What's the real tax bill on buying, renting and selling in Romania?

Updated October 2026: the tax rates and rules in this article have been revised to reflect the latest changes.

The real question isn't how much you earn, but how much you keep after tax. The complete guide for Israeli investors – purchase tax, rental tax, capital gains tax, the Israel–Romania tax treaty, and everything you need to know before you sign the deal.

Summary: Real estate tax in Romania is one of the first things Israeli investors ask about – and rightly so. Tax rates in Romania are significantly lower than in Israel, but the real picture only emerges when you calculate your full tax liability, in both Romania and Israel, under the tax treaty between the two countries. In this article we break down every layer of taxation, step by step.

When an Israeli investor considers buying property in Romania, the first question that comes to mind is: "Hold on – but after tax, what am I really left with?"

Why does this question matter so much?

It's the right question. Tax directly affects what stays in your pocket, so it is worth calculating it in advance, together with a tax adviser. At Compass Group RO we believe an investor should have all the numbers on the table before signing – including the less pleasant side of the equation: tax.

The good news: Romanian real estate taxation is among the most favourable in Europe for foreign investors. The less good news: as an Israeli, you don't only pay Romanian tax – you also have to settle up with the Israel Tax Authority. Let's break it down by stage of the transaction.

Stage 1: Tax on buying property in Romania

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The first point that pleasantly surprises Israeli investors: Romania has no purchase tax in the sense we know it from Israel. There is no graduated tax rate reaching 8%, 10% or more of the price.

So what is there? Notary and registration fees, which include, among other things, a purchase-tax component (Impozit pe transferul proprietăților). The total cost is about 1%–1.5% of the transaction value.

On a new home there is also VAT: 21% at the standard rate (it rose from 19% to 21% in August 2025). The transitional reduced rate of 9% ended on 30 September 2026, so every new home is now subject to 21%. Check in writing whether VAT is included in the price you were quoted.

For example: buying a villa for €140,000 will generate total notary costs of roughly €2,000. Compared with Israel (as an ynet report by Hila Tzion described, in Hebrew), where buying a similar property would trigger tens of thousands of shekels in purchase tax alone, this is a substantial difference you feel in your pocket from day one.

It is important to stress: in Israel there is no additional tax charge when you buy a property abroad. The Israel Tax Authority is only interested in your property from the moment it produces income or a gain on sale.

Most important of all: buying an apartment in Romania (or in any country outside Israel) does not count as owning an apartment in Israel. So if you do not own a home in Israel and later want to buy one there, you will pay purchase tax at the single-home brackets, not 8%.

Stage 2: Tax on rental income from property in Romania

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This is where the real day-to-day picture begins. If you rent out the property – and most of our investors do – there are two taxation routes to choose from.

Route A: Renting out as an individual

Rental income is taxed at 10% of the income, but Romanian law allows a flat statutory expense deduction of 20%, with no need for receipts (the deduction used to be 40%, and older guides still quote the old figure). In other words, you are effectively taxed on 80% of the income.

The simple calculation: an effective tax of about 8% of gross income.

For example: if you receive €12,000 a year in rent, your Romanian tax liability will be around €960.

There is one more component to take into account: CASS – Romanian social health insurance contributions. Above a certain income threshold, an individual who rents out a property must also pay a social contribution. The threshold and the contribution rate change from time to time, so it is important to check the current position with a Romanian accountant every tax year.

Route B: Renting out through a Romanian company

This is the preferred route for investors who hold several properties or plan to operate on a larger scale. A standard Romanian company (SRL) is taxed at 16% of profit, and withdrawing the profits as a dividend is taxed at 16% (from January 2026).

There is a particularly tempting route known as a "micro-company" (Microîntreprindere) – a tax rate of 1% of turnover (not of profit). But to qualify, three cumulative conditions must be met:

1. The company's revenue must not exceed €100,000 a year.
2. The company employs at least one employee on the minimum wage.
3. Rental income must not exceed 50% of the company's total revenue.

This route is very attractive for investors who combine additional business activity alongside real estate, but it requires smart tax planning and the help of a Romanian accountant who knows the current regulations.

Stage 3: Tax on selling property in Romania

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When sale day comes, the Romanians are far less bloodthirsty than the Israelis. An individual who sells pays tax on the transaction value, not on the profit: 3% if you held the property for up to three years, 1% after that.

The most important point: there is no longer a full exemption. Until 2023 there was an exemption threshold of 450,000 lei; it has been abolished, and the tax now applies to the full value from the first leu. The lower rate after 3 years is still an incentive for medium- and long-term holding.

For example (hypothetical figures to illustrate the tax only, not a price forecast): you bought a villa for €140,000, held it for 4 years and sold it for €190,000. In Romania you will pay 1% of the transaction value, about €1,900, regardless of the €50,000 profit.

