Hello can anyone tell me is it worth setting up a Romanian company to save the VAT on new build properties ? How much does it cost per month to administer the company ? Also does it not make reselling difficult as any buyers would have to have a company to claim their VAT back. Would really appreciate any adice on this as I am looking to invest in Romania and am unsure which route to take. Thanks !

will you be buying the property through own funds, or are you planning to finance through a Romanian mortgage?

Hello I would pay a deposit then secure a mortgage in Romania.

In this case I would recommend not to buy through a company. Reason being is that if you buy as a company , you can only get a company mortgage

I'd also have to mention that according the Romanian company law (law 31/1990) companies are prohibited to guarantee their assets for an individual. Therefore you can not obtain a personal mortgage guaranteed by company assets (being the property)


Many banks in Romania do not finance companies whose sole purpose is to buy a property, as there is hardly any financial trackrecord. In case a bank would finance a company, you'd be looking at maximum 50% of the purchase price + a 10% depozit in cash to cover the first year of installments. Interest rates for these type of credits are very high, and the tenor of such a loan is up to 18 months (a 'bridgeloan')

I would secondly not recommending buying through a company as you'll be paying 7 to 15 times more property tax as compared to an individual. The actual property tax is established by the city hall counsil of the city/town where you are buying your property

If you would buy as an individual you would not have the hassle of starting up a company, or maintaining a company , and you would benefit from much better mortgage conditions being

- longer mortgage period (up to 35 years)
- interest only grace period possible for the first 12 months
- financing up to 90% loan to value (but not more than the balance of the original
sales agreement)
- interest rates starting at 4,9% (Swiss Francs) fixed six months then variable (now
6,78%)
- no hidden monthly or yearly comissions
- bank's arrangement fees between 1 and 2% (depending on the mortgage sum)
- preferential early redemption fees


There's always the issue about the "VAT". As explained before in other forum posts, one can only offset VAT within a period of 3 fiscal years. This means the VAT that you are paying to the developer to buy the property can be offset by the VAT you receive as a company when you would sell the property further on. Furthermore, profit tax for companies is 16% , while an individual (when selling a property) pays 3% on the first 55.000 EURO of the selling and 2% on the amount surpassing 55.000 EURO

(conditoned by the fact that the property is owned for less than 3 years. If the property is owned for > 3 years , an individual , when selling his property has to pay 2% "profit" tax on the first 55.000 EURO and 1% on the amount surpassing 55.000 EURO)


If you are interesting in obtaining a personal mortgage, you can contact me on stefan@easycredit-bucuresti.ro

Stefan
(Director of Easy Credit)