In recent years, Romania has been a tax haven for Western businessmen. Not only because it had lower taxes than most EU countries, but Romanian taxation allows a well-paid tax consulting and accounting firm to offer the most appropriate solutions. But let’s see what incomes obtained by non-residents in Romania are exempt from taxation.
Revenues
Revenues obtained from trading securities issued by the National Bank of Romania. Revenues obtained from transactions in derivative financial instruments used to carry out risk management operations associated with government debt obligations;
Interest related to public debt instruments in lei and in foreign currency;
Revenues obtained from trading in government securities and bonds issued by administrative-territorial units, in lei and in foreign currency, on the domestic market and / or on the international financial markets as well as interest on instruments issued by the National Bank of Romania in order to achieve objectives monetary policy;
Awards
The prizes won by any non-resident, in Romania, as a result of his participation in various national and international festivals, artistic, cultural or sports, financed from public money.
Prizes awarded to non-resident pupils and students at competitions financed from public funds.
Revenues of foreign legal entities that carry out consulting activities in Romania within free financing agreements, concluded by the Romanian Government / public authorities with other governments / public authorities or international governmental or non-governmental organizations.
Dividends
paid by an enterprise, which is a Romanian legal person or legal person with its registered office in Romania, established according to European legislation, to a legal person resident in another Member State of the European Union or in one of the European Free Trade Association states, respectively Iceland , Principality of Liechtenstein, Kingdom of Norway, or of a permanent establishment of an undertaking in a Member State of the European Union or of a Member State of the European Free Trade Association, situated in another Member State of the European Union or of the European Free Trade Association Change. In order to benefit from these exemptions, both participants – both the company that pays the dividends and the one that receives the dividends – must meet certain mandatory conditions.
- In order to be exempt from taxation, the foreign legal entity must cumulatively meet the following conditions:
- 1. has one of the forms of organization provided at art. 20^1 para. (4);
- 2. in accordance with the tax law of the EU Member State or of one of the Member States of the European Free Trade Association, is considered to be a resident of that State and, under a convention on the avoidance of double taxation concluded with a third State, is not considered to be resident for tax purposes outside the European Union or the European Free Trade Association;
- 3. pays, in accordance with the tax legislation of a Member State of the European Union or of one of the Member States of the European Free Trade Association;
- 4. holds at least 10% of the share capital of the Romanian legal entity for an uninterrupted period of at least 2 years, which ends on the date of payment of the dividend.
Important!
If the recipient of the dividends is a permanent establishment of a legal person resident in a Member State of the European Union or in a state of the European Free Trade Association, located in another Member State of the European Union or of the European Free Trade Association, in order to grant this exemption, the foreign legal person for which the permanent establishment carries out its activity must cumulatively meet the conditions provided in points 1 – 4.
- In order to grant this exemption, the Romanian legal entity that pays the dividend must cumulatively meet the following conditions:
- 1. is a company established under Romanian law and has one of the following forms of organization: “joint stock company”, “limited partnership”, “limited liability company””;
- 2. pays profit tax, according to the provisions of title II, without the possibility of an option or exemption.
Royalties
From 1 January 2011, all income from interest or royalties, obtained in Romania by legal persons resident in the Member States of the European Union or the European Free Trade Association, or by a permanent establishment of an enterprise in a Member State of the European Union or from a state of the European Free Trade Association, located in another Member State of the European Union or of the European Free Trade Association, are exempt from tax, if the beneficial owner of interest or royalties holds at least 25% of the value / number participation certificates to the Romanian legal entity, for an uninterrupted period of at least 2 years, which ends on the date of payment of interest or royalties
Interest and / or dividends paid to pension funds, as defined in the legislation of the Member State of the European Union or in one of the states of the European Free Trade Association.
Gambling income obtained by non-resident individuals as a result of participating in another state in a game of chance, whose winnings also come from Romania.