The Israeli side: what does the Israel Tax Authority say?

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This is the part Israeli investors tend to ignore – and they mustn't: as an Israeli resident, you are liable to tax in Israel on income from properties abroad and on capital gains from selling them. Relief under the Israel–Romania tax treaty does not cancel your Israeli liability – it only prevents double taxation.

Tax on rental income: Rental income must be reported to the Israel Tax Authority. There are two routes in Israel, chosen each year: a 15% track on gross rent, with only depreciation deducted and no credit for the tax paid in Romania, or paying according to your marginal tax brackets with full deduction of expenses and a credit for the Romanian tax. The choice depends on the level of income and your personal circumstances.

Capital gains tax on sale: On top of the Romanian tax on the transaction value, in Israel you are liable for 25% tax on the capital gain, with a credit for the tax paid in Romania under the tax treaty. This is a figure that must be part of your planning from day one – not a surprise on the day you sell.

The Israel–Romania tax treaty: The treaty allows a credit for tax paid in Romania against your Israeli liability, so you don't pay twice (that is, you can offset the tax you paid in Romania on the sale, and the tax on rental income if you chose the marginal-rate route; the 15% track gives no such credit). This is a very important mechanism, but it requires orderly reporting and documentation of every tax payment made in Romania.

A real-world example: full tax calculation for an actual deal

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Suppose, purely to illustrate the tax calculation and not as a price forecast, that Moshe buys a villa for €150,000 and, after 5 years, sells it for €200,000. Let's do the maths:

On purchase

• Notary and registration (about 1%–1.5% of the transaction value): approx. €1,500–€2,250

On sale after 5 years

• Romanian sale tax (1% of the transaction value, held more than 3 years): €2,000
• Israeli capital gains tax: 25% on a €50,000 gain, i.e. €12,500, less a treaty credit for the €2,000 paid in Romania: approx. €10,500

If you rent the property out: Romania taxes about 8% of the gross rent (10% after a 20% deduction); the Israeli side depends on the route you choose (15% on gross rent with no credit, or the marginal rate with full deductions and a credit), so calculate it with a cross-border tax adviser.

Taxes on purchase and sale in this example: approx. €14,000–€14,750, before tax on rental income. (An illustration based on simplified assumptions.)

This line directly affects what stays in your pocket, so it is worth calculating it in advance with a tax adviser, before you sign.

How does Compass Group RO help you plan your tax?

We are not accountants, and we won't pretend to be. But we do make a point of doing three things:

1. We present all the numbers up front – including an estimate of the tax liability under both routes (individual and company).
2. We connect you with professional Romanian accountants who know the real estate market and how to plan tax properly.
3. We recommend consulting an Israeli accountant who specialises in overseas property – before the deal, not after.

Frequently asked questions

Is there a purchase tax on property in Romania?

There is no purchase tax in the Israeli sense, with no graduated 8% or 10% rates. You pay notary and registration fees, which include a transfer-tax component, for a total of about 1%–1.5% of the transaction value. On a new home there is also VAT at 21% (the reduced 9% rate ended on 30 September 2026).

How much tax do I pay in Romania on rental income?

An individual pays 10% on rental income after a flat statutory deduction of 20%, an effective tax of about 8% of the gross rent. Above a certain income threshold a CASS contribution is added, so check the current position with a Romanian accountant every tax year.

How much tax do I pay when selling a property in Romania?

An individual pays tax on the transaction value, not on the profit: 3% if the property was held for up to three years, 1% after that. The 450,000 lei exemption threshold has been abolished, so the tax applies to the full value from the first leu.

Do I also owe tax in Israel on a Romanian property?

Yes. An Israeli resident must report rental income and choose between a 15% track on gross rent with no credit, or the marginal rate with full deductions and a credit for the Romanian tax. On a sale, Israel charges 25% on the capital gain, with a credit for the tax paid in Romania under the tax treaty.

When does it make sense to hold a Romanian property through a company?

A standard Romanian company (SRL) is taxed at 16% of profit, and dividends at 16% from January 2026. A micro-company pays 1% of turnover, but only if revenue stays under €100,000 a year, it employs at least one person on the minimum wage, and rental income is no more than 50% of revenue.

The bottom line: Real estate taxation in Romania is significantly friendlier than in Israel and most European countries, but it requires integrated planning across both tax systems. A smart investor doesn't build cash-flow projections on the Romanian side alone – they also factor in settling up with the Israel Tax Authority, and gain peace of mind throughout the life of the investment.

This article is intended for general information purposes only and does not constitute tax, legal or financial advice.

Before entering into a transaction, we recommend consulting local experts.

Compass Group Romania – guiding Israeli investors in Romanian real estate, from the first idea to the keys.