Even if the situation of the building tax was uncertain in the last quarter of 2022, in December of the same year everything was clarified, the current building tax system remaining unchanged in 2023 and 2024, the new one being officially applicable from 2025, according to the law published in the Official Gazette.
The change to the current system was the removal of the term mixed-use building. For taxpayers who own buildings comprising both residential and non-residential premises, the tax is calculated by the local tax authority. In this case there is no need for a valuation report by an authorised valuer.
On the other hand, legal entities owning residential or non-residential buildings still have the possibility to submit an evaluation report to the General Directorate of Local Taxes and Duties in order to avoid the tax increase.
Taxpayers should bear in mind the following for the purposes of determining the tax on buildings, in the case of companies, the taxable value of buildings is the value as at 31 December of the year preceding that for which the tax is due and may be represented by:
a last taxable value recorded in the records of the local tax authority;
o the value resulting from a valuation report drawn up by an approved valuer in accordance with the Property Valuation Standards in force at the date of valuation;
o the final value of the construction work, in the case of new buildings constructed during the previous tax year;
o the value of the buildings resulting from the deed transferring ownership. In practice, however, there may be a number of situations where ownership of a building is transferred by deeds which do not specify the purchase price of the building, such as donation contracts, exchange contracts, etc. - in this case, the last value recorded in the local tax office database will be used;
o in the case of buildings financed under a finance lease, the value resulting from a valuation report drawn up by an approved valuer in accordance with the property valuation standards in force at the time of valuation.
The calculation of the tax on buildings owned by legal entities is done as follows:
o for residential buildings owned or held by legal entities, the building tax is calculated by applying a rate between 0.08%-0.2% on the taxable value of the building;
o for non-residential buildings owned or held by legal persons, the building tax is calculated by applying a rate between 0.2%-1.3% inclusive on the taxable value of the building;
o for non-residential buildings owned or held by legal persons, used for agricultural activities, the building tax is calculated by applying a rate of 0.4% on the taxable value of the building.
But if taxpayers, individuals/corporate bodies, do not update their rateable value, the rate of building tax is 5%, so you will have to pay more tax. Therefore the submission of the valuation report is not only an obligation for everyone, but even a necessity.
The taxable value of buildings is updated every 5 years on the basis of an appraisal report drawn up by an authorised appraiser in accordance with the valuation standards in force. For example, for buildings owned by the company on 31.12.2022 and whose last revaluation was carried out in 2018, revaluation is recommended in order to avoid paying the increased tax at the rate of 5% in 2023. The deadline by which the report must be submitted to the local tax authority is 31 March 2023.
Even if the deadline for submitting the valuation report is limited, the more than 60 valuers across the country, who make up #fairvalueteam, are ready to respond promptly to any valuation request, regardless of its complexity and location of the buildings in Romania.
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