Taxation of profit

Because the date of May 25th, when the payment of profit tax is required, is approaching, I made a calculation, from the point of view of a financial consultant, not an accountant, which I achieved being a general calculation on profit taxation.

How is money taxed for financial security and our retirement from activity?

We took a “close look” at two categories of investments that can bring us money for our retirement from activity – basically a wide time horizon and let’s see how much money we have left to support our retirement from activity.

Let’s say we will save 100 euros = 500 lei /month for 30 years.

We save 180,000 lei = 36,000 euros

The account balance, speaking about a more than natural yield of 9%/year, we will have 736,000 lei = 147,000 euros, which can support a pension of 1000 euros for 12 years.

Such an investment rarely happens to be just that, because it is taxed.

How much money do you have left in retirement?

If we talk about taxing the profit by 10% without taking into account the salary ceilings for pensions and insurance, we are talking about a decrease of 11,000 euros.

If, on the other hand, we take into account the pension and salary ceilings, we are talking, roughly, about another 16%, respectively a taxation of 36%, which represents: 40,000 euros. Deducting the commissions, but let’s say that we may invest in something that is not so safe, does not have so many safety nets for money and we are risking this money (which I do not recommend, but I have seen so many investments made on platforms that are not even authorized by the ASF and there, normally there is no administration cost, because if they leave with the money and withdraw the costs tenfold those platforms), then we will reduce our account balance and we will end up supporting ourselves in retirement with 1000 euros/month for only 8 years.

4 years were eroded by taxes. Which is normal, I’m not saying no, but we can find solutions that don’t pay us so much in taxes and keep more money for our retirement, with total costs over all 30 years of only 10,000 euros.

High costs versus risk and massive taxation

How does 3,000 euros in 30 years sound, high costs, right? But without cost and tax of 36%, that is 40,000 euros and it is only an estimated cost of taxation; tax level that can change over time. The cost of 3,000 euros in 30 years, actually means: 42 lei / month, a cost that you can have at a bank for the current coin, to have your salary transferred or at a bank deposit to keep your money and produce only as much as the inflation rate.