5% VAT limit should increase for a better quality of living

24 Jul 5% VAT limit should increase for a better quality of living

Bucharest, 24.07.2020: In Romania, according to a Eurostat study, half of the housing stock is older than 30 years. Also, according to studies, 46% of Romania’s population lives in overcrowded homes, while the European average is 17%. Regarding the living areas per inhabitant, the Romanian surface of 24 Sqm is one of the smallest, the European average being at 40 sqm.

Those statistics translate into a real demand for new housing stock, but the current 5% VAT limit for 450.000 RON restricts the options to build larger surfaces. For example, if a client would buy an apartment of 455,000 RON, he would have to pay a 19% VAT, i.e. for 5,000 RON differences in the price of the property he would have to pay 63,950 RON.

“The current limit for the application of the 5% VAT leads to a poor quality of housing with small areas and a lower quality of materials for the execution of construction works” says Antoanela Comsa, General Manager of Gran Via Real Estate.

The increase of the 5% VAT limit is in line with a similar regulation of these issues applicable in Central and South-Eastern European countries such as Poland – where the VAT rate for housing, storage, and parking is 8% for apartments whose surface is not more than 150 sqm and the general quota of 23% applies only for the difference between the surface of the building and the surface of 150 sqm.