Income tax in Moldova
August 16, 2017
Residents are taxed on their worldwide income. An individual is considered resident if he has a permanent residence in Moldova or he is present in the country for more than 183 days in a year. Married couples are taxed separately.
There are several categories of income in Moldova: (1) employment income and income from professional activities, including benefits in kind and business income, (2) income of shareholders in investment funds, (3) rental income, (4) capital gains, (5) interest and royalties, (6) annuities, (7) state subsidies and prizes, (8) benefits derived from waived debts, (9) dividends, and (10) other income.
Income earned in Moldova is taxed at progressive rates, often withheld at source, except for some forms of income, on which different rules apply. Business and professional income are taxed by way of assessment. For types of income that are taxed as ordinary income, progressive rates are applied.
INCOME TAX 2015
|TAXABLE INCOME, MDL (€)||RATE|
|Up to 29,640 (€1,347)||7%|
|Over 29,640 (€1,347)||18% on all income over €1,347|
|Source: Global Property Guide|
Residents are entitled to the following deductions and allowances:
- A basic personal allowance of MDL10,128 (€460)
- An additional allowance of MDL10,128(€460) for a spouse
- Additional allowances of MDL2,256 (€103) for each child and other dependants
- Contributions to eligible charities and qualified sponsorship contributions up to a certain amount of the taxpayer’s taxable income
- Social security and medical assistance contributions
Rental income is subject to a 10% withholding tax, levied on the gross amount.
Gains from the sale of real estate property are considered as ordinary income and taxed at progressive rates. The adjusted cost base of the property and related transaction costs are deductible when calculating the taxable capital gains.
If the property was owned by the taxpayer for at least 3 years before selling the property, it is considered that the property was used as his principal residence. In this case, the taxable capital gain may be reduced by MDL10,000 (€455) for each year after 01 January 1997, during which the taxpayer owned the property and used it as a principal residence.
Property tax is levied on the estimated value of properties in villages, and the estimated market value of properties located in cities and municipalities. The tax rates range from 0.05% to 0.30%, and the actual tax rates are set annually by the local authorities.
The applicable tax rate for properties located in villages is 0.10%. In municipalities and cities, the rates may vary between 0.02% and 0.25% for municipalities and cities. The property tax rate in Chisinau is 0.02%.
A specified value of the property is exempt, in Chisinau it is MDL380,000 (€17,273). The rate is increased by a particular multiplier, for the excess of the size of the property over 100 square meters. The rate is 0.02% in Chisinau.
Land tax is also levied by local authorities annually. Land owners are liable to pay this tax and determination of the tax liability depends on the land location, fertility and purpose.
Income and capital gains earned by companies are taxed at a flat rate of 12%.
Taxable income is calculated by deducting income-generating expense from gross income. Taxable capital gains are calculated by acquisition costs and related expenses from of market value or selling price. For sale of capital assets that are not considered to be part of the company’s ordinary activities, only 50% of the net capital gains are taxable.