Income Tax. Capital Gains.

How income tax on earnings obtained on the financial exchange is calculated in Moldova. Capital gains. Trading and investments.

Spring is the period when every citizen can declare to the tax authority the profits obtained in the previous year in order to pay income tax. The State Tax Service informs that for individuals, capital gains represent a source of taxable income. According to the Tax Code, capital assets include:

1. shares, bonds, and other ownership securities in business activity;
2. options to purchase or sell capital assets;
3. private property not used in business activity;
4. land.

The amount of capital gain resulting from the sale, exchange, or another form of alienation of capital assets is equal to the difference between the income obtained and the expenses incurred for the purchase or creation of those capital assets. These expenses must be confirmed in the manner established by Article 42 of the Tax Code and Ministry of Finance Order No. 40 of February 6, 2018.

Therefore, when alienating a capital asset, an individual must calculate income tax by taking into account the taxable amount of the capital gain, which represents 50% of the capital gain, and tax it according to Article 15 letter a) of the Tax Code (12%). In other words, the tax amounts to 6% of the total income obtained through investments on the financial exchange.

At the same time, capital gains are not recognized in the case of:

1. redistribution of property between spouses or former spouses;
2. conclusion of a donation agreement between first-degree relatives, as well as between spouses;
3. alienation of the main dwelling, which is the taxpayer's property for at least 3 years and has been their domicile/residence during the last 3 years before alienation.

If a person makes a donation, it is considered that they sold the donated asset at a price equal to the greater of its adjusted value basis or its market price at the time of donation. Capital gain or loss is not recognized for tax purposes when a donation agreement is concluded between first-degree relatives, as well as between spouses.

Based on Article 83 of the Tax Code, and taking into account that capital gains are a source of taxable income (Article 18 letter e) of the Tax Code), an individual who alienates capital asset(s) has the obligation to submit the Income Tax Return.

How income tax is calculated when capital gains are recorded can be seen in the following video, produced by the State Tax Service in collaboration with P.P. Monitorul fiscal FISC.md.

 

Source: https://sfs.md/en