New DTT With Norway, Italy, UAE & Bulgaria

UniCredit Bank S.A.
Summary: 
Romania has entered into 4 new bilateral treaties for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income with Norway, Italy, United Arab Emirates and Bulgaria.
Wed, 30/03/2016

In the case of Romania, the existing taxes to which the treaties shall apply are in particular:

(i)    the tax on income;
(ii)   the tax on profit.

The treaties shall apply to any identical or substantially similar taxes that are imposed after the date of signature of the treaties in addition to, or instead of the existing taxes.

The maximum withholding tax rates stipulated in the treaties are as follows:


The Kingdom of Norway

Dividends
(i) 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends;
(ii) 10% of the gross amount of the dividends, in all other cases.

Interest
(i) 5% of the gross amount of the interest.
(ii) tax exemption in the source state – if the beneficiary of the interest is government of the other contracting state including local authorities or administrative-territorial units.

 

Italy

Dividends
(i) 0% of the gross amount of the dividends, if the beneficial owner is a company (other than a partnership) which holds directly, for at least two years  a minimum of 10% of the capital of the company paying the dividends;
(ii) 5% of the gross amount of the dividends, in all other cases.

Interest
(i)  5% of the gross amount of interests;
(ii) tax exemption in the source state – if the beneficiary of the interest is government of the other contracting state including local authorities or administrative-territorial units.

 

United Arab Emirates

Dividends
(i) 3% of the gross amount of the dividends.

Interest
(i)  3% of the gross amount of interests;
(ii) tax exemption in the source state – if the beneficiary of the interest is government of the other contracting state including local authorities or administrative-territorial units.

 

Bulgaria

Dividends
(i) 5% of the gross amount of the dividends.

Interest
(i) 5% of the gross amount of the interest;
(ii) tax exemption in the source state – if the beneficiary of the interest is government of the other contracting state including local authorities or administrative-territorial units.

 

The treaties for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income conclude between Romania and the four countries shall enter into force after each of the contracting states will complete the procedures of ratification. The confirmation of the exchange of instruments of ratification is made through the publication in the official gazette. A treaty shall have effect to the income paid on or after the first day of January in the calendar year next following the year in which it enters into force.

 

Impact on investors: The new bilateral DTTs between Romania and the four countries will create a favourable tax environment for eligible investors from the five countries.