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The main amendments are the following:
- Certain intermediaries now have additional obligations in relation to the capital gains obtained through them. These intermediaries are “intermediaries as defined by the current legislation – investment management companies, self-managed investment companies, administrators of alternative investment funds, Romanian tax residents and tax non-residents which have a permanent establishment in Romania and are considered intermediaries.”
- Aside from the requirement to calculate the gain/loss for each transaction undertaken on behalf of a taxpayer, the reporting of information relating to annual gains/losses to the taxpayer and ANAF, these intermediaries are also required to calculate, withhold, declare and pay income tax for every transaction, on income obtained both from Romania as well as on income obtained from abroad, except for income obtained from the transfer of investment gold.
- For gains obtained through these intermediaries, the taxation rates decrease to 1% or 3%, as follows:
- For securities:
- A 1% tax rate on capital gains obtained from securities acquired and sold during a period longer than 365 days, calculated as of the day when they were purchased.
- A 3% tax rate on capital gains obtained from securities acquired and sold during a period shorter than 365 days, calculated as of the day when they were purchased.
- For derivatives:
- A 1% tax rate on capital gains obtained from derivatives held for more than 365 days since they were acquired.
- A 3% tax rate on capital gains obtained from derivatives held for less than 365 days since they were acquired.
- For securities:
- In order to determine the capital gain, the fiscal value of the shares sold is calculated by using the weighted average cost method and it includes the fees for each transaction, for each symbol, regardless of the period of ownership.
- Losses incurred through these intermediaries, from the transfer of securities or derivatives, cannot be carried over and compensated with future gains; thus, these losses represent a permanent loss for the taxpayer.
- The law also includes several transitional measures in relation to capital gains obtained for the current tax year, i.e., 2022.
By analyzing these new provisions, we can see that the favorable tax treatment (i.e., the reduced tax rates) applies only to those transactions carried out through Romanian intermediaries or through tax non-resident entities which have a permanent establishment in Romania that is an intermediary. In all other cases, the tax rate remains the same, i.e. 10%, which could be considered discriminatory. This could lead to cases in which for the same income, obtained from the same source, the taxation rate could be different. Additionally, in the document that presents the justification of the new provisions, the declared purpose of the law is to stimulate the Romanian capital market, to attract new investors and to increase the funding of Romanian resident companies. However, considering the current form of the law, the favorable tax treatment has no connection to either the Romanian stock exchange or Romanian security issuers (at least in relation to securities). Therefore, in practice, this could lead to situations where an investor trades through a Romanian broker on foreign markets in securities issued by foreign companies, thus benefitting from the favorable tax rate, which seems to be in contradiction with the purpose of the law.