Moldova Personal Income Tax

The following individuals are subject to income tax in Moldova:

  • Moldovan residents on income earned in Moldova, as well as in – come earned from overseas financial and investment operations
  • Any enterprise with the legal status of an individual, including sole ownerships, limited partnerships, general partnerships and farms
  • Nonresidents on income earned in Moldova and on income earned overseas for their work in Moldova except for financial and investment income from sources outside Moldova

Moldova does not apply different tax rates based on territoriality.

Residents are individuals who meet either of the following condi tions:

  • They have a permanent domicile in Moldova (includes indi­viduals studying or traveling abroad and Moldovan officials appointed for missions abroad).
  • They stay 183 days or more during any fiscal year in Moldova.

Income subject to tax. Individuals are subject to tax on their gross income earned in Moldova and on income earned from overseas financial and investment operations, less applicable deductions and other allowances.

Gross income includes the following items:

  • Income earned from entrepreneurial, professional and other similar activities
  • Salaries and fees for services rendered by the individual
  • Cash or in-kind compensation, other premiums and facilities paid by the employer
  • Interest
  • Capital gains
  • Royalties and annuities
  • Dividends
  • Rental income
  • Revenue earned by lawyers and other professionals, including commissions and other revenues

Gross income does not include the following items:

  • Amounts received as compensation from the budget for illness
  • Damages paid by a third party for accidents and/or permanent disability
  • Interest on government securities
  • Alimony and allowances for children
  • Donations and inheritances
  • Per diem allowances up to the limit set by the government
  • Scholarships
  • Welfare received from the government or charitable organizations
  • Income earned from business patent activity
  • Income earned from selling of secondary raw materials and agri­cultural goods produced by individuals (an exception applies to income earned by farms and individual enterprises)
  • Amounts obtained by individuals from the returning of recy­clable packaging
  • Winnings from promotional gifts or lotteries that do not exceed MDL1,012.80 per unit
  • Compensation for moral damages

Employment income. Taxable compensation includes salaries, cash or in-kind compensation, bonuses, rewards, paid holidays, inflation­ary allowances and royalties from patents and trademarks. Taxable compensation also includes salaries received by daily/temporary workers, fees and compensation paid to directors and managers of private commercial corporations and fees received by profes­sionals (lawyers, doctors and experts).

The Moldovan tax law does not provide any special rules regard­ing the taxation of education allowances provided by employers to their employees’ children under 18 years old. Such allowances are included in taxable income.

Self-employment and business income. Income earned by indi­viduals authorized to carry out independent activities (traders, craftsmen and family associations) and income earned from self-employment and business activities are subject to income tax.

Directors’ fees. Fees paid to directors or members of boards are taxed similar to salaries at the income tax rates indicated in the table in Rates.

Investment income. Interest earned by resident individuals on deposits with Moldovan banks is not subject to income tax until 1 January 2020.

Taxation of employer-provided stock options. Moldovan tax laws do not specifically address the taxation of employer-provided stock options.

Capital gains and losses. Capital assets for tax purposes include the following:

  • Shares and other titles of ownership in entrepreneurial activities
  • Bonds
  • Private property not used for business purposes
  • Land
  • Options for selling capital assets

The capital gains tax base for any fiscal year equals 50% of any amount of capital gains earned during that fiscal year.

Capital gains are deductible only against capital losses.

Deductions

Deductible expenses. Individuals may deduct the following expenses:

  • Expenses related to entrepreneurial activities (business deductions)
  • Capital losses to the extent of capital gains

Personal deductions and allowances. The amount of income from all sources is reduced by personal deductions and allowances. Each taxpayer is granted a personal deduction of MDL10,128 per year against taxable income. Certain listed individuals are entitled to a personal deduction amounting to MDL15,060 per year. These individuals include disabled veterans, parents and spouses of war veterans, and individuals disabled in childhood.

An individual may also benefit from an additional deduction of MDL10,128 or MDL15,060 per year if the individual’s spouse does not benefit from the individual’s personal deduction. A deduction of MDL2,256 per year is granted for each dependent, and a deduction of MDL10,128 per year is granted to support individuals with a permanent disability.

Business deductions. Expenses incurred in business activities may be deducted from revenue earned, excluding personal and family related expenses.

Rates. The following are the income tax rates.

Taxable income Tax rate Tax due Cumulative tax due
MDL % MDL MDL
First 29,640 7 2,074.80 2,074.80
Above 29,640 18 ­

For farms, the income tax rate is 7%.

Relief for losses. Income received for substitution of property for similar property lost under a force majeure event is not taxable.

Tax losses may be carried forward for five years.

Other taxes

Wealth tax. A wealth tax of 0.8% is imposed on residential immovable property located in Moldova (except for land) that is owned by individuals if both of the following conditions are met:

  • The total estimated value of the property is equal to or greater than MDL1,500,000.
  • The total size of the surface of the property is equal to or greater than 120 square meters.

This wealth tax must be paid by 25 December of the reporting year.

Property tax. Tax is imposed on property, including land, build­ings, apartments and other real estate. The rate of property tax on buildings, apartments, constructions and other types of premises ranges from 0.05% to 0.3% of the tax base, depending on the type and location of the real estate.

Inheritance and gift taxes. Moldova does not impose taxes on gifts or inheritances.

Social security

The rate of social contributions payable by employers is 23% of the gross payroll of individuals domiciled in Moldova. Employees must make a pension fund contribution of 6% of their remuneration.

For employers whose principal activity is software development and fulfill certain requirements stated in the Moldovan Tax Code, the social contribution is 23% of two average monthly salaries per employee (for 2016, the average monthly salary per employee is MDL5,050).

