Postponement until 1 January 2022 of the proposal for VAT reduction to 5% for dwellings with a value of up to EUR 140,000
The legislative proposal which has been adopted through Law no. 248/2020 published in the Official Gazette no. 1079 on 13 November 2020 and was scheduled to enter into force on 1 January 2021, has been subject to amendment in the last day of year 2020.
Government Emergency Ordinance no. 226/2020 was published on 31 December 2020 in the Official Gazette no. 1332 and established that the provisions of the Fiscal Code (as amended through Law 296/2020) regarding the reduced VAT to 5% for dwellings with a value of up to EUR 140,000 shall enter into force a year later than initially scheduled, namely on 1 January 2022.
We hereby remind you, that in order to encourage the economic prosperity of the construction sector, as well as to offer support for young families intending to purchase a dwelling, a legislative proposal had been adopted to increase the dwelling value for which the reduced amount of 5% VAT is applicable.
The proposal stated that the reduced amount of 5% VAT shall be applicable on dwellings purchased by individuals which have a total value, including the value of the land on which the dwelling stands, not exceeding EUR 140,000 (as opposed to the current limit of RON 450,000 or approximately EUR 93,000) and which have a usable maximum area of 120 sq.m., excluding any household annexes (such as warehouses, depots, garages, greenhouses, swimming pools and the like).
The postponement until 1 January 2022, of the entry into force date of such measure, will undoubtedly have a significant impact on ongoing real estate transactions.