Cryptocurrency taxation in Romania was recently clarified in the Romanian Tax Code (Law 227/2015) – as of 20 January 2019, when certain amendments to the Tax Code entered into force, by Law 30/2019. Thus, since this date revenues from virtual currency transactions are taxed as “income from other sources”, in accordance with Chapter X, Title IV of the Romanian Tax Code.
According to the newly published rules, and as we were actually expecting, cryptocurrency taxation will apply only to the gains one would earn from the transfer of the currency. More specifically, the gain will be determined as the positive difference between the sale price and the purchase price of the cryptocurrency, which will also include the transaction costs, if any. In addition, two non-taxable ceilings will be applied as follows:
- 200 LEI for each transaction
- 600 LEI for all gains derived during the tax year
With regard to social contributions, the category of income from other sources is generally exempt from the social contribution base (CAS – contribution to the pension fund), but not from the healthcare contribution (CASS – 10%), as per the legislation currently applicable. The healthcare contribution (CASS – 10%) is only due if the taxpayer generates such income (or aggregated with other income such as investment income, rent, etc.) during a tax year that totals at least 12 gross minimum national salaries – i.e. for the year 2018 stands at the amount of 22,800 lei. In addition, this contribution is capped at 10% of 22,800 lei, meaning a flat contribution of 2,280 lei per year.
Reporting obligations for cryptocurrency taxation
The taxable gain derived from cryptocurrency must be determined and reported by the taxpayer through the annual income tax return. The deadline for submitting the 2018 tax return is 15 March 2019. The income tax due must be calculated at the same rate as for any other types of income earned by individuals – i.e. 10% of the taxable income, and applying the above-mentioned non-taxable caps.
This change is important because it comes to clarify the cryptocurrency taxation regime in the Romanian tax legislation, eliminating the ambiguities or interpretations of the existing legal provisions regarding the way of taxing these revenues. We also consider it an important step for authorities recognizing the existence of these types of virtual currency economic transactions.
According to some expert estimates, the total revenues from cryptocurrency transactions made by Romanian residents during 2018 should amount to approximately EUR 72,000,000.
Therefore, the new regulations introduced in the Romanian Tax Code are welcome as it clarifies the applicable tax treatment and reporting regime applicable in Romania for cryptocurrency transactions and eliminates any tax law interpretations that in the past have led to reporting of these revenues under totally different categories.