4/10/2025

The Ministry of National Economy and Finance is working on a broad range of tax interventions for all types of income.
As part of the government’s plan—which foresees a tax reduction package to be announced by the Prime Minister in September, barring any unforeseen events—a reduction in the taxation of rental income is being considered.

The main scenario being discussed by the Ministry’s officials proposes reducing the lowest tax rate from 15% to 5% or 7% for property income up to €5,000 per year.

Up to 500€ in Rent Tax Relief

If implemented and included in the new tax bill, this reduction will not only apply to those declaring income up to €5,000, but will affect all property owners renting out properties, since a change in the rate affects the entire tax scale. Therefore, the annual tax benefit could reach up to 500€.

Current Taxation on Rental Income

Rental income is currently taxed separately, with rates ranging from 15% to 45%, depending on the total annual amount.

Detailed breakdown:

– Income up to €12,000 is taxed at 15% from the first euro. The maximum tax on this portion is €1,800.

If the rate is reduced to 5% for the first €5,000, the tax drops from €750 to €250, i.e., €500 less. Thus, the total tax for this bracket would be reduced to €1,300.

– Income from €12,000.01 to €35,000 is taxed at 15% for the first €12,000 and 35% for the next €23,000. The total tax in this case reaches €9,850 (12,000 × 15% + 23,000 × 35%).

– Income over €35,000 is taxed at 15% for the first portion, 35% for the next, and 45% for the excess amount.

The Automatic 5% Deduction from Rental Income

It’s worth noting that the above tax calculations are applied not to the full rental income but to 95% of it. The current tax law allows for a 5% deduction for property repair and maintenance expenses.

This deduction is applied automatically when submitting the tax return, without requiring receipts or documentation, and directly reduces the final tax amount.