[BUYING AND SELLING REAL ESTATE IN ROMANIA]
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restrictions for other foreigners to own land in Romania, the practice for foreign investors is to incorporate a Romanian legal entity which has no restriction on owning lands. The “right of ownership” gives the owner the power to possess, use and dispose of the property. A. Acquisitions A real estate deal in Romania may be made either (i) by way of an asset deal (direct acquisition of an asset) or (ii) by way of a share deal (acquisition of the shares in the holding entity of the asset). Share deals are often preferred to asset deals due to cost and tax optimization purposes, as they are not subject to the fees and costs entailed by an asset deal, as they do not entail the transfer of ownership of the real estate. However, according to Law 175/2020 which entered into force on 13 October 2020, the company who owns, outside city limits, lands, and which sells enough shares to ensure control over the company, shall pay a tax of 80% applied to the positive difference between the value of the agricultural lands from the date of sale and that from the date of purchase, determined according to the indicative value established by the expertise made by the chamber of notaries public or to the minimum value established by the market study carried out by the chambers of notaries public, as the case may be, from the respective period. This rule is also applicable if the sale of the control package takes place before the anniversary of 8 years since the acquisition of such lands and if such
lands are more than 25% of the company’s assets. This tax is an additional tax to the ones due in consideration of the Fiscal Code, moreover, this tax is not considered a deductible expense when calculating the tax on profit. B. Residential Property The most frequent forms of ownership of residential property are: 1. Sole ownership : The owner is the only person authorized to control and dispose of the land in question. 2. Common ownership : More than one owner over the property; there are two types: (a) joint ownership (ownership by
two or more persons holding undivided – undetermined – shares over the property – such as ownership by spouses); no deed may be concluded without the consent of the other co- owner. (b) co-ownership (ownership by two or more persons holding determined shares over the property) which, in turn, can be ordinary co-ownership (e.g., two buyers acquire 50% each of a property) or forced co- ownership (e.g., forced co- ownership of the owners of apartments in a building over the common parts of a building – stairs, lobby, elevator, rooftop, etc.) – deeds may be concluded by each co-owner for its share of the property
ILN Real Estate Group – Buying and Selling Real Estate Series
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