Double taxation represents the direct taxation of the same taxable matter for the same period of time by public authorities in different countries.
The avoidance of double taxation is governed by the conventions concluded by Romania with other states, so that taxpayers who are resident in a state will not be subject to double taxation, both in the state where they earn income and in the state of residence.
In order to benefit from the application of the Conventions in terms of avoiding double taxation, the non-resident shall make available the employer with the Certificate of Tax Residence, a document certifying that the non-resident is a taxpayer in the country of origin. The certificate is issued every year, on request, by the financial administration of the non-resident’s home country.
Without this certificate of tax residence, the non-resident has the obligation to pay the tax rate applied in the country in which he obtains the income.
The fiscal residence certificate issued during the year for which payments are made, is also valid in the first 60 calendar days of the following year, unless the conditions of residence change.
If a taxpayer is a resident of a country that has with Romania a convention for the avoidance of double taxation, the tax rate applicable to the taxable income received by that taxpayer in Romania may not exceed the tax rate provided for in the Convention which applies to that income. More precisely, if the tax provided by the convention is 5% and the tax in Romania is 10%, only 5% will be retained. The difference is paid in the non-resident’s country of origin, but after obtaining from the ANAF in Romania the certificate of payment. If this certificate is not obtained, the tax will be paid in full in the country of origin..
Where the national law and the double taxation conventions are set different tax rates, more favorable tax rates have to be applied.
If a taxpayer is a resident of the EU, the tax rate applicable to taxable income obtained in Romania is the more favorable rate, laid down in national law, European Union legislation, the European Free Trade Association or double taxation avoidance conventions.
The remission of the tax deducted in addition from the income paid by a Romanian resident to non-residents is made following the filing of an application for restitution of this tax, the application may be filed by a non-resident within the statutory limitation period, established by the Romanian state legislation.
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