Romania has approved a 10% tax on profits from cryptocurrency trading

[deisik]

Is it just trading or possession? I mean what if someone sells a product and gets crypto in return?

It's an income tax and it's for when one sells crypto for money.

It doesn't matter you bought one Bitcoin for 20000$ or for 1$, if you sell it they want 10% of the money you received (preev tells now 3438$) as tax

Are you sure about that?

It doesn't look very logical but I'm not from Romania, so I don't know and that's why I'm asking. Typically, if it is an income tax, you pay it on income earned, not on money received. Well, technically, you may in fact have to pay it on money received but at the same time you can file a tax deduction form proving that your income is actually the difference between the price at which you sold your coins and the price at which you bought them. In this manner, you may be inadvertently missing the part about the tax deduction

[NeuroticFish]

Are you sure about that?

It was quite a fuzz about it last month. I've read it in many papers directly in Romanian.

In the previous years crypto didn't exist in the papers. It was counted in the "other gains" group. So you you got any gains (sell > buy) you had to pay tax on those gains.
But starting with 2019 is has change and you pay tax on the money you receive for the crypto, no matter how much did you pay for it. At least that was what the papers I've read were writing.

[deisik]

At least that was what the papers I've read were writing

Is there a Tax Code in Romania or anything to that tune?

I don't know what kind of papers you actually read, but I guess you should be looking in the local tax law as the primary source of authentic information on such questions. It would take me a few minutes to find the relevant part on the income tax to see what tax deductions are applicable to what types of income tax and thus remove any doubts regarding this issue. In simple terms, you may have been misinformed

[NeuroticFish]

Is there a Tax Code in Romania or anything to that tune?

Sure, but it doesn't seem to be up to date (or I don't know where to look) at the official IRS-equivalent organization's site: https://static.anaf.ro/static/10/Anaf/legislatie/Cod_fiscal_norme_22012019.htm
At the newspaper they got the final draft here https://media.hotnews.ro/media_server1/document-2018-12-13-22864735-0-amendamente-admise-respinse-pdf.pdf

And the important area is:

Se propune menționarea expresă a veniturilor din transferul de monedă virtuală, încadrate și în prezent, în categoria venituri din alte surse, pentru care obligația declarării veniturilor revine persoanei fizice prin Declarația unică. De asemenea, impozitul pe venit datorat se calculează de către contribuabil, pe baza Declaraţiei unice, prin aplicarea cotei de 10% asupra venitului brut.

Google translate:

It is proposed to explicitly mention the proceeds of the virtual currency transfer, still included in the income category from other sources, for which the declaration of income is the responsibility of the individual through the Single Declaration. Also, the income tax due is calculated by the taxpayer, based on the Single Declaration, by applying the 10% rate of gross income.

[deisik]

It is proposed to explicitly mention the proceeds of the virtual currency transfer, still included in the income category from other sources, for which the declaration of income is the responsibility of the individual through the Single Declaration. Also, the income tax due is calculated by the taxpayer, based on the Single Declaration, by applying the 10% rate of gross income.

But how exactly is this gross income defined?

And it is still income, not money received. Income can be synonymous with profit (as well as revenue, which is not synonymous with profit), so we should look further into how income is defined exactly. Further, as I wrote in one of my previous posts here, we should also look into the income tax deductions part of the Code, which may specifically mention the condition according to which you can legitimately reduce your taxable income for the expenses incurred (so-called tax deductible expenses)

[NeuroticFish]

But how exactly is this gross income defined?

Sorry, but in 30 minute of searching I couldn't find anything useful as written down "paper" on this.
Maybe somebody with more contact with the financial laws can help on this.

[wuvdoll]

Same applies in all countries around the world. The "tax" you pay are different in two, one is tax usually paid by the buyer but sometimes the seller in difference countries where if a product is 100 dollars either the buyer or the seller also pays a tax on that, for example in my country its 8% and that is the tax on the product. However there is also the tax shop pays which means they made some income but they also had expenses and when you take out the expenses from the income whatever is left you pay taxes.

