Financing and fiscal mechanisms promoting energy efficiency in buildings in Romania

Financing mechanisms:

1. European funds of up to 182.4 MEUR (including the national co-financing of 18%) as grant made available through the Priority axis 1 - Support to sustainable development of urban growth poles of the 'Regional Operational Programme' of the European Regional Development Fund.

This program focuses on old apartment buildings – which were build upon designs drafted between the years 1950-1990, and has as objective: reducing heating energy consumption by minimum 40% and reaching a specific heating energy consumption of no more than 90 kWh/m2/year or 100 kWh/m2/year, depending on building location.

Only municipalities (representative city for each of the 40 counties) and the 6 sectors of Bucharest can apply for these funds.

The grant covers up to 60% of the eligible investments. The rest of 40% of the eligible investments is to be covered by the local authorities and associations of apartment building owners in different percentage, depending on the net monthly average revenue per family member:

• if more than a half of owners have a net monthly average revenue of less than 150 Euro per family member: 30% public authority, and 10% owners association;

• if more than a half of owners have a net monthly average revenue of less than 350 Euro per family member: 20% public authority, and 20% owners association;

• if more than a half of owners have a net monthly average revenue of less than 500 Euro per family member: 10% public authority, and 30% owners association.

This program opened on 3rd December 2012, and investments will have to be completed by 31 July 2015.

Applicable legislation (in Romanian only): Guide for Applicants

2. National and local budgets, within the limits set out in the national and local legislation

These funds focus on old apartment buildings and individual houses – which were build upon designs drafted between the years 1950-1990.

The objective of this program is reaching a specific heating energy consumption of no more than 100 kWh/m2/year of useful floor, under economic efficiency conditions.

Applicants are local public authorities (not only municipalities).

Eligible works costs will be covered within the limits approved by the Ministry of the Regional Development and Tourism, respectively each local authority as follows:

• 50% by national budget;

• 30% by local budget;

• 20% by owners; the owners' contribution may be financed by the local budget for a period of maximum 10 years, against either a refurbishing annual local tax or other financing mechanisms to be set up. For social cases, this financing turns to granting, and supplements the local budget contribution accordingly.

Applicable legislation: Emergency Government Ordinance No. 18/2009 (in Romanian only)

3. Loans with subsidized interest for refurbishing buildings

This program focuses on apartment buildings and residential individual houses build and taken over before 31 December 2000.

There is no particular objective concerning reaching a certain level of energy efficiency.

Applicants are the owners, either individual or in associations (for apartment buildings).

Eligible investment costs are covered:

• at least 10% by owners; local authorities may cover this contribution and even more, up to a maximum of 30% of the eligible investment costs, if local budget allows it;

• the rest by loans with government guarantee and subsidized interest for a period of maximum 5 years.

Applicable legislation: Emergency Government Ordinance No. 69/2010 (in Romanian only).

Fiscal incentives

Generally, fiscal legislation allows local councils to fix the level of property tax within a minimum and a maximum level. According to these provisions, local councils or the general municipal council of Bucharest may reduce property tax regardless any energy efficiency condition as follows:

• regardless of any condition: no less than the minimum legal threshold of:

• 0,1% of the taxable value of the building, for buildings owned by individuals;

• 0,25% of the building value, as it is registered in the bookkeeping, for buildings owned by companies;

• for buildings owned and used as residence by individuals: less than 0,1% or even exemption;

• for buildings owned by companies: less than 0,25% or even exemption, if state aid requirements are met.

Explicitly concerning energy efficiency in buildings, according to the Art. 286 paragraph 8 of the Fiscal Code, local councils may decide upon reduction or even exemption from the property tax due for apartments or individual houses for a period of minimum 7 years.

Reduction or exemption is provided under the following conditions:

• is applicable to apartments or individual houses built according to designs drafted between years 1950-1990;

• owners have performed (commissioned for) energy performance improvement works at their own expenses;

• works performed comply with recommendations provided by the energy auditor in the energy performance certificate or energy audit report;

• specific heating energy consumption is of no more than 100 kWh/m2/year of useful floor, under economic efficiency conditions.

Property tax reduction or exemption is effective starting from 1st of January after the year the refurbishing works were completed.