Investors on the Stock Exchange have to pay tax on the profits made from the capital market as of this year. Still, they have a few methods available to go around the stock market transaction tax.

Investors using companies registered in tax havens as investment vehicles no longer have to worry about taxes on the capital market in Romania, consultants say.

"The most frequently used method to maximise profit on the capital market in Romania is to trade through a firm registered in a friendly jurisdiction country such as Cyprus. Cypriot firms do not pay capital market tax in Cyprus or in Romania, either," says Gabriel Biris, partner of Biris Goian law firm.

At the same time, if an investor has more stocks in his portfolio, some of which are generating profits and some losses, and wants to sell the profit-making ones without paying tax, they can sell some of the loss-making ones to offset the profits. This mechanism enables investors to completely avoid paying tax this year or to substantially reduce the taxable value.

The new regulations of the Finance Ministry as of 2010 stipulate that investors shall pay 16% tax on the profits made from transactions with financial instruments held for less than one year and 1% tax for those held for more than one year.

At the same time, investors may not carry over losses from the previous year into 2010 in order to reduce the taxation base, which will only be allowed as of next year, so that they have to find other ways to minimise taxes.

"Carrying over losses through the following year is a very good incentive for the Stock Exchange investors and is closer to what happens in companies, which may carry over the losses for a number of years," says Dumitru Beze, chairman of the Association of Capital Market Investors.

The companies that posted losses from transactions on the capital market may ca