Romania – Taxation of the income earned by non-resident individuals in Romania

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The residence rules for taxation of the income earned by non-resident individuals have been amended with effect from 1 January 2012.

In accordance with the provisions of the Tax Code currently in force, a non-resident individual is required to pay tax on income sourced in Romania such as:

• employment remuneration received from a foreign employer or from a Romanian resident company or individual for work carried out in Romania,;
• rental income from property situated in Romania;
• dividends paid by a Romanian legal entity;
• royalties paid by a Romanian resident;
• commission fees paid by a Romanian resident;
• income for services performed in Romania;
• pensions income exceeding RON 1,000;
• fees obtained from independent services, such as lawyers, physicians, engineers and which are not obtained through a permanent establishment;
• proceeds resulting from the liquidation of a Romanian legal entity.

Before 1 January 2012, non-resident individuals were taxed only on the Romanian source income, and their worldwide income became taxable after spending 3 consecutive years in Romania.

With effect from 1 January 2012, a non-resident individual is taxed on their worldwide income after spending 1 year in Romania, if that individual has key interests in Romania or if that individual is present in Romania for a total period or periods of 183 days during any period of 12 consecutive months.

If the non-resident individual provides to the Romanian tax authority a certificate of residence confirming that he is resident in a state which signed a double tax treaty with Romania, then the provisions of the double tax treaty are applicable. The certificate of residence is valid in the year it is issued. The residence cannot be changed during the year. Romania has signed over 80 double tax treaties.

Resources

Tax Code 2012 published by National Agency for Fiscal Administration

For further information or to discuss any of the issues raised, please contact Marilena Ene on +4021 230 01 71.