Romania to notify EC about zero VAT rate for housing purchase

Prime Minister Sorin Grindeanu today announced that will give a positive point of view regarding the law on VAT rate cut to 0 percent for house building for individuals. In this context, Romania will notify the European Commission (EC) of certain rules to be observed.

He also said that this fiscal loosening could create uncertainty in a first phase, but in this parliamentary session, which ends in late May, the law will be adopted.

“Zero VAT law on house building for individuals has government support. (…) First impression is that we will record a minus, but the effects will be positive and we will begin to reduce deficit of one million houses that Romania has,” Grindeanu stated.

According to him, the economic growth forecast of 5.2 percent issued by National Commission for Economic Forecasting (CNP) for 2017 took into account the measures of the government program, including this reduction of VAT.

The government expects the final form of the law to calculate the budgetary impact.

The draft law submitted to the Senate explained in the explanatory memorandum to the legislative initiative that “the measure aims to support the social services sector, by reducing the VAT rate from 5 percent to 0 percent for buildings used for social purposes and facilitate population access to a house without VAT assumption”.

PSD’s Gov’t program shows that the VAT cut on housing sale, along with zero tax on property transfer under EUR 100,000, will help create 50,000 new jobs in construction.