AREI: Fiscal changes can lead to losses of RON 7 bln to the annual budget


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In a position letter submitted to the Romanian Government, the Association of Real Estate Investors in Romania (AREI) estimates that the proposed fiscal measures targeting the Real Estate and Constructions industry could lead to RON 7 billion in losses from the revenues generated annually to the state budget, the equivalent of a 10-12% decrease in business volume.

This drop will accelerate the contraction trend of the local Real Estate market, as the industry’s contribution to Romania’s GDP has already decreased from 14.5% in 2020 to 13% last year, while demand and supply have lowered substantially in the first quarter of 2023 (-25% compared to the same period in 2022).

In addition to the negative budgetary impact that these measures would cause, AREI warns against cascading consequences for the entire real estate ecosystem in Romania, as well as effects that would impact the population.


  • Higher costs for the end consumer and rising housing prices – The elimination of the 5% VAT rate on housing will strongly affect people with low incomes, especially young people and families with many children, who will no longer be able to afford the purchase of newly-built houses. For example, for a 2-3 room apartment, the increased VAT rate to 9% will result in an additional cost of EUR 4,800, plus notary fees calculated on the total purchase value, on top of the already registered 12% advance of housing prices in less than 2 years;
  • Lower quality of the new housing supply – Increased financial pressure could determine some developers to compromise on the quality of materials used in construction works. Also, the developers could be forced to reduce the size of housing units, in order to be able to maintain the affordability of apartments. This could lead to an over-saturated market of smaller apartments, Romania already reporting a considerable gap against the other EU member states, with the lowest average number of rooms per person and the highest percentage of people living in overcrowded housing units;
  • Increased risk of tax evasion – The increased tax burden on the residential segment (the higher VAT rate for housing of 9%, the 5% tax applied on sales transactions exceeding RON 600,000) could lay the ground leading to tax evasion, in terms of lower values being declared;
  • Risk of blocking the Real Estate market – Considering that housing demand is very price-sensitive, and the high inflation and higher mortgage interest rates have reduced the attractiveness of banking financing solutions, the new measures, especially the ones implementing new taxes (i.e. the 5% tax on the sales price for transactions worth over RON 600,000) could cut the market supply and demand by at least 50%, in 2024. On the other hand, new taxes should only be achieved through regulations in compliance with constitutional norms, based on the opportunity analysis and by avoiding any ambiguities upon implementation of these measures;
  • Higher tax burden by more than 4 times – With approximately 91% of companies active in the Constructions and Real Estate industry as micro-enterprises, the discussed fiscal measures would take their overall taxation level from RON 338 million RON (2022) to RON 1,478 million (2024), respectively from 1.1% of turnover (2022) to 5% of turnover (2024), 4 times above the national average;
  • Increased pressure on labor costs – The re-introduction of the social health insurance contribution quota (CASS) on construction wages would lower net wages in the sector by approximately 11.1% and would entail a major compensation effort on behalf of developers/builders, thus adding pressure on their costs.


AREI understands the need to implement fiscal measures that support state budget revenues and help alleviate the budget deficit, but believes that a more balanced approach is needed, so that it doesn’t cause a disproportionate impact on the Real Estate sector and the Romanian citizens’ prospects for real estate property,” says Dennis Selinas, President of AREI Board of Directors and Globalworth CEO. “During the constructive discussions we had with Government representatives, we reassured of our openness to identify together the optimal solutions, by bringing forward the resources of the AREI community, which has a significant contribution (billions of Euros) in investments at national level and an in-depth knowledge of market mechanisms, as well as access to good practices at European level, and may provide the support in forecasting and assessing the cascading impact that a fiscal measure can have on the industry and, implicitly, on state’s finances,” he added.

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1 Comment
  1. Panagiotis Spyridis says

    Well Well Well !!! look who is talking. They should be thankful that Romanian state is note yet obligated to ask them: Where did you get the Money from.

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