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Romania: New Fiscal Incentives and Changes in Taxation of Capital Gains for Individuals

Romania: New Fiscal Incentives and Changes in Taxation of Capital Gains for Individuals

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GEO no. 67/2022, published in the Official Gazette on 23 May 2022, enforces the application of fiscal incentives for companies who decide to increase their employees’ salaries from the minimum gross salary, i.e. RON 2,550, to RON 2,750, for salaries from 1 June - 31 December 2022.

For the aforementioned period, no income tax and social insurance contributions are due for the RON 200 increase.

On a separate note, GEO 67/2022 enforces the obligation for postal services providers to submit to the Romanian tax authorities, on a monthly basis, information regarding postal shipments with payment at delivery by the consignee.

Changes in taxation of capital gains for individuals

Starting from 1 January 2023, Law no. 142/2022, published in the Official Gazette on 23 May 2022, amends the provisions regarding the taxation of capital gains obtained by individuals from the transfer of securities (shares and financial instruments classified as such by the relevant legislation of the State in which they were issued) and from transactions with derivatives.

Capital gains earned from the transfer of securities and from transactions with derivatives are taxed differently depending on how the transactions take place, as follows:

(1) if said transactions are carried out through a Romanian intermediary or a non-resident intermediary having a permanent establishment in Romania, the income tax is calculated and withheld by the intermediary for the gain obtained from each transaction, and not on annual basis, as is the case under the current regulations.  Therefore, losses from one transaction cannot be offset against gains from another transaction;

In this case, the income tax withheld by the intermediary is calculated as follows:

✓ in the case of securities:

  • 1% on gains for the transfer of securities that have been acquired and sold in a period of more than 365 days, including the date of their acquisition;
  • 3% on gains for the transfer of securities that have been acquired and sold in a period of less than 365 days from the date of their acquisition;

✓ in the case of transactions with derivatives:

  • 1% on gains for transactions with derivatives held for a period of more than 365 days, including the date of their acquisition;
  • 3% on gains for transactions with derivatives held for a period of less than 365 days from the date of their acquisition.

(2) otherwise, i.e. if the transactions are not carried out through an intermediary, the income tax is calculated on an annual basis, cumulatively, by the beneficiary of the income. The income tax rate remains 10% in this case and is calculated on the difference between the gains and losses recorded during the fiscal year.

The same taxation rules apply to non-resident individuals earning income from the transfer of securities through Romanian intermediaries. In this case, the Romanian intermediary is required to apply for the tax registration in Romania of the non-resident individual.

By Carmen Mazilu, Tax Advisor, Noerr

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