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beyond its contractual term for an unspecified term, each of
the parties having the right to request the termination at any
time with a 60-day prior notice.
The renewed lease
• When the initial lease is tacitly renewed (tacita relocațiune)
it will provide the same terms and conditions as the previous
lease if there are no contrary provisions in the initial
agreement, with the exception of the duration which will be,
in principle, unlimited. If the parties decide to extend the term
of the agreement before its termination a new agreement
(express renewal) will be concluded.
• For the conclusion of a new lease agreement, the lessee has,
under equal conditions with any other person, a preference
right for leasing the property, if he/she has performed the
obligations arising from the previous lease agreement.
Transfer of leased property
• If the leased property (immovable) is transferred by its
owner, the lease will be opposable to the new owner if it was
registered with the Land Registry, unless expressly provided
otherwise in the lease agreement.
• The lease will remain opposable to the new owner even after
the lessee was notified about the transfer, for an at least
double duration than the prior notice term requested for
terminating the lease agreement (ie. at least 120 days).
TAX
Direct acquisition of a property
• The acquisition of a property may give rise to VAT and gives
rise to notary public fees and Land Registry fees.
• The sale of land and buildings (and parts thereof) is VAT
exempt with an option available to the seller to charge 24%
VAT. As an exception to this rule, the sale of new buildings
(buildings sold by 31st December of the year following
the year when they were first occupied), parts thereof and
building land (land on which constructions may be erected in
accordance to the law) is always subject to 24% VAT.
• Corporate sellers of real estate who are not required by law to
charge VAT often opt to do so in order to avoid the repayment
to the Romanian state budget of the input VAT credit they had
claimed upon the acquisition, construction or upgrade of the
respective property.
• Corporate buyers of real-estate who buy properties with
VAT will find themselves, more often than not, in a position
to claim excess input VAT credit from the Romanian state
budget. Because of the long time it takes to settle VAT refund
claims in Romania, corporate buyers often have to finance
the input VAT they pay to the sellers over a long period of
time and at a high financing cost. According to a draft piece
of legislation, which is currently under public debate and
scheduled to enter into force starting with 1 January 2016,
the sale of real-estate property between Romanian VAT
registered entities will be subject to the VAT reverse charge
mechanism (i.e. the buyer simultaneously accounts for both
the output and the input VAT on the transaction). This would
remove the aforementioned pre-financing issue.
• Real estate assets are subject to property taxes, due by the
owner as of the next month following the acquisition. For
buildings, the tax rate commonly applicable to corporate
owners is 1.5% computed ad valorem whereas the land tax is
in the form of a lump sum/sqm, which varies depending on
factors such as location, category of land, etc.
• Notary public fees may be paid by either of the parties
(however they are generally paid in practice by the purchaser)
and amount to various percentages depending on the value of
the transferred property, varying between 2.2% but not less
than lei 150 (approx. equivalent of EUR 35) for properties with
a value less than lei 15,000 (approx. equivalent of EUR 3,350),
and lei 5,080 (approx. equivalent of EUR 1,130) plus 0.44%
for the sum that is over lei 600,001 (approx. equivalent of
EUR 133,350) for properties with a value higher than lei
600,001 (approx. equivalent of EUR 133,350).
• Land Registry fees amount to 0.5% of the value declared
within the sale-purchase agreement, if the purchaser is a
legal person, and 0.15% of the value declared within the sale-
purchase agreement, if the purchaser is a natural person.
Acquisition of shares in a company holding a property
• The acquisition of shares in a Romanian real estate company
does not trigger any particular tax implications. If the shares
are acquired from a natural person, the buyer will likely have
some tax compliance obligations in connection to the capital
gain tax due by the seller.
Asset deal vs. share deal
• The asset deal could ensure a step-up in the value of the
building which could be beneficial for corporate tax purposes
and may generate additional local taxes in the short term. The
decision as to the appropriateness of having an asset deal
vs. a share deal depends essentially on the purpose of the
acquisition and overall investment structure. VAT may also
have an impact on an investor’s option between an asset deal
and a share deal.
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Investors Guide to Europe 2015