Tax treatment of cryptocurrency transactions in Romania: taxes and fees that must be paid
Redacția apr. According to recent estimates by a trading platform, the number of cryptocurrency users increased cryptocurrency eu more than 10 million globally between December and January In Cryptocurrency eu, the community of cryptocurrency users is booming too, so questions arise more and more often about the obligations to declare and tax the income obtained from transactions with virtual currencies.
Among the most common questions are those related to how income is declared and taxed, the amount subject to taxation, and the time when the income becomes taxable. According to these regulations, the proceeds from the transfer of virtual currency fall under the category of income from other sources and are subject to a specific tax regime for this category, with certain peculiarities.
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One of the peculiarities is that the determination of the applicable income tax and social contributions is the responsibility of those who generate the income, and not the responsibility of those paying out the income as is the case for other income in the same category. Even for trades made through the cryptocurrency eu platforms, the reporting obligation remains the responsibility of users of the platform.
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How is income declared? This year, the declaration must be filed by May 25 for revenues from cryptocurrency transactions made in and for those expected to be made in For taxpayers with tax residence in Romania, the obligation to declare the income from cryptocurrencies through the single declaration exists regardless g2a bitcoin în așteptare whether the income is generated from Romania sources or from foreign sources.
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As income from cryptocurrency trade is considered income from other sources, the gains from cryptocurrency trades are subject to income tax and the health insurance contribution CASSbut not to the social security contribution CAS. Therefore, the purchasing costs of the cryptocurrency are subtracted from the selling price to determine the gains that are subject to tax.
The current tax form declaration stipulates that for this income type generated in Romania, only the realized gain the net gain is entered with all allowable deductions being made cryptocurrency eu data is entered in the declaration. With regard to CASS contributions, for the contribution is due only if the total income achieved either only from transactions with virtual currencies or cumulatively with sources of income other than salaries and wages is equal to or greater than 12 times the gross cryptocurrency eu minimum wages forthe ceiling is 26, lei.
Cryptocurrency eu requiring further clarification In relation to the above mentioned particularities, a relevant aspect, which still raises difficulties of interpretation, is that of the time at which the recipient of the income must determine the gain to be declared.
In principle, the time should coincide with the time when the conversion from cryptocurrency units to units of a conventional currency or FIAT lei, euro, dollars, etc. However, this is hampered by the complexity of trading platforms that make available to users both electronic wallets, in which they can store cryptocurrency units, as well electronic wallets for FIAT storage. Thus, transactions involving the conversion of virtual currency into conventional currencies are, as a rule, initially reflected in the platform, the FIAT funds can then be withdrawn into personal bank accounts.
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In principle, the operation of conversion from crypto to FIAT without transferring the currency from the platform to a bank account does not provide a real, tangible benefit to the beneficiary as a rule, the funds can only be used for the cryptocurrency eu of purchasing cryptocurrency units as long as they are in the management within the platform. Consequently, the mere conversion operated within the platform should not trigger income taxation.
The particularities of each trading platform must cryptocurrency eu be considered. Mechanisms behind a simple conversion from cryptocurrency to conventional currency can be complex and are cryptocurrency eu always visible to users to be able to determine with certainty the moment when the benefit transfers from the virtual realm into the tangible, regulated environment. For example, transactions with cryptocurrencies are reflected directly within the bank account that is linked to the e-wallet in which the FIAT is stored in the trading platform or application as opposed to transactions that take place solely inside the platform, without reflecting transactions in the bank account then each transaction is reflected in this bank account which operates in the regulated environment, triggering taxation by bringing the funds into the regulated and visible sphere for the tax authorities.
Therefore, the authorities may consider that in this case, cryptocurrency eu the mere conversion and displaying of these funds as FIAT within the trading platform constitutes a time when income becomes taxable. A potential counterargument for this approach is that such an account is not entirely under the control of the beneficiary but of the platformincluding limits on the amounts expressed in conventional currencies that can be withdrawn.
But even such a counter-argument raises other questions, which, in the absence of specific provisions of the tax law, further complicate the determination of cryptocurrency eu time of taxation. In addition, we must also consider the continuous evolution of the developments within these platforms, cryptocurrency eu that some of them allow the purchase of goods and services directly from the platform or through the issuance of cards by these entities.
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In such situations, we can no longer talk about a lack of tangible benefits. Therefore, considering the frequent changes in this field, the current fiscal framework for cryptocurrency operations requires a continuous reinterpretation to be adapted to market developments.
Since the tax burden relating to income from cryptocurrencies is placed on the beneficiaries, they are required to ensure that they make a correct determination on the abovementioned aspects. The declaration of income from any source and the payment of taxes is an obligation under the current legislation for cryptocurrency eu taxpayer, except for the categories expressly provided for in the Tax Code, otherwise competent authorities will impose penalties and late interest as established by law.
Authorities have already conducted controls and tax audits regarding cryptocurrency transactions, some of the cases ending up in court. Given the expansion of this financial area, it is expected that such tax controls will only intensify in scope and frequency in the upcoming period.
Translated from Romanian by Service for Life S. Foto: © Melpomenem - Dreamstime.