Romania’s Government could give up its plan to introduce a zero VAT rate for real estate transactions, government sources told Mediafax.

"The business environment has shown that this measure is more confusing than it helps, so it is possible to give up the introduction of a zero rate on real estate transactions. In addition, the European Commission has to be notified, and nothing has been officially sent to Brussels yet,” the government sources added.

The governing program of the Social Democratic Party (PSD) showed that the zero VAT rate would be extended to the sale of houses, advertising and inputs in agriculture starting March 1, 2017.

“We are counting on 50,000 new jobs in construction, also as a result of our proposal to abolish VAT on house sales,” reads the document.

Alexandra Smedoiu, director of fiscal consultancy for PwC, explained that developers wouldn’t be helped by this measure. “The measure seems beneficial for the buyer, but not for the one who sells because he can’t deduct the VAT paid for building materials,” she added.

editor@romania-insider.com