Market participants have voiced strong reservations about the Romanian government’s proposal to increase the capital gains tax rate on stock market transactions to 10% (from 1%-3% currently), citing potential disruptions to investor confidence and market stability. The proposal, part of the fiscal agenda included in prime minister Ilie Bolojan’s ruling programme has prompted responses from the Bucharest Stock Exchange (BVB), the Brokers Association, and the Fund Administrators Association (AAF).
In an official communication to the Ministry of Finance, obtained by Bursa.ro, the three institutions advocated for preserving the current taxation model on securities transfers, which was only recently updated. The present system includes withholding taxes and a tiered structure introduced in 2023, requiring significant investment in IT systems by intermediaries.
Horia Braun, Chief Executive Officer of Erste Asset Management, warned in Ziarul Financiar that abrupt tax changes could distort the market. “Any change to the tax legislation for capital gains so soon after a change that required investments in IT applications to introduce withholding tax will create distortions and upset investors,” Braun stated.
He also urged the government to respect three guiding principles in any fiscal reform: avoiding disadvantages for local intermediaries, maintaining tax payment efficiency, and ensuring consistency across financial instruments.
Braun pointed out that increasing the capital gains tax to 10% - while keeping the current withholding system and denying loss deductions - would harm local brokers, who must comply with stricter rules than foreign intermediaries. He also highlighted concerns about tax asymmetry, as investments in government securities remain exempt from such taxation, encouraging financial disintermediation and reducing capital flows to the private sector.
Under current regulations, introduced in 2023, short-term capital gains (less than one year) are taxed at 3%, while long-term gains are taxed at 1%. Since January 2024, an additional 10% health contribution (CASS) applies to non-wage income of natural persons (including the capital gain resulting from the sale of securities) exceeding thresholds equivalent to six minimum wages.
The proposed tax hike would revert rates to levels last applied before 2023 and forms part of broader fiscal consolidation efforts as the government seeks to reduce the public deficit, which reached 9.3% of GDP in 2024.
Market stakeholders continue to call for consultation, warning that inconsistent and burdensome taxation could deter investment and hinder capital market development.
iulian@romania-insider.com
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