Looking for best advice on rental income taxation in Romania? Are you trying to get some tips on efficient reporting of your rental income in Romania, and still can’t get it? In this article, our team of tax consultants provides best practical tips for rental income reporting in Romania, so you can apply the most efficient tax reporting methods. And in the same time, you will be able to report your rental income correctly, and comply with the latest changes in the Romanian tax law.
Rental income generated from renting out any type of dwelling place – e.g. apartment or house – is an income subject to taxation in Romania. According to the Romanian tax law provisions, the income derived from rent is included in the broader category of “income generated from the assignment of use of goods”. Thus, as per the tax law in force, individuals who obtain such income have certain tax reporting obligations toward the Romanian tax authorities (ANAF).
IMPORTANT: Whenever the rental agreement is signed between individuals (i.e., the tenant is an individual and not a legal person), any tax reporting obligation for such income (income from rent) stays with the beneficiary of income (landlord), and not with the payer of the income (the tenant). Therefore, in such situation, it is always the obligation of the landlord to report and pay all due taxes, through the annual tax return.
If the tenant is a legal person, there may be an obligation for the tenant to withhold the income tax (10%) and pay it to the state budget.
Taxes that are applicable on rental income in Romania for year 2024 are:
If the above threshold is reached, either by one or by several types of income, the health insurance contribution is capped at 10% out of the following thresholds, depending on the total level of your personal income during the entire year:
We will explain further how these two taxes must be calculated, as they do not apply on the entire income as such, but certain deductible expenses can apply.
The first reporting obligation for rental income taxation arises at the moment you sign the rental agreement with the tenant. The signing of the rental contract generates the first tax obligation. This is to declare to the authorities (local tax office) that you will start deriving such type of income (i.e. rental income) during the tax year when the agreement is signed.
For example, if you sign the rental agreement with start date for 1 June 2024, you will have to declare to the local tax office that you estimate you will be deriving rental income during 2024. This “estimated income” declaration must be fulfilled through the annual tax return. Nevertheless, payment deadline for the income tax (and the health fund contribution, if the case) for the estimated income is still the regular annual tax payment deadline (for 2024 this is on 25 May 2025).
The deadline for submitting the advance tax return for the estimated income is 30 days as of the date of signing the rental contract with the tenant.
Important note: If you sign the rental contract before the annual tax return deadline (which normally is 25 May), the deadline for the advance declaration is 25 May. So, the deadline which applies for such situations is the regular deadline for the previous year’s tax return filing.
The next and final reporting deadline for the rental income taxation in Romania is after end of the tax year (i.e. calendar year). This is the annual tax return filing deadline, which applies to all types of income, other than salary. For the tax year 2024 the deadline is 25 May 2025.
The annual tax return can be submitted to the tax authorities through electronic means, as follows:
or
Alternatively, the tax form can also be filed in hard copy, directly at the local tax office where you legally reside (where you have your domicile, or your living address, as per the case). However, we do not recommend this alternative, as the online filing is the easiest and the most efficient solution.
Now let’s get to the method of calculation of the taxes. As already mentioned, the Romanian taxes due on rental income are not applied to the total gross income that a person derives. There is a expense deductibility method that applies.
More exactly, for year 2024, for determining the taxable base, the individual is allowed to deduct from the annual gross income a lump-sum of 20% (to account for any expenses with the property, such as: property taxes, renovation or repairing expenses, property insurance, or other related expenses). The deduction of 20% lump-sum is considered to cover for any potential expenses related to the property one may incur during a year. Other expenses are not allowed for deduction.
Example:
As way of example, let’s assume one would derive rental income during year 2024 in total amount of 30,000 lei, and would incur deductible expenses in the amount of 10,000 lei. Out of this amount you would be allowed to deduct for income tax calculation only 20%, which means an amount of 6,000 lei.
Thus, the net taxable base will be 24,000 lei. This means that the income tax due will be in amount of 2,400 lei (10% of the taxable base).
Given that the taxable base determined of 24,000 lei is higher than the minimum threshold established for the payment of the health insurance contribution (19,800 lei for year 2024), then health insurance contribution will also be due in this specific example. As shown above, since the taxable income is between 19,800 and 39,600 lei, the health insurance contribution will be calculated as 10% of 19,800 lei. So, the contribution due will be in amount of 1,980 lei.
As consequence, the taxes payable for year 2024 will be:
If the rental income was already declared and paid in advance (as per the instructions under point 1 above), then at year end the tax payer will only have to pay the differences between the final tax calculated and the amount already paid in advance during the tax year, if the case of such difference.
The deadline for paying the taxes due on rental income is the same with the tax return filing – i.e. for year 2024 it will be 25 May 2025.
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