Romania's proposed REIT framework has returned to public attention. On 31 August 2026, Bucharest Stock Exchange Chief Executive renewed his call for dedicated legislation. Earlier this year, public discussions involving the Ministry of Finance and members of Parliament highlighted the unresolved debate over the proposal's fiscal treatment and budgetary impact. These interventions provide a timely reason to revisit the proposed regime and the structuring questions it raises for property owners, lenders and investors.
European real estate investment regimes offer useful and diverse precedents for Romania, although they differ in what they permit and how they tax the resulting income. Spain's SOCIMI legislation, introduced in 2009 and substantially amended in 2012, combines qualifying asset and income requirements with mandatory distributions and admission to an eligible trading venue. The UK REIT regime exempts qualifying property rental profits and gains at company level while requiring substantial distributions of rental profits to investors. These arrangements allow investors to hold an interest in property portfolios through shares, while giving property owners access to equity capital. Their commercial usefulness depends on the interaction between eligibility conditions, tax treatment, financing and the ability to retain sufficient cash for the business.
Romania's PL-x no. 433/2024 proposes a dedicated framework for societăți pentru investiții imobiliare (S.I.I.) and the qualifying property companies they own. The text adopted by the Senate would combine a Romanian joint-stock company, admission to a Romanian regulated market, a qualifying-income threshold and mandatory profit distributions with special treatment for specified categories of income. This article examines that Senate text. The bill is now before the Chamber of Deputies as decision-making chamber, where debate has been deferred pending the Government's position.
For property owners considering a future listing under the REIT regime, the proposal worth assessing now, even while its legislative outcome remains uncertain. The assessment would involve identifying the assets and activities that might be included, testing existing ownership arrangements against the proposed conditions, and reconciling the distribution requirements with financing commitments.
The five questions below are the ones owners, lenders and prospective investors have to answer when assessing whether the proposed structure suits an existing business.
1. Which assets and activities can be included?
The Senate text permits a broader range of activities than a model confined to completed properties held for rental income. Article 3 expressly includes property sales and purchases, the letting of owned real estate, other arrangements concerning rights of use, and the operation, management and development of properties or real estate projects, directly or through qualifying property companies. At least 75% of an S.I.I.'s income would have to derive from these activities, including dividends from qualifying property companies and other S.I.I.s in which it holds shares. This is an income test; the Senate text does not establish a corresponding general requirement that 75% of assets consist of real estate.
Development activity should therefore be capable of inclusion. The text does not impose a general obligation to separate development for sale from properties held for investment, but a company combining development, property ownership and services is likely to be required to establish which revenues count towards the income threshold, and whether its activities satisfy the principal-business requirement. However, a separation might be appropriate because of construction risk, financing terms or investors' expectations, even where the legislation would permit the activities to remain together.
The permitted assets also extend beyond ownership of buildings. The draft regulation includes rights of use over properties for at least ten years, acquired with a view to granting those rights to third parties and earning income. The list also encompasses certain predominantly property-based investments and real estate used in agriculture or forestry.
2. Should properties be held directly or through subsidiaries?
The proposal accommodates ownership through separate property companies. A qualifying subsidiary may be a limited liability company or a joint-stock company established in Romania or another EU Member State, at least 95% owned by one S.I.I., with the specified principal real estate activities. This would allow a group to retain property companies beneath the listed entity, potentially preserving existing ownership, development, leases and financing arrangements without transferring every property to the S.I.I. itself.
The inclusion of companies established elsewhere in the EU gives the proposed ownership structure a potential cross-border application, but does not by itself extend Romanian tax relief to income taxable in another jurisdiction. Any regional structure would require separate analysis of the subsidiary's local tax position, withholding taxes and the treatment of distributions received in Romania. The choice between direct and subsidiary ownership will turn on the existing contracts, tax costs and financing arrangements as much as on eligibility under the proposed law.
3. Can the business support the distribution requirements?
The Senate text establishes distribution obligations at both ownership levels. An S.I.I. would distribute at least 90% of its profit after the legal reserve, by the end of the financial year following the year in which that profit was earned. A qualifying property company would distribute 100% of its profit after the legal reserve within the same timetable, proportionately to the S.I.I. and any minority shareholders. These provisions would materially reduce the scope to finance acquisitions or development from retained earnings, particularly within the property subsidiaries.
