Local governments in Romania raise property taxes substantially

Romanian Local Governments Raise Property and Vehicle Taxes

Recent reports indicate that various local governments in Romania have significantly upped property and vehicle taxes, with some hikes exceeding the government’s set tax rates by about 70%. This has stirred a public conversation about the extent of these increases.

This rise follows the government’s decision to adjust the recommended cap on council taxes. Officials claim that this move enables local authorities, which had been charging almost the minimum rates, to boost their revenues dramatically—sometimes by more than 100%. They suggested that any extra revenue remains in local budgets.

In certain areas, the withdrawal of tax breaks for historic buildings has led to even steeper property tax hikes, adding to the financial strain on property owners.

The government anticipates that these property tax increases will bring in an additional R3.7 billion (approximately 700 million euros) by 2026, marking a rise of over 30% from 2025. Despite this new revenue stream for local authorities, the central government intends to cut funding transfers to these same authorities by an equivalent amount, effectively balancing out the budget impact.

Prime Minister Ilie Borojan has defended the increases, countering criticisms by stating that Romania’s property tax rates are still beneath the European Union average. He highlighted the low collection rates in some regions as a rationale for these changes.

According to government figures referenced in reports, Romania collects a mere 0.55% of its GDP in property taxes, compared to the EU average of 1.85%. This gap, as the Prime Minister noted, underscores both the low taxation levels and insufficient enforcement.

Borojan has also mentioned that increasing property tax revenue is an official goal under Romania’s National Recovery and Resilience Plan, thereby tying this reform to commitments made to the European Commission. The reports have pointed out significant regional disparities regarding tax levels and collection efficiency across the country.

It has been noted that in some jurisdictions, around one-third of property taxes go uncollected, a situation that officials argue impairs local budgets and restricts funding for public services.