Romanian Taxes on Rental Income
Even if you don’t live in Romania, chances are good that you’ll look into renting out your property there to generate some extra cash. Before renting out a property in Romania, it is essential to understand the country’s taxes system. The amount of money you must pay the government in order to earn a profit while still meeting your financial obligations will help you determine how much rent you should charge your renters.
For the purposes of calculating your taxable income from rental property in Romania, we’ll go over what you need to know regarding taxes on rental property revenue. When it comes to calculating your tax bill, these taxes are an additional piece of information to consider.
Rental property owners in Romania must pay a variety of taxes depending on whether or not they rent their property out to others.
No matter how little money you make renting an apartment or studio, you must still declare and pay taxes on any income you receive. This is due to the fact that the country’s regulations necessitate it. In 2022, when you file your taxes, your rental property income will be taxed at a rate of sixty percent, and that percentage will not change. Deduct 40% of your income before moving on to the rest of the computation to calculate how much you owe the government. This is a critical step that must be accomplished before moving forward.
Your tenants are paying you €400 a month, which is roughly equivalent to 2,000 RON every month.
In order to calculate your annual rental revenue, multiply 2,000 RON by 12, which is €4,850.
On the other hand, according to Romanian tax laws, we just have to worry about 60% of the total amount.
More than 24,000 divided by 60 is 14,400 RON (about €2,910)
How much of the sixty percent Rental Tax is distributed to the state?
According to Romanian law, the Romanian government is only permitted to take 10% of your entire contribution, which is 60%. Is there something that baffles you? The level of difficulty isn’t as high as it first appears. Keep in mind that only 60% of a yearly gross profit of 24,000 RON is taken into account when calculating our taxes, and this is the sole factor (so 14,400 RON).
If your Romanian home is rented out for 1440 euros per month at a 10/100 percent tax rate, you’ll owe 1,440 RON, or $291. To calculate this tax, you must take into account the rental revenue from the property.
Calculation will be made much easier if a deduction for income tax on rent equivalent to 6 percent of the total value of the rent is allowed.
We’ve come to the end of our debate now! If you own land in Romania and want to rent it out, you can figure out how much rent you’ll need to collect using the information provided below. Read on if you’re thinking of putting your house up for rent.
What are your thoughts on raising rental taxes in Romania?
Depending on where you file your taxes and how much money you make, you may be subject to additional taxes if you rent out a home in Romania. There is a “health tax” if your rental property’s gross revenues exceed 12 times the minimum wage and your residency is in Romania. This is because the regulations that are currently in existence indicate that you will be subject to this requirement. The so-called “health tax” is not something that is forced to be paid by non-Romanians, even Romanians who have moved away from the nation and are now living elsewhere.
Calculating this could be challenging due to the many modifications that are applied to the gross pay for Romania’s minimum wage. It is strongly advised that you first determine the current minimum wage rate before proceeding with this calculation. Hopefully, this will prevent any bad surprises from occurring. In the event you haven’t done so already, please do so immediately.
Starting January 1, 2022, Romanian New Lei minimum monthly gross compensation for low-wage workers will rise to 2,550 Romanian New Lei. This means that thirty-six thousand New Lei of Romanian currency is equal to a year’s worth of wages. In order to cover this “health tax,” you will be compelled to pay an additional 10% of your annual rental property revenue if it exceeds 30,600 RON, according to the law. If you’re already required to pay other taxes, this “health charge” will be added to your total bill. Romania’s main insurance and health agency, the Casa Națională de Asigurare și Sănătate (CASS), collects this levy known as a “CASS contribution.” An abbreviation of the acronym CASS stands for “contribution to the CANS” (CASS).
Let’s say that the monthly rent you charge your tenants is 2,700 RON, which is roughly comparable to €540.
The annual rental income from your property is 32,400 RON, or 2,700 divided by 12 months.
You will be required to pay an additional tax based on the proportionate difference between the two amounts if your income exceeds 30,600 RON (equal to 12 months of salary).
32,400 divided by 60/100 equals 19,440 RON per hour (taxable rental income)
1,944 RON (rental income tax) + 19,440 RON (CASS “health fee”)
One payment is made for each quarter of the year, totaling 480 RON in annual “health charge” payments. The annual payment totals 480 RON, divided by 12 payments of 162 RON each.
Attention! You won’t have to pay any additional taxes if your rental property’s annual earnings is less than the 30,600 RON calculated above. This is due to the fact that you won’t be liable for any additional taxes. Ten percent of the sixty percent income tax is due if you earn less than 2,550 Romanian New Lei each month in rental revenue. If your monthly rent totals more than 2,550 Romanian New Lei, you’ll be liable for the whole 60%. As a result, you’ll have a lot less to think about moving forward.