Buildings should be taxed according to use, investors say

Private foreign investors believe that real estate constructions should be taxed according to their use – residential, commercial or industrial – and not in the current manner, based on the type of owner – private investor or company

October 2011 - From the Print Edition

Investors have also branded the decision to raises taxes for companies that do not re-evaluate the buildings in their portfolio ridiculous, given the current state of the market. According to lawyer Gabriel Biris, the current building taxation regime “creates confusion and competition distortions between legal representatives such as companies and private investors, since the taxation may be 100 times higher for companies owning the building.” Biris added that the current taxation rate – 1.5 percent of the market value of a building – makes no sense and at this time, “Romania doesn’t need to tax investments instead of enhancing and attracting them.”
Foreign investor representatives criticized the current regulations in the Fiscal Code which, among others, includes increased taxation for buildings, at 10-20 percent of the inventory value for structures that have not been evaluated in the last three years. The Code says that buildings not evaluated in the last five years should be taxed at 30-40 percent of their inventory value. Under the former regulations, companies paid 1.5 percent tax on evaluated buildings and 10 percent on unevaluated ones.