Capital Gains Taxation in Romania
In Romania, the taxation of capital gains is governed by the Fiscal Code, specifically Article 53, which outlines the income subject to personal income tax, including capital gains. The legal framework aims to regulate and influence investment decisions by establishing clear rules for the calculation and taxation of capital gains.
Definition of Capital Gains
Capital gains in Romania refer to the profit realized from the sale or disposal of capital assets, including:
- Real estate properties
- Stocks and shares
- Bonds and other financial instruments
- Business assets
The Fiscal Code does not distinguish between short-term and long-term capital gains for tax purposes.
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula for calculating capital gains is as follows:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, including expenses related to the sale (e.g., brokerage fees, legal fees) and any improvements made to the asset during ownership.
Tax Rates
Capital gains in Romania are taxed at a flat rate of 10%. This rate applies to all categories of capital gains, regardless of the type of asset or the holding period.
Legal Framework
The taxation of capital gains in Romania is outlined in the following articles of the Fiscal Code:
- Article 53 defines income subject to personal income tax, including capital gains.
- Article 116 specifies the calculation of taxable capital gains.
- Article 117 sets the tax rate for capital gains at 10%.
The legal reasoning behind these tax provisions is to ensure that individuals and businesses contribute their fair share of tax on profits realized from investments and asset disposals. By applying a flat tax rate to capital gains, Romania aims to simplify the tax system and promote investment while generating revenue for the government.
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