SALE OF AGRICULTURAL LAND LOCATED OUTSIDE THE BUILD-UP AREA: CALCULATION AND PAYMENT OF THE ADDITIONAL TAX

Long waited to unlock transactions with agricultural land located outside the build-up area, the procedure regulating the calculation and payment method of the 80% additional tax due, under certain conditions, when selling agricultural land located outside the build-up area or the controlling interest of a company holding such land, was approved by Common Order of the Ministry of Agriculture and Public Finance No. 396/2022/883/2023, published in the Official Journal No. 93 of February 2, 2023.

We remind that significant changes to the legislation regulating the sale of agricultural land located outside the build-up area were made under the Government Emergency Ordinance No. 104/2022¹ , introducing, among other requirements, the obligation for the seller to pay an 80% additional tax in the following cases:

• the resale of the land within 8 years of its purchase;
• the direct or indirect sale of the controlling interest of a company holding one or more land plots located outside the build-up area, if they account for more than 25% of the company's assets and the sale takes place before expiry of the 8 years following the purchase of one of these lands;
• the sale of the controlling interest of a legal person that became owner of agricultural land located outside the build-up area following a contribution in kind made by the person who sells the controlling interest if the sale occurs within 8 years since the purchase of the said land.

Sale of agricultural land located outside the build-up area

The additional tax of 80%²  is calculated by the notary and paid to the notary before the authentication of the notarial deed of sale of the agricultural land located outside the build-up area. Notaries shall submit a monthly income tax return on this additional tax, which accounts for income to the State budget. The tax return is due for filing before the 25th of the month following the month when the tax was collected.

The tax can be paid by the taxpayer either at the notary's office, in cash or via a payment terminal, or by bank transfer to the notary's account. The payment receipt must be referred to in the notary's deed.

The procedure also provides the necessary details on:

• How the notaries declare the tax;
• The template of the receipt to be used by the notary when the tax is paid in cash;
• The account into which the notary pays the tax and how to open this account;
• The distribution of the sums among the recipient administrative-territorial units.

According to this new procedure, no additional tax is due on the sale of agricultural land located outside the build-up area acquired by inheritance, partition by court or by any acquisition deed other than a sale contract.

Sale of the controlling interest of a company

At the sale of the controlling interest of a company, the 80% additional tax applies to the overall value calculated by adding the capital gains relating to the land acquired during the 8 years preceding the sale of the controlling interest, without taking into account the capital loss, if the legal entity owns several agricultural lands located outside the build-up area.

If prior to enactment of this procedure there has been a certain degree of uncertainty as to the land to be considered when determining the income subject to taxation, things are very clear now as the procedure provides that only land acquired less than 8 years before the transfer of the controlling interest is aimed at.

- Time limit for declaration of income: 10 days maximum from the date of transfer.

- Deadline for payment of additional tax: 60 days from the date of communication of the tax decision³.

If the transfer of ownership occurs under a court decision, the court rendering the final decision shall notify the central tax body of its territorial jurisdiction of the decision and the related documentation, within 30 days of from the date on which the decision becomes final. Within 5 days of receipt of these documents, the central tax body of the court’s territorial jurisdiction sends them to the relevant central tax body, which will have to issue the tax decision within 60 days. If the relevant tax authorities do not determine the tax within the period provided by law, upon expiry of the 60-day timeframe, the taxpayer may request the calculation of the tax and delivery of the tax decision by submitting an application and the supporting documents.

Notes: 

1. GEO no. 104/2022 amending and completing of Law no. 17/2014 regarding some measures to regulate the sale of agricultural land located outside the build-up area and to amend Law no. 268/2001 regarding the privatization of companies that administering public and private land owned by the state for agricultural purposes and the establishment of the State Domains Agency.
2. The 80% rate applies to the amount that represents the positive difference between the value of the agricultural land at the date of the sale and that at the date of purchase, determined according to the indicative value established by the expertise drawn up by the chamber of public notaries or the minimum value established by the market study carried out by the chambers of public notaries.
3. The template and the content of the taxation decision shall be approved by order of NAFA’s president.