Romanian Minister of Finance, Mr. Eugen Teodorovici and U.S.A. Embassy Charge d'Affaires in Bucharest, Mr. Dean Thompson signed an agreement between the two governments to improve international tax compliance and for the implementation of the US Foreign Account Tax Compliance Act (FATCA).
Signing of this agreement means that income obtained in the U.S.A. by financial institutions from Romania will not be subject of withholding tax in the U.S.A. and, at the same time, Romanian financial institutions will not be obliged to retain tax on certain income received by U.S.A. citizens or U.S.A. residents who have accounts opened with the respective financial institutions.
The agreement will enhance transparency between the two countries in the field of taxation, will promote growing cooperation in combating tax evasion practices, will simplify implementation of financial information transmission and will increase legal certainty for financial institutions in Romania.
According to the Ministry of Finance communique, the agreement also includes an article that requires the application of most favored nation clause. In case the U.S.A. will provide favorable conditions for a third country, the U.S.A. side is obliged to notify the Romanian side that may accept or reject the extension of the benefit of these more favorable conditions.
Impact on investors: The agreement signed on 28 May 2015 between Romania and U.S.A. allows a mutual exchange of information between tax authorities of the two countries.