Real estate ownershipi Planning
Facilities may be developed on certain land provided that parameters established under the applicable territory planning and urbanism documentations are observed.
The urbanism documentation represents the outcome of land-plot planning (reflecting localities' organisation, constructible areas and building conditions) and provides general information regarding the possibility of erecting buildings on specific land.
After confirmation that a building may be developed, the investor should obtain information on the land plot scope of use (economic regime) and on construction conditions (technical regime), based on the urbanism certificate.
The urbanism certificate also provides information on the approvals and permits necessary for a building permit. The urbanism certificate does not grant the right to build, this being established only by the building permit issued based on the formalities required under the urbanism certificate, the technical documentation of the building and the legal requirements.ii Environment
Irrespective of having a facility under development or a standing investment, the owner (including contractors, agents, tenants, employees) is bound to observe the environmental regulations.
These apply to any type of pollution (noise, land, water and air pollution, waste disposal and evacuation) and are related to all operational permits necessary for the development or exploitation of all facilities (e.g., fire-fighting, operating, environmental, health and security work, civil protection).
A particularity for Romania (and in many other countries of the former Communist Bloc) is that many developments, especially brownfields, generate a false image of clean projects, while they may hide dangerous or prohibited materials that are covered by the evolution of the land plots or buildings and are difficult to detect. To this end, it is advisable that the investors retain specialised consultants for the environmental aspects of the development.
The real estate beneficiaries bear the liability for ensuring compliance with the environment protection laws, which, depending on the outcome of the breach, may be administrative, civil or criminal liability.iii Fire safety requirements
Certain constructions (e.g., high and very high buildings, office and commercial buildings or exceeding 600 square metres, as well as buildings for cultural or touristic activities) are subject to fire safety authorisation. The authorisation has to be obtained prior to the commencement of any construction, and the person bound to obtain it is either the investor or the beneficiary of the investment.
The fire safety authorisation is issued after submitting technical documentation (containing fire safety scenarios, fire safety notices, evacuation plans, etc.) and is valid as long as the conditions met at its issuance are fulfilled and no changes are made to the building. The lack of authorisation triggers administrative fines, but in case of major breach of fire safety requirements (irrespective of the existence of the authorisation) the authorities may stop the building operation. Moreover, criminal liability may be a factor if a fire causes bodily injury or death.iv Completion of the project
Romanian law regulates the reception of construction works, certifying the fulfilment of the construction works and the construction takeover by the investor.
The reception regulations were significantly amended in 2017, implementing new elements such as partial reception (which allows the building reception on execution stages, before its completion), new structure of the reception committee (mandatorily involving multiple local authorities), new force of the reception committee's decision (which is now compulsory for the investor) and simplification of the reception options (the reception may only be admitted or rejected).v Tax
All asset owners owe local taxes on land and buildings. Exemptions may be available if the buildings serve a public or social interest.
The land tax is determined on: (1) surface; (2) location (e.g., inside or outside the locality's borders); and (3) use category (e.g., constructions, agricultural), as all such are established by the local authorities.
The tax on buildings is determined by the building category, namely 0.08–0.2 per cent of the fiscal value of the residential buildings, 0.2–1.3 per cent on non-residential buildings and 0.4 per cent on agricultural buildings. The fiscal value of the buildings has to be updated every three years by valuation, for buildings that have not been acquired during this period. Otherwise, the applicable quota of local tax is increased to 5 per cent.
In case of transfers, taxes vary depending on the transaction structure. In a share deal, the stake seller owes the corporate income tax, which is of 16 per cent of the capital gain (reduced to zero if the shareholder is a company owning more than 10 per cent of the shares for minimum one year, subject to additional conditions), or the personal income tax of 10 per cent. For foreign nationals, additional benefits may be available under the conventions for the avoidance of double taxation.
In asset deals, 16 per cent corporate income tax applies on the profit, except for the case of natural persons, for which the tax is 3 per cent of the taxable income. As per the new fiscal regulations, natural persons are exempt from taxation in case of asset deals lower than €100,000, in Romanian lei equivalent (referred to as 'non-taxable amount'), the 3 per cent being applicable to the difference between the transfer price and the non-taxable amount.
A reverse taxation mechanism is applicable to constructions and lands whose transfer is subject to VAT, which applies if both seller and buyer are registered for VAT purposes in Romania. Otherwise, the normal VAT system applies.
If the land is not for construction purposes, the transfer is VAT exempt (with no deduction right). VAT exemptions also apply to transfer of buildings, except for the new buildings.
For all real-estate transactions where an exemption applies, the seller can opt to levy VAT, based on prior notification of the tax authorities.vi Finance and security
The acquisition of real estate either through asset deals or share deals is most commonly financed by banks. The foremost securities are the mortgages, which may be established over immovable assets, owner's shares and certain present and future rights attached to the property (e.g., rent, indemnities, bank accounts).
The mortgages established over the immovable assets are valid if the relevant agreement is concluded in authenticated form before the public notary and become effective as of their registration with the land book registry.
Regularly, such mortgages that totally or partially encumber the real estate go along with interdictions to transfer the asset, to build or to implement any other operation that might affect the property (e.g., partitioning, consolidation, lease, easements).
The mortgage agreement validly concluded and registered with the land book registry or the Electronic Archive for Security Interests in Movable Property represents enforceable title. Thus, the enforcement procedure of the corresponding security is simplified and the court intervention for establishing the enforceability of a mortgage is not necessary.