I know that summary sheet but is it possible that a non resident will be responsible for dividend tax?
I am referring to the fiscal code of
romania (updated jan 2022), which is - by the way - extremely redundand in my opinion. Is it possible that
Deloitte got it wrong? do you have clear based on what grounds they claim is 0%?
ART. 12 - Income obtained from Romania by non-residents
They are considered to be obtained from Romania, regardless of whether they are received in Romania or abroad, in particular the following incomes:
a) income attributable to a permanent establishment in Romania;
b) income from dependent activities carried out in Romania;
c) dividends from a resident;
......
ART. 223 -
Taxable income obtained from Romania
(1) Taxable income obtained from Romania, regardless of whether the income is received in Romania or abroad, are:
a) dividends from a resident;
b) interests from a resident;
...
ART. 224 - Withholding tax from taxable income obtained from Romania by non-residents
......
b) 5% for income from dividends provided for in art. 223 para. (1) lit. a);
......
Here the exemptions: no mentions of individuals but only of legal entities
ART. 229 - Exemptions from the tax provided for in this chapter
(1) The following incomes are exempt from the tax on income obtained from Romania by non-residents:
a) the interest related to public debt instruments in lei and in foreign currency, the income obtained from transactions with derivative financial instruments used to carry out risk management operations associated with government public
debt obligations and the income obtained from the trading of state securities and bonds issued by to the administrative-territorial units, in lei and in foreign currency, on the domestic market and/or on the international financial markets, as well as the interest related to the instruments issued by the National Bank of Romania in order to achieve the monetary policy objectives and the revenues obtained from the trading of the securities issued by the National Bank of Romania;
b) interest on instruments/debt securities issued by Romanian companies, established according to Law no. 31/1990, republished, with subsequent amendments and additions, if the debt instruments/securities are issued on the basis of a prospectus approved by the competent regulatory authority and the interest is paid to a person who is not an affiliated person of the issuer of the respective debt instruments/securities ;
c) dividends paid by a resident to a legal person resident in another member state of the European Union or to a permanent establishment of a foreign legal person from a member state of the European Union, located in another member state of the European Union, if :
1. the foreign legal entity receiving the dividends cumulatively fulfills the following conditions:
(i) (i) is resident in a member state of the European Union and has one of the forms of organization provided in annex no. 1 to title II or to art. 43 para. (4) lit. a) point (ii);
(ii) is deemed to be a resident of the Member State of the European Union, in accordance with the tax laws of that State, and, pursuant to a double taxation convention concluded with a third State, is not deemed to be resident for the purposes of taxation in outside the European Union;
(iii) pays, in accordance with the fiscal legislation of a member state, without the possibility of an option or exemption, one of the taxes provided for in annex no. 2 to title II or another tax that replaces one of those taxes;
(iv) holds at least 10% of the share capital of the resident for an uninterrupted period of at least one year, ending on the date of payment of the dividend.
2. the beneficiary of the dividends is a permanent establishment of a legal entity resident in a member state of the European Union located in another member state of the European Union, and the foreign legal entity for which the permanent establishment carries out its activity must cumulatively meet the conditions set out in point 1 subsection (i) - (iv) and the profits recorded by the permanent establishment be taxable in the member state in which it is established, on the basis of a convention for the avoidance of double taxation or on the basis of the domestic legislation of that member state;
3. the resident paying the dividend cumulatively meets the following conditions:
(i) has one of the forms of organization provided for in art. 43 para. (4) lit. b) point (i) or in annex no. 1 to title II and, pursuant to a convention on the avoidance of double taxation concluded with a third country, it is not considered to be resident for the purpose of taxation outside the European Union;
(ii) pays profit tax, according to the provisions of title II, without the possibility of an option or exemption, or another tax that replaces the profit tax, in accordance with national legislation;
c 1 ) dividends paid by a Romanian resident to a legal person resident in a member state of the European Economic Area, other than the member states of the European Union, namely Iceland, the Principality of Liechtenstein, the Kingdom of Norway, if the foreign legal person receiving the dividends meets the conditions provided to art. 43, regarding the Romanian resident who receives the dividends;
d) the prizes of a non-resident natural person obtained from Romania, as a result of participation in national and international artistic, cultural and sports festivals financed from public funds;
Methodological norms
e) prizes awarded to non-resident pupils and students at competitions financed from public funds;
Methodological norms
f) the income of foreign legal entities that carry out consultancy activities in Romania within the framework of free financing agreements concluded by the Government of Romania/public authorities with other governments/public authorities or international governmental or non-governmental organizations;
g) income from interests and royalties, which fall under chapter V of this title;
Methodological norms
h) interest and/or dividends paid to pension funds, as they are defined in the legislation of the member state of the European Union or in one of the states of the European Economic Area, provided that there is a legal instrument based on which the exchange of information is carried out;
i) the income obtained by non-resident natural persons as a result of participating in another state in a game of chance, the winnings of which also come from Romania.
(2) The provisions of para. (1) lit. c) does not apply to an action or a series of actions which, being undertaken with the main purpose or one of the main purposes of obtaining a tax advantage that is contrary to the object or purpose of this article, is not honest considering all the relevant facts and circumstances . An approach may comprise several stages or parts. Within the meaning of this paragraph, an action or a series of actions are considered dishonest to the extent that they are not undertaken for valid commercial reasons that reflect economic reality. The provisions of this paragraph are supplemented by existing provisions in domestic legislation or in agreements related to the prevention of
tax evasion, tax fraud or abuses.