Now this looks like 10% tax on profits of trading which should be regarding buying and selling bitcoin however if a person sells stuff for bitcoin and shows expenses for that product and rent and all other expenses then they will pay a smaller amount than the trader who just has one expense which is buying and one income which is selling.

[Dreamchaser21]

They needed it for them to survive on the possible crisis. But how they can find the real profit you’ve got from cryptomarket? Well, this is still a good move from Romania and this mean that they really support cryptocurrency which is good for us, I hope they will succeed to collect taxes for them to grow economically.

[Ranly123]

The local media inform that Romania has made amendments to tax laws, approving a 10% tax on the profits from the investments in cryptocurrency.
Read more: https://www.xmlgold.eu/en/news/article/798/romania-tax-cryptocurrency-trading/

Good for their government to find ways to track the owner of those cryptocurrency investments. It would be hard to trace the owner of those investments because of the anonymity the crypto brings.

[ChrisPop]

Yeah.. the tax on income is also 10% so it is somewhat logical to pay that tax for profits coming from trading cryptocurrencies. Until now the tax was in the "grey" area, some specialists said that you need to pay them, some said the opposite. At least now everything is clear from a legal point.

[aoluain]

Are you sure about that?

It was quite a fuzz about it last month. I've read it in many papers directly in Romanian.

In the previous years crypto didn't exist in the papers. It was counted in the "other gains" group. So you you got any gains (sell > buy) you had to pay tax on those gains.
But starting with 2019 is has change and you pay tax on the money you receive for the crypto, no matter how much did you pay for it. At least that was what the papers I've read were writing.

its more like what we have in my country, a "capital gains tax"
tax is due on the profit you make, it could also be seen as an
"income" tax but income is technically the wrong word to use.

either way its a very low tax.

[deisik]

Are you sure about that?

It was quite a fuzz about it last month. I've read it in many papers directly in Romanian.

In the previous years crypto didn't exist in the papers. It was counted in the "other gains" group. So you you got any gains (sell > buy) you had to pay tax on those gains.
But starting with 2019 is has change and you pay tax on the money you receive for the crypto, no matter how much did you pay for it. At least that was what the papers I've read were writing.

its more like what we have in my country, a "capital gains tax" tax is due on the profit you make, it could also be seen as an "income" tax but income is technically the wrong word to use

I don't really think it is a misnomer (sort of)

Whenever I see that word (income), it is what it is supposed to mean according to common use (or dictionary), i.e. what you receive as wages, salary, money you procure from selling, say, real estate, securities or from currency exchange operations. In other words, it is not profit, as simple as it gets. And the income tax (which is also a correct term here) is calculated on this amount specifically, even though this income is not the same as profit (i.e. it also includes your expenses which should be taken out)

And this is where things get interesting (or complicated if you please) as many tax codes in many cases allow you to reduce your taxable amount by the expenses you made to obtain this income. For example, in case of securities this will be the money you paid for them (i.e. price multiplied by quantity), so you actually end up paying what is commonly understood as profit. And if you think of it, that makes sense as it allows the tax authorities to see what your profit is actually made of (i.e. income minus expenses)

[maksimukr1989]

How are they able to monitor profits ?
For example, investor trades on Binance and then exchange crypto on fiat at localbitcoins. How government will control it?
As to legit payments and transactions, on the one hand it is an advantage that Romania accepts crypto and Blockchain technology. On the other hand, they limit traders and investors. What do you think about it?

You can control it by introducing the KYC procedure on the exchange.If taxes are introduced then cryptocurrency turnover control is introduced.I already want to see how it will all happen in fact.After all,if the model of collecting taxes on cryptocurrencies in Romania will work, then they will be followed by other countries.

