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Romania; Uruguay

16 September 2013

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Treaty between Romania and Uruguay – details

Details of the Romania - Uruguay Income and Capital Tax Treaty (2012), signed on 14 September 2012, have become available. The treaty was concluded in the Romanian, Spanish and English languages, each text having equal authenticity. In the case of divergence, however, the English text prevails. The treaty generally follows the OECD Model (2010).

The maximum rates of withholding tax are:

-   10% on dividends in general and 5% if the beneficial owner is a company (other than a partnership) holding directly at least 25% of the capital of the company paying the dividends;
-   10% on interest, with exemptions for interest arising in a state if:
-   it is derived and beneficially owned by the government, its political subdivision, local authority or administrative-territorial unit; or
-   the debt claims are warranted, insured or financed by a financial institution wholly owned by the government; and
-   10% on royalties.

Deviations from the OECD Model include that:

-   a building site, a construction, assembly or installation project, or supervisory activities, in connection therewith constitutes a permanent establishment (PE) only if such site, project or activities last for more than 9 months;
-   the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose constitutes a permanent establishment (PE) only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than 6 months within any 12-month period;
-   the definition of royalties includes payments for the use of, or the right to use, industrial, commercial or scientific equipment; and
-   income derived by artistes or sportsmen within the framework of cultural or sports exchanges agreed to by the governments of the states and carried out other than for the purpose of profit shall be exempt from tax in the state in which the activities are exercised.

Romania generally provides for the credit method to avoid double taxation. Uruguay generally provides for the exemption-with-progression method to avoid double taxation

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