6 June 2016
According to a recent update from the Norwegian Ministry of Finance, the income tax treaty with Romania entered into force on 1 April 2016. The treaty, signed 27 April 2015, replaces the 1980 tax treaty between the two countries.
The treaty covers Romanian tax on income and tax on profit. It covers the following Norwegian taxes:
If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement based on its place of effective management, place of registration and any other relevant factors. If no agreement is reached, any relief or exemption from tax provided by the treaty will not apply unless agreed upon by the competent authorities.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through one or more individuals present in the other state for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.
The beneficial provisions of Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) will not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims or other rights in respect of which the dividends, interest or royalties are paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of the Articles
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
The treaty applies from 1 January 2017. The 1980 tax treaty between the two countries ceases to have effect from that date.
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