According to the general rule, stipulated in art. 291 paragraph (1) letter b) of the Fiscal Code stipulates that, for the sale of apartments and parking spaces, a VAT rate of 19% is applied.
By exception, subject to certain conditions detailed below, the transaction may also be carried out by applying the 5% rate.
Thus, according to art. 291 paragraph (3) letter c) of the Fiscal Code, as amended by the Law no.30 / 10.01.2019, for the delivery of dwellings as part of the social policy, including the land on which they are built (the land on which the home is built and includes the ground footprint of the dwelling), the VAT rate of 5% is applied.
By dwelling delivered as part of social policy is understood the delivery of residence purchased by individuals who:
- have a usable area of maximum 120 square meters, excluding household annexes,
- have a value, including the land on which they are built, which does not exceed 450,000 lei,
excluding value added tax.
The usable area of the dwelling is the one defined by the Housing Law no. 114/1996, republished, with the subsequent modifications and completions.
Household annexes are those defined by Law no.50 / 1991 on the authorization of construction works, republished, with the subsequent modifications and completions.
It is very important to note that reduced VAT (5%) applies only to dwellings which at the time of sale can be inhabited as such.
The Methodological norms given in the application of this article, approved by Government Decree (HG) no.1 / 2016, state that the reduced rate of the 5% tax provided in art. 291 par. (3) lett. c) of the Fiscal Code only for delivery, as defined in art. 270 par. (1) of the Fiscal Code, of housing as part of the social policy, respectively for the transfer of the right to dispose as owner of the goods provided under art. 291 par. (3) lett. c) of the Fiscal Code.
For deliveries provided under art. 291 par. (3) lit. c) points 1, 2 and 4 of the Fiscal Code, the reduced VAT rate of 5% applies also for the land on which the dwelling is built.
In addition, in application of Art. 291 par. (3) lit. c) point 3 of the Fiscal Code:
- a) “dwelling” means a building made up of one or more living rooms, with the necessary dependencies, equipment and utilities, which, at the time of delivery, satisfies the housing requirements of a person or families;
- b) the household annexes are not taken into account in the calculation of the useful surface of the dwelling of 120 square meters;
- c) the limit value of 450,000 lei includes the value of the dwelling, including the value of the individual shares in the common parts of the building and of the household annexes and, as the case may be, of the land on which the dwelling is built but excludes some servitude rights related to that dwelling; these provisions shall also apply to contracts concluded until 31 December 2015 for operations the chargeable event of which occurs after 1 January 2016;
The surface of the land on which the dwelling is built, as well as the usable area of the dwelling, provided in art. 291 par. (3) lit. c) point 3 of the Fiscal Code, must be entered in the cadastral documentation attached to the sale-purchase act concluded according to the law.
Therefore, if the sale is made to an individual and the conditions regarding the usable area and value are met then the apartment can be sold with 5% VAT.
Regarding parking, the VAT rate to be applied is determined on a case-by-case basis, by analyzing the sales contracts and determining the accessibility or not of the sale of the car parking place. If a whole apartment is delivered with parking (the maximum value of 450,000 lei refers to the entire delivery) then it is a unique operation (apartment delivery, main transaction, parking delivery, accessory operation).
In conclusion, when determining the VAT rate for the delivery of an apartment with parking, the company must be cautious and analyze the terms of the sales contracts.