Revaluation of buildings for tax purposes, to be done every 5 years

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Revaluation of buildings for tax purposes

According to the recent amendments to the Romanian Tax Code in December 2020 (by Law 296/2020), the revaluation of buildings for tax purposes will have to be carried out by companies who own them every five years. The new rule will apply as of 1 January 2022, thus replacing the currently applicable period of 3 years.

As per the Romanian tax provisions, this new rule will only apply to buildings that are owned by legal entities. As provided by Law 227/2015 regarding the Romanian Tax Code, non-compliance with the revaluation deadline may lead to an increase in local taxes on those buildings owed by legal entities.

In line with the newly enforced amendments (through Law 296/2020) to Article 460 of the Tax Code: “The taxable value of the building must be updated every 5 years based on a building valuation report prepared by an authorized evaluator in accordance with the assets valuation standards in force on the valuation date, which must be submitted to the local tax office until the first tax payment term of the respective year ”.

According to a statement issued by the Romanian Ministry of Public Developments and Administration, the date of entry into force of the new provision on the 5-year period after which companies are required to carry out the valuation of buildings to avoid the increased property tax rate is July 1, 2021. Therefore, the new provisions will be effectively applicable starting with the tax year 2022.

Rules to be considered for the revaluation of buildings for tax purposes

Thus, according to the new regulations, companies should consider observing the following rules:

  • For the tax year 2021, in order to avoid the increase of the property tax rate, those who made the last valuation in 2018 must redo their assessment of the building until the first property tax payment deadline (which is March 31, 2021);
  • Starting with 2022, those who performed the last valuation in 2019 may decide to postpone the revaluation until 2024.

If the owner does not update the taxable value of the building (through a new valuation) within the period established by law, the property tax rate will be set at 5%.

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Razvan Popovici

Business adviser & entrepreneur

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