Obligation for PFAs to Withhold Rental Income Tax:
Starting in 2024, Authorized Physical Persons (PFA) operating in the real estate sector will be required to withhold tax on rental income received from individuals. This legislative change aims to simplify tax collection procedures and increase their efficiency.
 
Who is affected by this change?
  • Authorized Physical Persons who earn income from renting properties to individuals.
  • Property owners who rent properties through a PFA.
 
How is the new tax obligation implemented?
 
  • Payment Method: PFAs are required to make tax payments through the Treasury Payment Order and use the Ghiseul.ro platform to monitor any legislative or procedural changes.
  • Submission of Form 100: This form must be completed monthly by PFAs to report the taxes withheld in the previous month.
 
Important aspects to mention:
  • The tax for the initial months of the year (January and February) that was not withheld at source during this period must be declared and paid the following year.
  • PFAs must record both the net rental expenses and the withheld tax in their accounting.
  • Property owners are responsible for registering rental contracts with the tax authorities and must complete the Single Declaration to declare gross income.
 
Recent legislative adjustments include the introduction of withholding tax on rental income as a standard method for all income obtained from renting properties to individuals, to ensure more efficient tax collection.
 
Costs associated with the new tax obligation:
Implementing this new tax system may lead to additional costs for PFAs, including the need for tax and accounting consultancy to ensure compliance with the new rules.
 
Concrete examples:
  • For a monthly rent of 1000 EUR:
  • Flat rate: 20% of 1000 EUR = 200 EUR
  • Taxable base: 800 EUR (1000 EUR  200 EUR)
  • Tax owed: 10% of the taxable base = 80 EUR
 
The new obligation to withhold rental income tax represents a significant change for PFAs in the real estate sector. By clearly understanding these changes and adequately preparing, PFAs can ensure they efficiently manage their tax obligations and avoid penalties for noncompliance. This measure aims not only to simplify the tax process but also to improve the efficiency of tax collection, benefiting the entire tax system.