Tips & tricks
It was worth investing time showcasing the apartment and negotiating with all those people for finding the perfect renter for your property. All that’s left to do now is to register a lease agreement and to sign it. If in our previous post we talked about rights and obligations when it comes to renting, now we will go into more details about what it means for you, as an owner and a landlord, to register a lease agreement at the Romanian fiscal authority. Here are all the details you might need to legally rent out your apartment.
What are the necessary documents for registering a lease at the Romanian fiscal authority?
According to the current legislation and Fiscal code, those who earn income from renting have the obligation to register a lease in the next 30 days after closing such contract. You will need the following documents to apply for this:
- The lease agreement (original and two copies);
- The income statement (form 220 in two copies);
- ID, in copy;
- The ownership document of the property (original and a copy);
- Owner of attorney with the ID of the authorized person, if necessary.
To be able to lease a property, you are bound to apply and get an energetic certificate. This will certify the energetic state of the apartment and, more precisely, it will categorize it in one of the energetic classes (class A means that the property is using the energy efficiently). Moreover, with registering the contract you will also have to hand in form 220 which is the declaration regarding estimated income, within 30 days since closing the lease agreement.
Gross income and net income
According to the new Fiscal code, the gross income from renting represents the sum of all earnings as their equivalent in RON from the earnings established according to the closed agreement, for each fiscal year, no matter the payment term. The gross income is increased with the value of the expenses which are supposed to be made by the landlord or legal owner, as per the legal provisions, but are instead done by the other contracting party.
In addition, according to the Fiscal code normative, the owner is bound to perform and bear the expenses of the maintenance and repairs of the leased property according to the current legal regulations. However, if these are to be made by the renter, then the expenses will fit in the flat rate costs rate with the according decrease of the rent, while keeping the taxation unchanged.
The net income from leasing a property is calculated by subtracting the costs from the gross income by applying a rate of 40% on the gross income. It is worth mentioning that, for recognizing the deductibility of the flat rate costs, the owner is not bound to present the Fiscal authority any kind of documents to justify expenses.
The annual tax
The fiscal authority establishes the owned annual tax based on the declaration of total made income using form 200, by applying a rate of 16% on the taxable annual net income. More precisely, after establishing the amount of the owned annual tax, a decision to impose will be emitted, which will be communicated to the taxpayer. According to the new Fiscal code, the annual taxable net income is calculated per each income source by deducting from the net income the reported fiscal loses. The total income that is made during part of the year or in different time periods which represent parts of the same year, are considered annual income.
It is important to also know that you will have to pay health insurance contributions (CASS) from the earnings made through leasing, however you will not have to pay any social contributions (CAS) as well. Thus, for earnings made through leasing, you would owe, besides the 16% income tax a 5,5% health insurance contribution.
Taxpayers that terminate lease agreements during the year are bound, according to the Fiscal authority, to inform the institution, in writing, in maximum five days. To do so, you would need to include, in copy, a series of documents that prove the termination of the leasing contracts, such as: the addendum, the affidavit and so on. According to the Fiscal code, in the case of contractual termination, during the fiscal year, for agreements where the rent is calculated in RON, the pre-paid payments will be re-calculated by the fiscal authority at the taxpayer's request.