The luxury of being an owner in Romania, at IMF command

by Oana Strătulă  (Partner)

In the Letter of Intent agreed with the International Monetary Fund in late July, the Government has expressed its desire to find new ways to broaden the base of social contribution system in order to reduce the burden of labour taxation1.

In this regard, the official document shows that by mid-September 2013, the Government will adopt an Emergency Ordinance to amend the current provisions of the Fiscal Code for applying a mandatory contribution at the health fund, on the incomes from rents received by individuals. To induce the hope that these revenues may not be, however, subject to CASS, the Letter of Intent states that  the new contribution would be applicable as of 1 January 2014, but only to the extent that the proposed amendment of the fiscal system will be agreed by the IMF and EC teams.

Before being rescued by the intervention of the IMF and EC experts, which will temper the momentum of the Government to impose new taxes, it is a certainty that the Government’s intention is to introduce social health insurance contributions on incomes from rents of individuals, this representing, moreover, only a first step for the implementation a uniform fiscal approach, as it is shown in an official  press release issued by the Ministry of Finance. Furthermore, CASS is not the only tax that will diminish revenues obtained from rents, given that it is also expected a new way of property taxation, depending on their destination and not on the legal status of the owner.

Thus, also starting in January 2014, the owners will pay higher taxes for the rented houses than those used as domicile, but this measure is not a novelty introduced by the letter of intent from July 2013, but was assumed by previous letters and only reiterated in the new letter.

Who is currently paying CASS from rentals

In the current regulations, health insurance contribution is also due to by persons who have incomes from concession of goods, but only to the extent that these people do not get during a fiscal year any other incomes for which they pay CASS.

In other words, in the current form of the Fiscal Code, the CASS for rents is payable only by individuals whose incomes are themselves derived from concession of goods, not by people who derive incomes from salaries, similar incomes, income from pensions, income in the form of unemployment benefits and any other income for which they pay CASS.


1. This is a translation of the article published on August 9 , 2013 in For the Romanian original text, please visit this link: 

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