National legislation on direct taxation to be aligned with European Union rules

Chișinău, September 30, 2026 – National legislation on direct taxation will be aligned with European Union rules. The Committee on Economy, Budget and Finance approved the report on a draft law concerning the taxation of interest, royalties and dividends, as well as the introduction of rules on controlled foreign companies and the resolution of tax disputes.

The legislative initiative was drafted by the Ministry of Finance in the context of accelerating the process of harmonizing national legislation with the European Union legal framework. The amendments are necessary because, within the EU single market, transactions carried out between entities from different member states should not be subject to a more or less favorable tax regime. Thus, once the Republic of Moldova joins the EU, the current provisions of national legislation will no longer be applicable.

The Tax Code will be supplemented with a new chapter providing for the elimination of any form of taxation of interest and royalties in the Member State from which these payments originate. Accordingly, income sourced in the Republic of Moldova will be exempt from withholding income tax only if the beneficial owner is a company from an EU Member State or a permanent establishment of a company from a Member State. The exemption from taxation will apply only under certain conditions expressly established by law.

The draft law also transposes into national legislation the Directive on the common tax regime applicable to parent companies and subsidiaries from different member states, which aims to eliminate double taxation of income distributed between subsidiaries and parent companies in the European Union. It is important to note that these companies must be tax residents in the EU and must be subject to corporate income tax, without the possibility of opting for another tax regime or benefiting from an exemption. A parent company is a commercial company from an EU member state that holds at least 10% of the capital of a commercial company in another member state.

Another amendment to the Tax Code concerns the introduction of rules applicable to controlled foreign companies (CFCs). These rules aim to tax profits transferred by groups of companies to controlled subsidiaries in low-tax jurisdictions. The CFC rules provide for the attribution of certain income of a controlled foreign company subject to low taxation to the parent company, with a view to taxing that income in the parent company's country of tax residence. Consequently, the parent company will be required to tax this income in its country of tax residence.

The draft law also contains provisions on mechanisms for resolving tax disputes.

The draft law on direct taxes will be examined in its first reading by the plenary of Parliament.

Following adoption, the new legislative provisions will enter into force on the date the Republic of Moldova accedes to the European Union. In addition, the provisions concerning controlled foreign companies will enter into force on January 1, 2028, while those concerning tax dispute resolution mechanisms will enter into force on January 1, 2027.

 

Communication and Public Relations Department of the Parliament of the Republic of Moldova