Real estate developers could be exempt from taxes and duties if they plan to sell buildings after construction. This is a new bill aimed at stimulating the construction market by unlocking funds that developers can use in favor of the market.
Regardless of whether they are individuals or companies, real estate developers could be exempt from paying taxes and duties at the moment construction is completed. Thus, tax payment shifts to the time of the transaction, meaning developers are no longer forced to lock up significant sums of money in taxes and duties.
“The law currently in force obliges you to declare the construction to the tax department as soon as you finish it. This can prove to be detrimental if you don’t sell the project quickly. In recent years, there have been dead periods of years between the moment state dues were paid and the moment the sale was made,” explained Mihai Mares, lawyer, for IMOPEDIA.ro.
Currently, the bill is under debate in Parliament and enjoys broad support from specialists, senators, and deputies. According to supporters, such a law would eliminate market inequities where buildings erected exclusively for sale are not treated as merchandise but have a much stricter taxation regime.
“From this point of view, the similarity between the producer of built properties and the producer of means of transport is practically perfect. In both cases, the produced goods are intended for commercialization, according to the object of activity, and are subject to registration for taxation purposes, the tax becoming revenue for the local authority. The difference, according to the current legal framework, is that taxation in the case of means of transport occurs only after the first registration or enrollment, being considered merchandise until then, while in the case of built properties, registration and taxation are mandatory from the date of construction completion, even if they are not sold and their use has not begun,” the project’s initiators state in the supporting note.
It is therefore necessary to introduce notions that distinguish between constructions built for sale and those built for personal use. Thus, the need for taxation arises only after the first sale, or after the start of use.
Source: Flux Imobiliar
Frequently Asked Questions
What does the new bill propose for real estate developers?
The bill proposes exempting developers from taxes until the property is sold, effectively treating the building as merchandise rather than a fixed asset.
Why is this legislative change considered necessary?
It aims to prevent developers from locking up significant capital in taxes before generating revenue, which is especially helpful during slow market periods.
How does the bill compare buildings to vehicles?
Similar to cars, buildings intended for sale would be considered merchandise and only taxed upon their first registration or transaction.