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In a significant shift in the taxation of special constructions, the Romanian government has introduced Government Emergency Ordinance (GEO) no. 21/2025. Published in the Official Gazette no. 300 on April 4, 2025, this new regulation replaces the flat 1% annual tax on constructions established under GEO 156/2024 with a more nuanced and targeted tax structure. Here are the key takeaways for businesses and property owners operating within Romania:
Key Changes to the Special Construction Tax Regime
Under the newly adopted tax rules, the government has introduced two differentiated tax rates based on the nature of the construction. These rates are aimed at more accurately reflecting the economic realities of different construction types, ensuring fairness and alignment with their use and status.
1. 0.5% Tax Rate
This rate applies to constructions that meet the following criteria:
- Exclusion from Local Building Tax: The construction must be excluded from the standard local building tax, which is typically levied at the municipal level.
- Asset Status: The construction must form part of the taxpayer’s assets as of December 31 of the preceding year.
2. 0.25% Tax Rate
This reduced rate applies to constructions owned by the state or local authorities, and to those constructions where the taxpayer is responsible for the administration, concession, leasing, or free use under a legal agreement. To qualify for the 0.25% tax rate, the construction must meet the following conditions:
- Public Ownership: The construction must be part of the public or private domains of state or local authorities.
- Use/Management Agreement: The construction is managed, leased, or held free of charge by the taxpayer under a legal agreement. In this case, the taxpayer who holds such an agreement will be liable for the tax.
It’s important to note that these tax rates apply only to constructions located within Romania’s territorial land area. Constructions in the maritime zone are exempt from these tax provisions.
Incentive for Early Payment
Romanian taxpayers who pay their special construction tax by May 25 of each year will be eligible for a 10% discount on the tax due. This early payment incentive is designed to encourage timely tax compliance and ease the financial burden on property owners.
Takeaways: A More Targeted Tax Approach
The new ordinance is a marked shift from the earlier, one-size-fits-all approach of a 1% flat tax. With differentiated tax rates, the government aims to introduce a more proportionate and equitable tax burden based on the type of construction. The revised system reflects Romania’s desire to modernize its tax rules and align them more closely with legal and economic realities, fostering a fairer taxation environment.
For businesses and property owners, these changes mean that certain types of constructions—particularly those held or managed under public agreements—will see a significant reduction in their tax liability. However, it also places greater emphasis on proper registration and documentation of asset ownership, usage, and management agreements, especially for those hoping to take advantage of the lower 0.25% tax rate.
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