As accounting profit and cash available for distribution are not the same thing, the assessment has to separate them. Principal repayments, construction expenditure, refurbishment, tenant incentives can absorb cash without reducing the relevant year's profit by an equivalent amount. Calculation and timing also have to be coordinated between the subsidiaries and the S.I.I.
The draft regulation addresses contractual distribution restrictions expressly. It would prohibit the S.I.I. and its qualifying property companies from entering into agreements with third parties that restrict the distributions required by the proposal, while making an exception for credit agreements with financial institutions. That exception permits relevant restrictions in those agreements, but the text does not fully explain how a distribution lock would interact with the continuing distribution requirement and tax eligibility.
4. What borrowing and security arrangements would be permitted?
The draft regulation would allow an S.I.I. or a qualifying property company to borrow from third parties up to an aggregate limit of 65% of its total assets.
The same provision requires security granted by the borrower to third-party creditors to be confined exclusively to assets relating to the financed project. The practical question would be how that restriction applies to the full security package. A property financing may involve security over bank accounts, rental and insurance receivables and contractual rights, as well as a mortgage over the property. Each has to be tested for its connection to the project, although that test will not always be straightforward.
These issues would be particularly relevant to facilities covering several properties, cross-collateralisation and financing secured on assets held across a group. The proposal also requires annual independent valuation of owned real estate, audited financial statements under requirements to be established by the Ministry of Finance, and insurance addressing damage, destruction and business interruption.
5. How would listing, regulatory classification and entry into the regime interact?
The ordinary eligibility rule requires the S.I.I.'s shares to be traded on a regulated market in Romania. The proposal nevertheless contains a transitional route: it would permit a joint-stock company satisfying the other conditions to qualify before admission, provided its shares are admitted to a Romanian regulated market within eighteen months of the law's entry into force. This is a single statutory deadline measured from entry into force, rather than a fresh eighteen-month period available whenever a company chooses to seek S.I.I. status.
The transitional provision could allow eligibility during preparation for admission, but would require the restructuring, financial reporting and admission timetable to be planned together. If admission has not occurred by the deadline, the S.I.I. and its qualifying property companies would cease to benefit from the tax benefits.
Regulatory classification would require a separate assessment. The Senate text does not provide an express exclusion from the alternative investment fund framework, and neither corporate form nor listing alone determines whether an undertaking is an AIF. The analysis must consider the elements of the AIF definition together, including capital raising from a number of investors, a defined investment policy and investment for their benefit. Under ESMA's guidance, the collective-investment assessment also considers the undertaking's commercial or industrial purpose and whether investors, as a collective group, lack day-to-day discretion or control.
For a developer-sponsored vehicle, governance also has to address the continuing relationship with the sponsor. Property acquisitions, development contracts and management services involving affiliates create questions about valuation, approval procedures and conflicts of interest. The proposed annual independent valuation requirement would be relevant, but would not replace the assessment and procedures appropriate to each transaction.
Tax treatment and continuing compliance
Article 7 would treat specified categories of income as non-taxable when calculating the fiscal result. These include income from property sales and rights of use, property maintenance or management, specified dividends and disposals of participations, and interest on loans granted to qualifying property companies. The mechanism is a defined exclusion of income from the corporate tax calculation. The characterisation of that exclusion has itself been raised in the parliamentary process, where the possibility that the treatment constitutes State aid has been noted, together with inconsistencies identified in the text by the Legislative Council and the financial supervisory authority.
Access to the proposed treatment would involve a quarterly declaration confirming compliance and electing the regime, identifying qualifying property companies where applicable. Article 7(3) also provides for loss of the treatment where the S.I.I. fails to satisfy the cumulative conditions for six consecutive months. If the position is not remedied by the end of that period, the S.I.I. and its qualifying property companies would be required to pay corporate income tax attributable to those six months without the Article 7(1) treatment. Failure at the S.I.I. level could therefore affect the tax position of companies beneath it, making continuing monitoring of eligibility a group-wide concern.
Assessing an existing portfolio
The Senate proposal supplies a basis for assessing how an existing property business might use a Romanian REIT regime, while leaving several questions of implementation and interpretation open, several of which have been identified in the parliamentary process itself. That assessment would involve mapping qualifying activities and income, reviewing minority interests and subsidiary ownership, modelling distributions against cash requirements, and checking each financing and security arrangement. Admission timetable and regulatory classification should also be addressed. The work that is useful now is analytical; committing to reorganisation, minority buy-outs or refinancing on the basis of this text could be premature.