Romania and the United States of America have signed a double taxation treaty
that is meant to prevent double taxation of income and property
and also prevent fiscal evasion. The convention is similar to the other double tax avoidance treaties
concluded by Romania with other countries around the world. Its provisions are meant to encourage foreign investments and simplify taxation for individuals who are residents of one or both countries.
Our Romanian accountants
can give you detailed information about how the convention applies on different types of income and will help you with accounting services
The taxes covered by the Romania-USA treaty
The Romanian taxes that are subject to the convention are those applied on:
- different types of income: wages, salaries, fees, copyrights and other source received by individuals;
- profits of mixed companies;
- agricultural activities;
- rentals etc.
The taxes in the United States that are subject to the convention are the federal income taxes imposed by the Internal Revenue Code. The applicability of the treaty also extends to taxes similar to the ones described that are imposed in place of or in addition to existing taxes, after the convention has entered into force.
General rules for taxation included in the USA-Romania treaty
According to the double tax treaty signed between Romania and the United States, one of the contracting states may tax a resident of the other contracting state only on the income produced within the state. The manner in which the contracting states tax their own citizens or residents is not influenced by the convention.
The convention applies to the following types of income:
- from immovable property including royalties and other payments for the exploitation of the natural resources;
- business profits: industrial and commercial profits made by a resident of one of the countries are exempt from tax in the other country, unless the resident has a permanent establishment in the other state;
- derived from activities involving shipping and air transport;
, interest, royalties and capital gains;
- independent personal services and dependent personal services;
- pensions, social security payments and others.