From 1 July 2024, Romania will implement a significant tax measure targeting property owners who rent out their homes without declaring the income. This new fiscal policy, aimed at combating tax evasion, introduces a hefty 70% tax rate on undeclared rental income, a substantial increase from the current rate of 16% applicable to undeclared revenues from unknown sources.

The move is part of a broader set of fiscal and budgetary measures designed to ensure the financial sustainability of the country. Initially, at the start of 2023, a provisional rate of 20% of gross income plus an additional 10% tax for renters who are legal entities was introduced. Additionally, property owners earning rental income exceeding six times the minimum gross salary must also pay health insurance contributions. This obligation varies based on income exceeding thresholds of 12 or 24 times the minimum gross salary.

Landlords are now required to register or declare rental contracts with the National Agency for Fiscal Administration (ANAF) within 30 days of signing. This regulation has led to increased scrutiny, with authorities conducting random inspections to ensure compliance. If no rental agreement is found, police have advised tenants to formalise a rental contract and obtain a temporary residence permit. Notably, contracts where the property is loaned (contract de comodat) do not require declaration to ANAF.

These measures have been introduced in response to widespread non-compliance among property owners who fail to report rental income to avoid taxation. As a result, authorities are intensifying inspections to identify and rectify undeclared rental activities, ensuring that landlords adhere to the new regulations and contribute their fair share to the state budget.

More information about “Contract de comodat”

A comodate contract, known in Romanian as “contract de comodat,” is a legal agreement where one party (the lender) loans an asset to another party (the borrower) for temporary use without any payment involved. This type of contract is similar to a loan for use or gratuitous loan, as it is typically used for lending personal property rather than money or consumable items. In this situation, it would be illegal for the owner of the property to request rent or other financial compensation for this type of contract.

In the context of real estate, a comodate contract is often used when someone allows another person to live in a property without paying rent. This can be common among family members or friends. Since there is no income generated from such an agreement, it does not require tax declarations, making it distinct from rental agreements.

Legal Requirements for a “Contract de comodat”:

• Written Form: While oral agreements are possible, a written contract is advisable for legal clarity and proof.
• Notarisation: It is not mandatory to notarise a comodate contract, but doing so can provide additional legal security.
• Registration: Unlike rental agreements, comodate contracts do not need to be registered with the National Agency for Fiscal Administration (ANAF).