[Shenzou]

The local media inform that Romania has made amendments to tax laws, approving a 10% tax on the profits from the investments in cryptocurrency.
Read more: https://www.xmlgold.eu/en/news/article/798/romania-tax-cryptocurrency-trading/

This is defenlitly some fantastic news, i honestly people think that taxing crypto is bad but it is actually good for the industry it self, because if you have something that is regulated and has a law tied to it , actually attracts more investors and more people into the market, because they will be working in an environment where they know that they are not doing something illegal, because one of the biggest things that is holding the crypto down is the government and if we see the government showing interested in it, we will see more people getting into it.

[NeuroticFish]

As an addition:
A new article has come online, with explanations and indeed, it looks like that after all we talk only about the profit. (so I was wrong).
(The link is here, but it's in Romanian: https://www.hotnews.ro/stiri-specialisti_deloitte-22958662-criptomonedele-prima-reglementare-specifica-din-legislatia-nationala-prin-codul-fiscal.htm )

Something more, especially for the ones telling that 10% is low. If the income is more than ~5000 Euro one has to also pay more 10% for the compulsory health insurance.

[Naida_BR]

Is it just trading or possession? I mean what if someone sells a product and gets crypto in return?

It's an income tax and it's for when one sells crypto for money.

It doesn't matter you bought one Bitcoin for 20000$ or for 1$, if you sell it they want 10% of the money you received (preev tells now 3438$) as tax.
I don't expect many individuals will do this; it's just one more of the stupid laws my country started to get in the last 2 years at an accelerated rate.

So, considering that I exchange my cryptocurrency for fiat in a local Bitcoin ATM, which takes a fee of 9%, I will have to pay 9% to the ATM plus 10% to the government as a tax for my trading activity?
This is kind of insane to me. I think it is too much to pay 10%. They should have a more decreased rate in order to make it viable. I hope that other countries that want to follow this direction to use a rate of 3-5%.

[babarian]

the first time I read the OP post I thought that 10% was too high for a tax.
but if you read a few replies the posts from other members were higher than that. I was very surprised by that.
Please understand my ignorance, but in my country, Bitcoin has not received permission or regulation from the government.

[deisik]

As an addition:
A new article has come online, with explanations and indeed, it looks like that after all we talk only about the profit. (so I was wrong)

So be it then. In general, governments may not be interested in levying too high taxes on activities that are highly susceptible to tax evasion (unless you are some dictator, of course). If they levy too high a tax like 10% on the received monies, that will only cause unnecessary tensions in the society. And with that they will be obliged to prosecute such behaviors which may make people revolt against the government in the end

And we all know how that can turn out in Romania

[omonuyak]

The local media inform that Romania has made amendments to tax laws, approving a 10% tax on the profits from the investments in cryptocurrency.
Read more: https://www.xmlgold.eu/en/news/article/798/romania-tax-cryptocurrency-trading/

Is it just trading or possession? I mean what if someone sells a product and gets crypto in return? Do we know what happens to those people? Are they not taxed? Are they taxed the same way they would if they sold it for fiat currency? What about the freelancers? They do not even sell anything, they provide a service and they get paid?

It is great that countries are making laws for crypto, it makes the crypto world a lot more legit however we need the laws to be more precise and more comprehensive, this just concludes one part of the crypto world which is trading but it leaves out a bunch of other stuff unanswered and without that people could be taking advantage of these things. Looking at the USA example the countries that tax the trading depend on the exchanges and the information they give but it takes just one bad exchange to make the trust go away.

I think that is were the whole argument is.  Are they supposed to tax bitcoin when we used it as money? If bitcoin is used for the purchase of goods and services and a government is Tax cryptocurrencies for it that government is treating crypto as stocks or commodities and not currencies.

[ayshagotyou]

This is of course interesting news. But I can not understand how they are going to fulfill this law. I mean, how are they going to withdraw 10%. Will it be shared at the level of exchangers or what?