Brokers can breathe easy: 16% tax for future gains only

Gains from investments on the Bucharest Stock Exchange, to be taxed by 16% starting next year, will be calculated as the gap between the price for which shares are sold and the last price registered on the market at the end of this year, in line with a draft of the new Fiscal Code published by the Finance Ministry last week.

The way the tax is calculated may reassure investors on the Stock Exchange, who have been afraid that for shares to be sold next year, the gains accumulated over recent years would also be subject to the 16% tax. This would have prompted some of the market players to cash in on their profits this year so as to pay a smaller tax, and this may have led to a collapse of prices on the market.

It is not clear, though, how gains accumulated by investors on the Stock Exchange by December 31 will be taxed, given that the draft only refers to the taxation of gains accumulated after this date.

The representatives of the Finance Ministry could not be contacted for comment on this latest draft of the Fiscal Code.

The stipulation regarding the 16% taxation of gains accumulated as of next year does not cover the open investment funds, however, with the entire gain to be taxed, in line with the draft, at 16%, irrespective of the date the units were bought at. At present, the tax stands at 1%.

The draft also specifies that losses linked to open investment funds are not to be deducted from gains, and therefore investors will have to pay a 16% tax for each profitable placement.

Brokers and investors operating on the market hoped that the Finance Ministry would at least not drop former minister Ionut Popescu”s idea of continuing to levy a 1% tax for gains from long-term investments, of more than one year. “The proposed formula is the easiest one to implement from a technical point of view. We are still disappointed, though, that the 1% taxation of gains from long-term investments has been dropped,” says Iulian Panait, chairman of KTD Invest investment consultancy. Maintaining the 1% tax for long-term investment was a request submitted to the Finance Ministry by the representatives of the Stock Exchange, but the Finance Ministry eventually rejected the idea.

Starting January 1st, investors are going to pay 16% of the gains derived from each deal, with the total gains registered by investors to be determined on a quarterly basis. Investors will thus receive from the state the sums accounting for surplus taxes.

Starting next year, gains from banking interest will supposedly be subject to the same 16% tax, with banks being the ones to retain the tax. vlad.nicolaescu@zf.ro