If you’re a foreigner who owns property in Romania, it’s quite likely that you’ll be looking to rent it out, to earn yourself a neat profit. Familiarizing yourself with the Romanian tax system before you begin renting out a property in the country is crucial. Knowing how much you will have to pay to the state will help you get a better idea of how much rent you should charge your tenants, in order to still turn a good profit.
In this article, we look at the taxes for rental property income in Romania, and what you need to know, to calculate how much you will have to pay.
What taxes do you need to pay, as a landlord, in Romania?
Although the money you make from renting an apartment or a studio isn’t going to be substantial, it is still subject to taxation, as per the country’s legislation. At present, in 2022, only 60% of your rental property income is subjected to tax. So, when calculating the sums you will have to pay towards the state, you should always remember to drop 40% off your income.
So say, for instance, that you are charging your tenants €400 monthly rent, which converts roughly to 2,000 RON.
Your overall annual rental income would be 2,000 x 12 = 24,000 RON (or approx. €4,850).
But from that, we only need to care about 60%, as per Romanian taxation laws.
24,000 x 60/100 = 14,400 RON (€2,910)
How much of that 60% goes to the state?
According to Romanian legislation, only 10% of your 60% will have to be paid to the government. Sounds confusing? It’s easier than it looks. So remember that from an annual gross profit of 24,000 RON, we’re only calculating our taxes based on 60% of that (so 14,400 RON).
14,400 x 10/100 = 1,440 RON (€291), which amounts to 120 RON tax for every month you are renting out your property in Romania.
For easier calculation, you should pay 6% from rent value as income tax on rent.
And that’s it! That’s the way to work out how much you need to pay, if you’re a landowner, renting out your property in Romania.
What about additional taxes?
Depending on your fiscal domicile and on how much you earn from renting property in Romania, you may be subjected to additional taxes. According to current laws, if, as a landowner, your rental property income is higher than 12 minimum wage gross salaries AND your domicile is in Romania, you will also owe a “health tax”. Foreigners and Romanian citizens who live abroad are not required to pay “health tax”.
This can be a bit of a headache to calculate, since the minimum wage gross salary in Romania keeps changing. So we strongly suggest checking the minimum salary at the time you’re doing this calculation first, to avoid unpleasant surprises.
As of January 1st 2022, the monthly minimum wage gross salary hiked up to 2,550 RON. So, twelve monthly salaries would amount to 30,600 RON. Therefore, as per the law, if your annual rental property income is higher than 30,600 RON, you will have to pay an additional 10% as a “health fee”. This fee, also known as a “CASS contribution” is owed to Casa Națională de Asigurare și Sănătate (CASS), Romania’s chief insurance and health authority.
Let’s say you charge your tenants a monthly rent of 2,700 RON (€540).
2,700 x 12 = 32,400 RON – your annual rental property income
Obviously, this is higher than the aforementioned 30,600 RON (aka 12 monthly salaries), so you will have to pay an additional tax, which will be calculated similarly.
32,400 x 60/100 = 19,440 RON (taxable rental income)
19,440 x 10/100 = 1,944 RON (rental income tax) + 19,440 x 10/100 = 1,944 RON (CASS “health fee”)
The “health fee” is payable in four installments, at every quarter of the year, which would come down to 162 RON/month.
Attention! If your annual rental property income is lower than the above-calculated 30,600 RON, then you don’t have to pay any additional taxes. Or to make it even easier, if you charge less than 2,550 RON monthly rent, you only have to pay the 10% out of 60% income tax we talked about in the beginning.