Capital gains tax returns – Romania
Any foreign investment entity that carries out or intends to carry out transactions in Romania needs to fulfill certain fiscal obligations towards the Romanian Tax Authorities (“RTA”). This could translate into an underestimated burden for foreign investment funds.
Development and news – general fiscal obligations
Primarily non-resident investment companies (e.g. Luxembourg SICAVs) investing in Romania might be affected by fiscal obligations such as registration, obtaining a fiscal identification number (“NIF”) and submitting annual and quarterly tax returns.
The above obligations depend on the nature of the securities traded by the foreign investors (equities, government bonds or corporate bonds) and the market where the trading activity is being undertaken (Romanian or foreign market).
|Romanian market||Foreign market|
by Romanian entities
|Capital gains (“CG”) are subject to the 16% internal corporate tax rate which may be reduced by the application of a DTT.||CG should be non-taxable in Romania.|
|Consequence: registration and filing of quarterly and annual tax returns.||Consequence: no
tax obligations would arise in principle.
|Government bonds||CG and interest derived from government bonds are subject to tax, although exempt.
|Consequence: registration and filing of quarterly and annual tax returns (i.e. “nil-return”).
|Corporate bonds and other securities issued by Romanian entities||CG derived from corporate bonds and other securities are not specifically mentioned in the Romanian fiscal code and would fall outside the scope of Romanian taxation.||CG should be non-taxable in Romania.|
|Consequence: no tax registration requirements.||Consequence: no tax obligations would arise in principle.|
Obtaining a Romanian NIF is also required for passive income obtained from Romania (such as dividends/interest). Such registration is a one-off process, required only for exchange of information purposes, and does not trigger further declarative obligations in Romania.
Foreign investors should pay attention to fulfilling the requirements laid out above and should file the annual capital gains tax return by 25 March 2017 (for the year 2016). An early registration will be crucial as the tax reporting cannot be performed retroactively.
In order to comply with the Romanian tax requirements, a non-resident investor might appoint a Romanian fiscal representative. KPMG can assist in this respect.
Furthermore, the foreign investor may benefit from a beneficial tax treatment applying a DTT concluded with Romania. KPMG can assist you in obtaining beneficial treatment.
Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.