In addition, both employers and employees must pay mandatory medical insurance contributions on salary and other labor remu­neration at a rate of 4.5% (that is, a total of 9%).

Tax filing and payment procedures

The tax year in Moldova is the calendar year. Annual tax returns must be filed by individuals whose total annual income tax exceeds the amount of income tax withheld during that year. The annual tax return must be filed with the tax authorities by 25 March of the year following the reporting year. Entities must withhold income tax on a monthly basis.

Double tax relief and tax treaties

Moldova has entered into double tax treaties with the jurisdic­tions listed below. The treaties generally provide for a residency test of 183 days in a fiscal year.

Albania                          Germany                    Oman

Armenia                         Greece                        Poland

Austria                           Hungary                     Portugal

Azerbaijan                     Ireland                        Romania

Belarus                          Israel                          Russian

Belgium                         Italy                            Federation

Bosnia and                     Japan                          Serbia

Herzegovina                  Kazakhstan                 Slovak Republic

Bulgaria                         Kuwait                        Slovenia

Canada                           Kyrgyzstan                 Spain

China                             Latvia                         Switzerland

Croatia                           Lithuania                    Tajikistan

Cyprus                           Luxembourg               Turkey

Czech Republic              Macedonia                  Turkmenistan

Estonia                           Malta                          Ukraine

Finland                          Montenegro                United Kingdom

France*                          Netherlands                Uzbekistan

Georgia*

* This treaty has been signed, but it is not yet in force.

Temporary visas

Moldovan embassies and consulates issue visas. Nationals of the following jurisdictions do not require visas to visit Moldova.

Albania                          European Union         Montenegro

Andorra                         Georgia                      New Zealand

Australia                          Iceland                        Norway

Bahamas                          Israel                          San Marino

Barbados                         Japan                          Seychelles

Canada                            Korea (South)             Singapore

Chile                                Liechtenstein              Switzerland

Commonwealth               Macedonia                  Turkey

of Independent             Malaysia                     United States

States                            Monaco                      Vatican City

Ecuador

Nationals of other jurisdictions with an invitation from a Moldovan company, organization or individual must either obtain a visa from a Moldovan consulate or embassy before their depar­ture for Moldova, or obtain a visa on arrival at Chisinau International Airport.

A foreign person intending to stay in Moldova for a period longer than 90 days must submit a request for the issuance of an immigration certificate to the local competent authorities at least 1 month before the expiration of the 90-day period.

Work permits

Foreign nationals may work in Moldova based on a special deci­sion issued by the National Employment Agency with respect to such matter.

Residence permits

The obtaining of an immigration certificate is a prerequisite for eligibility for a residence permit in Moldova.

A residence permit may be permanent or temporary. The tempo­rary residence permit is issued for a one-year period and can be extended for consecutive one-year periods.

Notwithstanding the above, a residence permit may be issued for a longer period if the foreign citizen is holding a managerial posi­tion within a Moldovan company and if the foreign citizen has made any of the following investments in the company:

  • An investment exceeding USD1 million for a period of up to 10 years
  • An investment exceeding USD500,000, but not exceeding USD1 million, for a period of up to five years, with the possi­bility of extending it for a new period not longer than the valid­ity term of the national identification card
  • An investment exceeding USD200,000, but not exceeding USD500,000, for a period of up to three years with the possibil­ity of extending it for a new period
  • An investment exceeding USD100,000, but not exceeding USD200,000, for a period of up to two years with the possibil­ity of extending it for a new period

Family and personal considerations

Family members. Priority for migration is given to minors who are joining their parents, as well as to the elderly or parents who need assistance if they have no children or guardian abroad.

Children and parents under the immigrant individual’s care may also apply for migration to Moldova.

Marital property regime. All assets acquired by spouses during a marriage are subject to the marital regime of joint ownership. The legal regime of the assets of spouses may be modified by a mar­riage settlement, which may be concluded before the marriage is registered or anytime during the marriage. In this case, the regime will apply only to the extent it does not contradict the marriage settlement.

Forced heirship. Under the Moldovan Civil Code, the following are the three categories of rightful heirs:

  • First degree heirs, which include children (including adoptive ones), spouse and parents (including adoptive parents) of the deceased and his or her children born after his or her death
  • Second degree heirs, which include brothers, sisters and both grandmothers and grandfathers of the deceased
  • Third degree heirs, which include aunts and uncles of the deceased

Heirs of the next degree inherit if the deceased has no heirs of preceding degrees or if the latter rejects their right of heirship. Heirs of the next degree also inherit if the right of heirship was withdrawn from heirs of preceding degrees.

The Civil Code also provides that forced heirs are considered in – capable heirs of the first degree. Forced heirs inherit not less than one half of the share to which they would have been entitled in the event of a legal succession, regardless of the provisions in the will.

Property left by deceased persons is distributed according to the laws of the deceased’s last domicile. If the last domicile is not known, the property is distributed according to the laws of the place where the assets (or the preponderance of the assets) are located.

Driver’s permits. Foreign nationals may drive international vehi­cles in Moldova only if they hold national and international driver’s licenses that adhere to the requirements of the United Nations (UN) Convention on Road Traffic.

Foreign individuals entering Moldova for a six-month stay may use their home countries’ driver’s licenses in Moldova. Foreign in dividuals who live in Moldova or stay in the country for more than six months should exchange their home countries’ driver’s licenses for a Moldovan license.

National and international driver’s licenses from countries that are signatories to the UN convention may be exchanged. In such circumstances, the drivers are exempt from statutory exams. Driver’s licenses issued by other countries may be exchanged for a Moldovan license after passing the re quired exams.