Bitcoin and cryptocurrency trading in Romania
Romania is representative of many countries with low regulation and institutional uncertainty but with wider acceptance among the population fuelled by low tax on trading.
Law and crypto trading in RomaniaLegal - existing crypto legislation
Although bitcoin and other cryptocurrencies are not considered legal tender, there is a growing level of acceptance generally. Romania considers cryptocurrency a moveable asset that can be bartered and exchanged. Romania even had some of the first bitcoin ATMs in Europe, but the regulatory framework is still less developed than other countries and the government is following the lead of others rather than setting the pace on these matters.Legal - forthcoming crypto legislation
All aspects of crypto and blockchain are under constant review but no forthcoming legislation at present.
Taxing cryptocurrencies in Romania
How to tax bitcoin is always a big issue with every country – or more correctly, how much to tax it. The profits you make from cryptocurrencies are subject to income or capital gains tax, both at a flat rate of 10% on crypto earnings exceeding a cumulative 600RON per year. Income from cryptocurrency trading is considered income from other sources and the gains are subject to income tax and the health insurance contribution (CASS), but not to the social security contribution (CAS). Incidentally, a recent study found that Romania has one of the highest percentages of the population that own cryptocurrencies, due in no small part to the publicity of its usage by celebrities and media figures creating an atmosphere of optimism about its future.
Crypto trading is both recognized and tax allowable, so your expenses as a professional incurred in buying or mining them – and your losses – can be offset. For non-professional crypto dabblers, the relevant fact to consider – and declare – is whether your activity is a casual activity or a trading activity for income. The way you invest in bitcoin will largely affect its qualification for income tax purposes. The special status of Bitcoin as a non-currency makes it at present not eligible for VAT.
Tax when moving residency
If you’re a resident of Romania, you have an obligation to declare your income from cryptocurrency trading – and this applies whether your gains come from within Romania sources or from foreign sources. If you take up residency abroad, however, you’ll come under that country’s tax code.
Tax on mining
Mining is beyond the scope of most individuals and calls for significant investment in time, money, and equipment. However, if you are declaring yourself as a miner you are required to pay income on your profits, but you may also deduct your expenses, such as electricity cost (very much in the news at the moment), maintenance fees, and the cost of your hardware. Bear in mind that the cost of the electricity you use to mine your Romanian bitcoin is likely to be more than the value of your bitcoin, so you need to do the math on this one.
Crypto financial services in Romania
Most retirement and pension funds worldwide deem cryptocurrency too volatile to become part of long-term retirement schemes. There is little certainty on this at present.
Low interest rates given by commercial banks in the European Union and Romania are a major reason why investors look to buy cryptocurrency. However, Romanian banks view cryptocurrency as too risky and likely to cause reputational damage, so the outlook for financial acceptance at an institutional level is not high, although as we have seen, it is widely accepted by the population.
As yet Romanian financial institutions are lagging in their consolidation of this new technology. However, a Romanian blockchain start-up, Elrond, is preparing to have its new global payments app support Bitcoin this year to tap what it sees as surging interest in cryptocurrencies.
Using crypto in Romania
Romania has retailers across most of its cities that accept bitcoin as a payment, but you’ll have to look for them and most tend to be in the capital, Bucharest. The bitcoin-accepting outlets range from large stores to small online outlets, including beauty salons, car rentals, and travel.
Many world brands operating in Romania accept bitcoin, including Starbucks and Microsoft.
You won’t be able to reduce your tax by gifting your cryptocurrency. Whatever gain you have made on it will be taxable up to the point at which you gift it.
Crypto regulation in Romania
It’s always a good idea to check the levels of security, protection, and insurance any exchange can offer you. Romania-based exchanges may offer more recourse to action if things go wrong, and a more immediate level of customer support, while overseas exchanges can provide a wider choice of services and perhaps greater transaction speeds. In all cases, you’ll have to report your identity credentials and trading details.
As with many government bodies, the Romanian tax authorities can request information from crypto exchanges and expect compliance with their laws. You’ll need to provide your personal details and proof of ID – so you can forget about the myth of anonymity that surrounds cryptocurrency.