The population of Romania has distinguished itself as an enthusiastic adopter of cryptocurrencies with 12% of Romanians presently invested in crypto. Yet while this significant representation of Romanian citizens recognizes the value of crypto, the government has been slower to the uptake.
At present, Romania does not recognize crypto as legal tender nor have the tax authorities released any specific guidance regarding crypto’s taxation. As such, crypto is liable to the same tax rates as any other income or capital gains.
Despite the fact that it has not yet been included into Romanian tax code, the National Agency for Fiscal Administration, which manages taxation across Romania, has in recent years been monitoring crypto activity.
How is Crypto Taxed in Romania
As stated above, taxation of crypto in Romania falls under the same tax rate as Income Tax. Unlike other European countries which have tiered tax rates that depend on the amount of income earned, Romania is unique in its fixed rate of 10% Income Tax across all earnings above 600 Leu.
Before beginning to calculate what taxes are owed, it is necessary to determine whether your reported crypto earnings fall under Capital Gains, Personal Income or Corporate Income.
While most crypto transactions classify as taxable events, there are, however, specific scenarios in which your crypto will not be subject to taxation.
Tax Free Crypto Transactions:
- Buying crypto with Euros or with Leu
- Holding crypto
- Transfers between personal wallets
Capital Gains Tax on Crypto
In Romania, there is no specified Capital Gains Tax and as such, all capital gains fall under the 10% tax rate of Personal Income Tax. Crypto earnings are considered to be capital gains in the following scenarios:
- Selling crypto for Leu or Euros
- Trading crypto for other crypto
- Spending crypto on goods or services
If one of the above transactions results in a capital gain, Income Tax will be owed on the gain. However, if a capital loss is incurred, this can be used to offset tax liability against other capital gains for up to seven years.
To arrive at the accurate final sum of what is owed to the Agency for Fiscal Administration, it is necessary to calculate the cost basis. Start with the acquisition price of the crypto and add to that any fees involved in its purchase. To arrive at the final gain or loss, subtract the cost basis from the price of the crypto at the point of sale or trade. This final sum represents what is owed on a capital gain, or the capital loss that can offset other gains.
Personal Income Tax
If an individual’s earnings in crypto are regarded by the Agency for Fiscal Administration to be additional income, they will be taxed as Personal Income.
Romania has a flat rate of 10% Personal Income Tax. The key difference between taxes paid on capital gains and income is that taxes on income are owed upon receipt, whereas with capital gains, taxes are paid upon the sale of the asset. Additionally, if income in crypto is later traded or sold, an additional 10% tax on any capital gains will be owed to the Romanian tax authorities.
To calculate what taxes are owed on crypto earned as income, determine the fair market value of the crypto on the day it was received, and calculate 10% of the total.
Corporate Income Tax
For corporate entities in Romania that generate profit in crypto, the standard Corporate Income Tax rate is levied on earnings. This applies to businesses that operate and/or have their offices in Romania. For such entities, the standard rate of 16% will be applied to all crypto gains.
In addition, depending on the nature of business, Value Added Tax (VAT) may be applicable. As per the standards laid out by the Court of Justice of the European Union, in regards to VAT, crypto in Romania is taxed the same as fiat currency.
Crypto companies with salaried employees in Romania are expected to withhold and pay a pension insurance, a health insurance, and a labor insurance contribution. As with all other Corporate Tax obligations, this will be based on the fair market value of the employee’s crypto salary.
Crypto Payroll and Compliance in Romania with Rise
While at present the regulatory picture for crypto in Romania remains unresolved, the National Agency for Fiscal Administration continues to closely monitor crypto business activity. For Romanian organizations that pay contractors in crypto, understanding the core elements of crypto tax compliance is critical for avoiding costly mishaps.
Rise provides an all-in-one solution for streamlining crypto payroll and compliance. For Romanian-based companies looking to attract top talent with competitive compensation packages, Rise offers global crypto payroll and guarantees total compliance.
With Rise’s flexible routing infrastructure, organizations can fund payroll in crypto and contractors can receive payouts in fiat, or vice versa. Regardless of the currency in which you choose to send payments, Rise ensures full local and global compliance.
Drive your organization’s growth with automated onboarding, payroll and compliance with Rise. Schedule a demo today to learn how you can optimize your payroll.