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Bitcoin tax regime in Romania – FAQ

In this article we provide answers to the most frequently asked questions about Bitcoin tax regime in Romania. The clarifications provided below are written by the best tax consultants and experts in taxation of cryptocurrency transactions.

Bitcoin is a form of digital money, from the category of cryptocurrencies, created back in 2009. Bitcoin is based on a peer-to-peer network of autonomous computers, a consensual digital network, called “blockchain”. Thus, the system behind Bitcoin is a digital, decentralized one, supported only by its users, without any intermediaries or any central authority, such as a bank.

Bitcoin can be bought and sold like any other fiat currency, and Bitcoin markets, called “Bitcoin exchanges”, allow people to buy or sell Bitcoins using any type of money.

Every Bitcoin is practically a digital file on a computer that is stored in an application, called “digital wallet”, and which in turn is installed on a device such as smartphone or computer. People can send Bitcoins (or even part of one – i.e., sub-units) to your digital wallet, and you can send Bitcoins to other people.

Each transaction is recorded in a kind of public register, called blockchain.

This makes it possible to track all historical transactions with Bitcoin, thus preventing system fraud, such as stealing coins by replicating them, or canceling transactions.

As mentioned above, like any other fiat currency, Bitcoin can be bought and sold in cryptocurrency markets. Given that the value of Bitcoin fluctuates constantly in the market (Bitcoin market price can fluctuate significantly in just a few minutes), this makes it possible to make gains from these types of buy-and-sell transactions.

Thus, for investors it may seem very promising to invest in Bitcoin, even more than in transactions with shares or other types of assets, because they can generate significant short-term gains.

Historically speaking, before January 2019, the Romanian tax legislation did not regulate in any way the taxation of profits made from the trading of Bitcoin or other virtual currencies.

However, the fact that the taxation of cryptocurrencies in Romania was not specifically mentioned in the tax legislation does not mean that such gains could not be taxed by the authorities. The Romanian Tax Code (Law no. 227/2015) did not include them in any specifically defined category of income, but at the same time did not exclude such income from the general rule of taxation.

Therefore, the gains that an individual derived from buying and selling of Bitcoins or any other type of cryptocurrency (Ethereum, Ripple, Stellar, Litecoin, etc.) were considered taxable income and taxed as income from other sources even before January 2019.

Starting with January 20, 2019 however, based on the Ordinance no. 25/2018 which amended the Romanian Tax Code, the income derived from the transfer of digital currencies was for the first time specifically regulated from a tax perspective. More exactly, under Article 114, paragraph (2) of the Romanian Tax Code, the authorities introduced letter m), applying starting with the income tax due for the revenues generated in 2019.

Thus, under the newly introduced letter, starting with the revenues related to year 2019, it was clarified that the income from the transfer of digital currencies derived by individuals must be taxed as “income from other sources”.

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Individuals generating gains from cryptocurrency transactions must report this income to the Romanian tax authorities by submitting the annual tax return (“Declarația unică”). Thus, all individuals are required to declare the earnings they derive each year, in the first part of the next year.

More precisely, the official deadline for submitting the annual tax return is May 25 of the year following the one during which the income is generated (for 2020, the deadline is 25 May 2021). The reporting deadline may be extended by the authorities.

The annual tax return can be submitted to Romanian tax authorities (ANAF) in both paper and electronic format. The submission in electronic format can be done through the Virtual Private Space (on ANAF’s website), as well as through the online portal e-guvernare.ro. The submission through the e-guvernare.ro website can be done only by electronic signature (based on a qualified digital certificate).

For more details on submitting the annual tax return in Romania you can also read the article: Romanian annual tax return – frequently asked questions.

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