VAT changes in Romania from January 08: companies WILL be paying VAT, so anyone who believed setting up company to buy will save them 19% were wrong. Agents say this is not a problem since VAT can be claimed back at the end of the fiscal year, but I see some problems with this:

1. Some peoples budgets are on very narrow margins and do not have the additional 20%,

2. according to authortities getting the VAT out of the Romanian state takes 28 days, but in reality I think anyone relying on this would be better off looking at somewhere between 28 weeks and 28 months.

3. Once you claim the VAT also wait for thorough checking from the Fiscal Authotities, Financial Guard, maybe Chamber of Labour as well and who knows what other authorities. Even if your accounting is perfect they are always finding something wrong therefore expect penalties of at least 1,000 RON. The poor accountants also, being blocked with these checkings!

PLUS:
Buyers beaware! According to Government Decission (OUG) no 106/Sept.2007, that is being applied starting with 1st of January 2008, a company can recover the VAT from purchasing a property. However, the company CAN'T recover the entire sum paid as VAT. You calculate the depreciation and then you calculate the VAT to that. Only the VAT calculated on the depreciation rate can be claimed back.

Morals:
Don't establish company in order to buy. Do the purchase as a private person!

Diana, thanks for informative post. Not the sort of information easy to get. Are you familiar with the CentreWest commercial property development in Bucharest being marketed by ready2invest.com? They are proposing purchase and holding through a company, but the real tax implications are proving difficult to unravel. I have tried to email you, but get helpful messages such as 'unkown error' Bless the techies
Regards, Ian

Hi Ian,
Thanks for the reply. I believe fiscal and financial knowledge is the key in any investment action and this is where we are very good at. I haven't heard of this project, but Bucharest is booming with all sorts of developments from commercial to residential to logistic. You can also post on http://transylvaniainvestment.phpbbsite.com/index.php if e-mail doesn't work (sometimes messages can be interpreted as spam - yeah, bless the techies!) as I'd like to know more about this development. I'll contact you back and tell you my opinion of it and probably recommend you other developments if the one you look into seems rather too expensive in the terms we discuss here. You can also give me a call on the number posted on the website (www.transylvaniainvestment.com ).