'Company Formation' Buying process, contracts  

Company Formation

What steps do you take when you find a home in Romania to buy? What type of offer do you make? Should you request a complete home inspection? What other tests are required by the mortgage lender such as water, sewer, pest or radon testing? Can you back out once you sign a contract? How long until you can move in to your new home after you sign? Find out what you need to know to be prepared to buy a home.

Michael J Beckerman from Transylvania, Romania (Contact Member) - 10/23/09 03:52

The Purchase Process

How to purchase Romanian property

Under current Romanian Law anyone who is not a Romanian citizen may not purchase land in Romania. However, a Romanian company may purchase land in Romania.

How to acquire a Romanian Company

We provide a comprehensive service for the acquisition of a Romanian company on your behalf. There are no restrictions on the ownership of a Romanian company by non-Romanian persons.

Security of Title

The Romanian government has become extremely strict in respect of title to property. There is now a central land registry similar to the UK and other western European countries. No sale will be entered into without a notarised certificate from the land registry showing proper title to the property. No official notary in Romania will provide incorrect information in respect of the title of the property.

Costs

On completion of the purchase there are some notary fees payable which are based on a sliding scale in respect of the purchase price of the property. These are nominal amounts which we will estimate and advise prior to completion. A new Romanian company is not required to register for VAT until its turnover reaches a certain threshold unless the company owners wish to make a voluntary application in order to recover VAT for outgoing expenses. Once the company is formed there will be accountancy fees payable in the region of 20 euros per month (inclusive of VAT). The registered address of the company can be transferred to the property at a later date if required. The company formation fee will be 900 euros.

Please note that in addition to the purchase price of the land there is a tax payable based on the total price of the acquisition. Currently, this is based on a sliding scale with variable percentages. Typically, a purchase to the value of 20, 000 euros would attract a tax of approximately 800 euros. We understand that in January 2007 this system will be replaced by a standard tax rate which has yet to be announced. Our information is that this will be in the region of 3%. This should be taken into account when working out the overall costs.

We charge an all inclusive finders fee of 3.0% or 500 euros whichever is the greatest of the final purchase price which is payable after the property purchase is completed. If you wish, we can arrange maintenance and management of your property in your absence.

Property Survey/Insurance

We can obtain a comprehensive written surveyors report at a cost of 350 euros. Insurance for your property will become mandatory from July 2008, the cost being around 100 euros per year for comprehensive insurance covering all eventualities.

Procedure

1. If you decide to proceed with the purchase of land and property (assuming that it is not an apartment) you will need to stay in Romania for approximately 14 days in order for us to complete the company formation and purchase the property etc.) We will then negotiate a deposit with the owners of the property and enter into a secure notarised agreement for a reasonable period of time to complete the transaction. We will act on your behalf as consultants and advise you of the necessary time scale and payment procedures.

2. We will instruct our lawyer (who speaks English) on your behalf to obtain the necessary guarantees in respect of the land registry title and if you wish arrange any insurance in case of any default.

3. The company will own the land and therefore the property and will be transferred to you at the time of your choice and therefore you as the sole owner of the company will also be sole owner of the land. Should you wish to sell the property at a later stage you can therefore do this by a simple transfer of the company to another party which will include the ownership of the property and should therefore not incur any capital gains tax. We can advise on any other tax liabilities in respect of such a transfer of the company.

Inheritance

As the property will be owned by a limited company, which in Romania is called an SRL you are able to declare to whom the company will pass in the event of demise. The company and therefore the property would then be owned by anyone you nominate.

In conjunction with our lawyer the local notaries and The Chamber of Commerce it is our job on your behalf to deal with all these issues and we guarantee that all legal and fiscal requirements will be dealt with in that way.

• Company Formation

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