How can people buy a property in Romania?
Under the Romanian Constitution , foreign individuals are prohibited from owning a land in Romania. This limitation also applies to foreign companies. This restriction only concerns lands, foreigners may own buildings whilst on the land on which the building is located such citizens enjoy only a right of use for the entire building existence (superficies right).Foreign individuals and companies may establish a Romanian registered company. The cost of setting out a company is approximately US $500 and further US$ 300 per year to run the company. A Romanian business entity may own land in Romania without limitation.

How to set up a company in Romania?
A limited liability company (SRL) may be set up by one or more shareholders and must have a minimum capital of RON 200 (about US $60.00). There is no limit on foreign ownership and participation in the share capital of a Romanian company. A foreign investor is allowed 100% ownership in a Romanian company. Setting up a legal entity in Romania generally takes 10 to 30 days to complete. The registration procedure can be terminated without organizing trips to Romania signing the necessary corporate documents overseas. The ownership right over land may be bought as contribution to a company's chare capital established in Romania. The value of such contribution is determined by evaluation report to the company.

What financial possibilities exist to buy a property in Romania?
Further to well known possibilities such as re-mortgaging foreign properties or equity release on the primary residence in a foreign country, due to the continuous growth of the mortgage loan market and the advantages of loan refinancing through bond issuances, a new legal framework will likely be introduced in order to allow mortgage loan and issuances to be conducted in a transparent and effective manner. Thus, a 3-law package is soon to be adopted by the Romanian Parliament: the mortgage bonds law, the securitization law and the law on mortgage banks. The package of laws would allow banks to raise funds for mortgage financings by selling mortgage loans to special purpose vehicles that would, in turn, issue mortgage bonds to the public.

Is there a land registry system in Romania?
The property registration system is wholly functional in Transylvania; the other territories of Romania are required to introduce the Land Registry system in order to facilitate the process of EU integration in 2007.
Land registration system is merely important for registration of new ownerships pursuant to the new act of the Romanian Parliament on return of the properties which were confiscated during the communist era.

Tax issues
Concluding a sale and purchase contract of a land involves payment of taxes such us notary taxes, registration taxes, local taxes etc. Taxes depend on the value of the real estate, the type of the land and the ownership structure and the average tax rate is 3%. Furthermore, the landowner is liable for an annual payment of a local tax. The local councils may approve the tax exemptions of or reductions foe land realties to direct investments having a significant impact on the economy.

Disclaimer: No information herein constitutes the basis for a purchase/sale contract. The information provided is not intended to be legal advice or tax advice but merely conveys general information related to legal and taxation issues commonly encountered.