Any company owning a building has to pay building tax according to the Law 571/2003 – Fiscal Code. This tax is due annually and it is to be calculated according to art. 253, by applying a certain tax rate on the inventory value.
Tax rates are established by local tax offices between 0.25% and 1.50% and they differ depending on the area where they apply. In case a building is not revalued, its tax rate shall be established by the Local Council / General Council of Bucharest, between:
- 10-20% for buildings that have not been revalued during the past 3 years before the reference business year;
- 30-40% for buildings that have not been revalued during the past 5 years before the reference business year (applicable rates as at January 1st, 2012).
The revaluation of buildings represents one of the methods that may bring major benefits by diminishing the amount of tax to be paid. From a financial point of view, revaluation pays off, as the costs of revaluation reports are relatively low as compared to the tax to be paid in case revaluation does not take place.
In case a building is revalued, according to accounting rules, the taxable value of the building is the book value resulting after revaluation and booked as such in the ledgers of the owner, considered as juristic person.
An evaluator shall calculate the taxable value of the building by using one of the financial techniquesbelow:
- Discount rate
as well as one of the following evaluation methods:
- Asset methods
- Yield methods
- Market methods
Elements from a single group of tangible assets are revalued simultaneously so that selective revaluation could be avoided, as well as annual financial reporting of amounts that are a mix of costs and values that are calculated upon different dates (if a tangible asset is revalued, then all other assets of its group must be revalued as well).