Tax relief for REICs – The 0.75% tax rate is abolished according to new law
According to the draft tax law, the Ministry of Finance is abolishing the 0.75% tax rate imposed on REICs in 2016 by the previous government.
Following the entry into force of the draft law, real estate investment companies are required to pay a tax at a rate of 10% of each European Central Bank's applicable interest rate (reference rate) plus 1 percentage point and calculated at average of their investments, plus cash, at current prices, as shown in the six-month investment tables.
According to real estate market executives, due to the multiplication of this ratio on the assets (cash, real estate) of REICs (from 0.105 to 0.75%), REICs have lost their competitive edge, leading foreign investors to focus on real estate, competing platforms and companies abroad. Under the current regime, which will change after the bill is passed, REICs are the only corporations that are taxed on property and not on income.