according to the provisions in art. 458.”

The valuation reports for the individuals who own non-residential or mixed usage spaces must be submitted every 5 years.

A change of art. 459 para. (1) in Law no. 227/2015 regarding the Fiscal Code was implemented in 2020 and it changed the system for the calculation and submittal of the tax on mixed usage buildings, that have areas that cannot be distinguished and/or for which a company does not deduct the utilities expenses. The tax due for this type of buildings shall be calculated according to the method used for residential buildings.

This law shall entry into force on January 1st, 2021! Therefore, the owners of the mixed usage buildings that were to submit the assessment reports for these premises the latest on December 31st, 2020, shall prepare and submit them until the latest on March 31st, 2021.

For further details, as well as for specialized consultancy provided directly by an ANEVAR authorized valuator, please contact us at the e-mail address contact@contconsulting.ro.

Note: This text is valid on the date it is published, it has an indicative purpose and represents an interpretation of the specialists of the company Cont Consulting, without intending to substitute the legal provisions in force. We are not liable for any possible damages caused by the use of this material for a legal purpose or as a proof in a potential litigation.
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