Reduced VAT rate for more expensive residential properties
Reduced VAT rate for residential properties
Amendment made to the threshold under which the reduced VAT rate is applicable for supplies of residential properties to individuals
Law no. 248/2020 on amending art. 291 of the Fiscal Code (Law no. 227/2015) was published in the Official Journal of Romania (no. 1079) on 13 November 2020. The Law states that starting from 1 January 2021, supplies of residential properties with a maximum useful surface area of 120 m2 and the price of which does not exceed the equivalent in RON of EUR 140.000, will be subject to the reduced VAT rate of 5% when supplied to individuals. The reduced VAT rate will be applicable only for properties which can be occupied as such at the moment of the supply.
KPMG Comment
Considering the fact that this amendment to the threshold will come into force starting from 1 January 2021, sales contracts of residential properties concluded this year must be analyzed from the perspective of the applicable VAT rate by taking into account the specific rules in this regard.
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